For decades, Alaska officials have dreamed of a pipeline that would ferry natural gas hundreds of miles from the North Slope to an export terminal in Cook Inlet.
Over the years, the state has pumped hundreds of millions of dollars into designing and permitting for the project, which is estimated to cost tens of billions of dollars to construct.
While President Trump has framed the pipeline as a centerpiece to his plans for “unleashing” the country’s energy, there are many questions surrounding the mega project, including whether there’s a large enough market for the gas it would carry and what kind of environmental impact it could have.
Reporter Lois Parshley recently wrote about the project for the nonprofit news outlet Grist. She says despite many backers saying the time to build the pipeline is now, there’s still a lot of skepticism.
This interview has been lightly edited for length and clarity.
Lois Parshley: The short answer is, there isn't yet much hard evidence that this project will pay off at the scale that's being promised. To start, there are no binding, long term contracts with overseas buyers. Costs for steel and construction have continued to rise, and global LNG markets are becoming more competitive and uncertain as countries accelerate a transition away from fossil fuels. So there's a big question about whether this project is economically viable, and if it does move forward anyway, if Alaska will face cost overruns that leave both state ratepayers and federal taxpayers on the hook.
Wesley Early: So Glenfarne is the company that's set to operate the pipeline, and they've also received a lot of state support. What does the public actually know about the state's dealings with Glenfarne and what's their background in pipeline management?
LP: Very little, but that's a great question. Glenfarne Group is a privately held energy firm that has no experience to date operating a liquefied natural gas export terminal. They were given a 75% stake in the project by the state in a no-bid contract whose details have been kept even from the state legislature. And Glenfarne has said that they don't plan to release updated estimates of the project's costs.
WE: Is there any reason why they're not releasing that to the public, or why legislators are having such trouble?
LP: So far, both Glenfarne Group and the Alaska Gasline Development Corporation have cited confidentiality agreements and claimed these are trade secrets.
WE: And you write that Glenfarne stands to reap a lot of financial benefit from the pipeline, even if it isn't built. How does that work?
LP: Yeah, so Glenfarne could make a lot of money even if a mile of pipe is never laid. The company now owns permits, engineering work and other assets that give it leverage in future deals within the state or in qualifying for federal support. For example, Nat Herz's great reporting showed recently that Glenfarne is working with the private utility Enstar to develop plans to import liquefied natural gas that overlaps with other existing utility projects, potentially raising costs for rate payers while laying the groundwork for their export facility. One expert nationally recently noted in a public comment on LNG export terminals that this kind of leverage is pretty typical, and that insiders like Glenfarne can quote take fees and bonuses and profit, even if projects like these fail.
WE: So the pipeline has run into pushback from a surprising group of entities, local energy utilities. What is their concern with the project?
LP: So utilities, especially in Southcentral Alaska, face dwindling energy supplies. Natural gas in Cook Inlet, which has historically provided most of the state's supply, have become unprofitable to extract, and as a result, utilities have been warning that the region could face rolling blackouts. So this supply crunch is one that Glenfarne argues can only be solved in the long term by the pipeline. But a lot of the people I spoke to said that the pipeline won't actually solve this affordability crisis without foreign buyers. The pipeline is going to be overbuilt. And the Alaska Utilities Working Group wrote in a report that current natural gas demand in Alaska simply does not support a pipeline project. Many of Alaska's power plants aren't currently set up to run off natural gas, and converting them will cost money. These are existing assets, and many of the experts I spoke to suggest that the cost of energy from any LNG pipeline would likely be higher than just importing gas
WE: Assuming the gasline never gets built, besides the wasted public funds, which are pretty significant, why else should Alaskans care?
LP: I would argue that all Americans should care. The U.S. is now the world's largest LNG exporter prior to this project being built, and the industry is increasingly built on debt, not demand. Analysts warn that the LNG sector may be approaching a bubble, and investors writ large are exposed to climate risks and these weakening markets. One recent report, which was quite alarming, warned that declining credit quality could lead to debt packaging similar to the 2008 mortgage crisis. So as one source told me, every taxpayer should be furious that the federal government is chasing this project.
WE: So this push to sort of kickstart this natural gas pipeline in Alaska, it comes kind of at the expense of other renewable energy projects. How is that squaring away?
LP: That's a great question. As you noted, Trump has cut more than a billion dollars for Alaskan renewable projects, including pretty significant ones near Fairbanks and Anchorage. And sources have told me that this leaves Alaskans vulnerable to volatile energy price hikes. Senator Bill Wielechowski told me that this basically creates what he calls a “hostage situation” where Alaskans are forced to develop fossil fuels at whatever price companies want to charge.
