State open season for AK LNG Project.  It’s open season for the Alaska Gasline Development Corp. That’s not to be confused with open… Read More


Alaska LNG Project Open Season Observations

by

Dave Harbour 

After reviewing the story above, our critical thinking readers will no doubt be wondering if the term “open season” applies to a normal pipeline expansion or new pipeline process conducted by sponsors with shareholder skin in the game vs. the most expensive pipeline/LNG project in history, owned by a fiscally irresponsible state government, administered by temporary bureaucrats, approved/curtailed at any time by temporary legislators and a governor.

We think that this particular effort is unlikely to produce valuable assurances for the owners of a socialized project or for those expressing interest.  Indeed, it may have the trappings of Kabuki theater or a Hollywood greeting.  After it is over, the project owning bureaucracy could tell the Legislature, “See, they are interested.  Please give us more money to support us in the style to which we have become accustomed, Tokyo and Houston offices, included.  We promise to finally complete our work and produce support for a Final Investment Decision ‘FID’.  This project is ‘Alaska’s get well card’!”)

For decades Asian leaders have politely told solicitous Alaskan state and municipal politicians, in smooth diplomatic rhetoric, “Sure we would love to invest in your project at the appropriate time.”   Meaning, of course, that final, binding marketing commitments and/or investments might follow completion of project feasibility, due diligence, project completion guarantees and/or acceptable assurances, acceptable financing plan, acceptable wellhead pricing, competitive transportation pricing, Alaska governmental stability (i.e. Constitutional amendment), securing of all federal and state permit/regulatory approvals, etc.

Accordingly, our readers will be the best judges as to whether the Alaska government-owned LNG scheme is workable, and, accordingly, whether the Legislature would be prudent to allow further public money to flow to the Alaska Gasline Development Authority when an imprudent state, itself, stands trembling on the brink of fiscal and political crisis.

Or, should the project be shelved until private sector interest and market trends support further investment and – hopefully – reliable, free market leadership?  -dh