Alaska LNG Hinges on How Much Asian Buyers Will Pay for Energy Security
The Trump Administration’s pet project Alaska LNG may not be commercially investable as costs per production could be more than double the costs at most U.S. Gulf Coast LNG export projects, a Reuters analysis has found.
This week, the Trump Administration touted a $50-billion investment from South Korea for the proposed Alaska LNG project.
The entire project is estimated to cost between $44 billion and $55 billion in total, according to Glenfarne Group, the majority owner and developer of Alaska LNG.
South Korea disputed the U.S. Administration’s claim of a $50-billion investment, saying no sums have ever been agreed upon and the government of South Korea is now only beginning to review the commercial merits of a potential investment in the project.
These commercial aspects don’t look too good for Alaska LNG, as the project would cost $2.2 billion to $2.7 billion per one million metric tons per annum (mtpa) of capacity, per Reuters estimates based on the planned 20 mtpa capacity for the project costing between $44 billion and $55 billion.
To compare, Cheniere Energy’s Corpus Christi Stage 3 was built at around $760 million per mtpa, while Gulf Coast projects under development, such as NextDecade’s Rio Grande LNG and Woodside Energy’s Louisiana LNG, are near the $1 billion-per-mtpa threshold, two times lower than the Alaska LNG costs.
Alaska LNG is designed to deliver North Slope natural gas to Alaskans and export LNG to U.S. allies across the Pacific. An 800-mile pipeline must also be built to transport the gas from the production centers in the North Slope to south-central Alaska for exports.
Glenfarne looks to take the FID for the pipeline in 2026, later than a previous target in late 2025, Adam Prestidge, president of Glenfarne Alaska LNG, told Reuters in the first weeks of the Iran war in March.
Alaska LNG’s advantage would be the easy access to Asian markets, which look to diversify away from Strait of Hormuz supply, but Canadian LNG projects could be tough competitors. The key to making Alaska LNG commercially investable is how much premium Asian LNG importers would be willing to pay for energy security, analysts say.
By Tsvetana Paraskova for Oilprice.com
The Trump Administration’s pet project Alaska LNG may not be commercially investable as costs per production could be more than double the costs at most U.S. Gulf Coast LNG export projects, a Reuters analysis has found.
This week, the Trump Administration touted a $50-billion investment from South Korea for the proposed Alaska LNG project.
The entire project is estimated to cost between $44 billion and $55 billion in total, according to Glenfarne Group, the majority owner and developer of Alaska LNG.
South Korea disputed the U.S. Administration’s claim of a $50-billion investment, saying no sums have ever been agreed upon and the government of South Korea is now only beginning to review the commercial merits of a potential investment in the project.
These commercial aspects don’t look too good for Alaska LNG, as the project would cost $2.2 billion to $2.7 billion per one million metric tons per annum (mtpa) of capacity, per Reuters estimates based on the planned 20 mtpa capacity for the project costing between $44 billion and $55 billion.
To compare, Cheniere Energy’s Corpus Christi Stage 3 was built at around $760 million per mtpa, while Gulf Coast projects under development, such as NextDecade’s Rio Grande LNG and Woodside Energy’s Louisiana LNG, are near the $1 billion-per-mtpa threshold, two times lower than the Alaska LNG costs.
Alaska LNG is designed to deliver North Slope natural gas to Alaskans and export LNG to U.S. allies across the Pacific. An 800-mile pipeline must also be built to transport the gas from the production centers in the North Slope to south-central Alaska for exports.
Glenfarne looks to take the FID for the pipeline in 2026, later than a previous target in late 2025, Adam Prestidge, president of Glenfarne Alaska LNG, told Reuters in the first weeks of the Iran war in March.
Alaska LNG’s advantage would be the easy access to Asian markets, which look to diversify away from Strait of Hormuz supply, but Canadian LNG projects could be tough competitors. The key to making Alaska LNG commercially investable is how much premium Asian LNG importers would be willing to pay for energy security, analysts say.
By Tsvetana Paraskova for Oilprice.com
Trump Says South Korea Deal Includes $8.4 Billion U.S. Oil Project
THEY WILL GET A BETTER DEAL WITH CANADIAN LNG
President Donald Trump said Friday that South Korea’s investment agreement with the United States now includes $8.4 billion for an enhanced oil recovery project. Seoul says it agreed to no such thing.
“The Republic of Korea Deal keeps getting BETTER! 8.4 Billion Dollars for an enhanced Oil Recovery Project. Producing more Oil and Gas means American Energy Dominance and Energy Security in the World for the Future!” Trump wrote on Truth Social.
Enhanced oil recovery (EOR) is used to squeeze more production from aging fields after extraction slows using conventional methods. The process can involve injecting carbon dioxide, natural gas, steam, or other materials into a reservoir to push more oil toward producing wells.
The Truth Social post did not identify the field, operator, or location of the $8.4 billion project.
South Korea’s industry ministry said the EOR investment was not included in the strategic investment agreement reached between the two countries. Seoul has asked Washington for clarification, according to Yonhap.
This isn’t the only round of U.S.-South Korean investment announcements this week, and just a couple weeks ago, South Korea said it was looking to cut its reliance on Middle Eastern crude by as much as half by 2035.
Trump said Wednesday that South Korea would put $200 billion into U.S. projects, including eight large nuclear power plants, a 6-gigawatt power generation facility in Texas and a pipeline associated with the Alaska LNG project. That $200 billion sits alongside another $150 billion pledged for shipbuilding under a broader $350 billion investment package negotiated last year.
Seoul has been considerably more cautious about the Alaska piece. South Korea’s government says participation in the roughly $54 billion pipeline project remains subject to commercial viability and legal review, with no final investment decision yet made.
By Julianne Geiger for Oilprice.com
No comments:
Post a Comment