Alaska Senator Warns of $100 Billion LNG Costs, Praises South Korea‘s Caution

Alaska State Senator Cathy Giessel.

Alaska State Senator Cathy Giessel, a Republican who has played a leading role in legislative discussions over the North Slope liquefied natural gas (LNG) development project, warned that the actual cost of Alaska LNG could reach as much as $100 billion (approximately 132.5 trillion won).

Giessel, the Senate majority leader and chair of the Senate Resources Committee, said in a telephone interview with The Kyunghyang Daily News on October 14 that cost estimates presented by Glenfarne, the project’s developer, were “still too low.”

She also praised South Korea’s cautious approach to the proposed investment, saying it was “very wise” of the Korean government to seek more information and give the project further consideration.

The following is an edited transcript of the interview.

- How much confidence do you have in the cost estimates Glenfarne presented in June?

“The initial estimate was $40 billion to $45 billion. We’ve been trying to build this project for probably 40 or 50 years, so we knew that number was too low. When we pressed Glenfarne, they raised the number to $54.5 billion. But that’s still too low.

Even Governor Mike Dunleavy himself stated publicly that the project would probably cost $65 billion to $70 billion. That number would be realistic if the project were completed on time and there were no inflationary costs associated with it. That never happens with megaprojects.

When you actually start construction, with delays and increased costs due to inflation and shortages of materials, we expect the cost will be closer to $90 billion to $100 billion.”

- Taiwan has announced plans to invest up to $4.4 billion and purchase 6 million metric tons of LNG annually. Do you see this as a significant step toward making the project commercially viable?

“Although no final agreement has been signed, it is meaningful that Taiwan is willing to put a specific number next to its interest.

But Glenfarne has told the legislature that it needs to raise at least 70 percent of the project’s total cost from investors. $4.4 billion is a significant amount of money, but it falls far short of the investment needed.”

- Experts say Alaska LNG will struggle to compete on price with Canadian LNG and other suppliers.

“I agree with that assessment. Canada is now working to double the capacity of its LNG facility, and that expansion is being undertaken by large energy companies with the financial wherewithal to carry out a project of that scale.

Here in Alaska, we’re working with Glenfarne, a company that was virtually unknown to us until last year. People I’ve spoken with in the U.S. gas and LNG industry are skeptical that such a small company has the capacity to take on a project this size.”

- Does that mean the project could fail if Glenfarne cannot secure the necessary financing and the capacity to carry it out?

“Yes. That’s why we’re not putting all our eggs in the Glenfarne basket. We have to have other options.

Right now, the most urgent priority for Alaska is ensuring a reliable natural gas supply for our residents, rather than exporting LNG. Remember, we are an Arctic state. Heat and electricity are our lifeline.

That’s why we’re revisiting the idea of a smaller-diameter pipeline that would supply gas to Alaskans, separate from the large-scale LNG export project.

The cost of that standalone pipeline is estimated at about $15 billion to $17 billion. It’s not insignificant, but we’re aware that there are funding options for this alternative approach.”

Giessel also raised the possibility of using icebreaking LNG carriers built in South Korea as another alternative.

“Polar LNG, an American company, is proposing to export gas directly from the North Slope by ship instead of building this very expensive pipeline,” she said.

“I’ve been told that South Korean companies were building icebreaking LNG tankers for Russia’s Arctic projects, but those vessels were set aside after the war in Ukraine began and sanctions were imposed on Russia. One possibility would be for those ships to travel around Alaska’s coast, bring gas to Cook Inlet for domestic use, and then transport gas directly from the North Slope to South Korea.”

The vessels Giessel referred to appear to be Arc7-class icebreaking LNG carriers built by Hanwha Ocean for Russian Arctic LNG projects.

The Trump administration has temporarily waived certain requirements of the Jones Act for oil and natural gas shipments amid soaring energy prices caused by the war with Iran.

The Jones Act generally requires vessels transporting goods between U.S. ports to be U.S.-built and U.S.-owned. However, the temporary waiver does not guarantee the long-term exemptions that would be needed for an LNG transportation operation lasting several decades.

- What steps do you expect the newly constituted Alaska Senate to take on the LNG project after the midterm elections?

“We’ve been told that the Alaska Gasline Development Corporation (AGDC) will bring another tax abatement proposal to the legislature for review. But I don’t expect a significant change in the Senate’s membership after the election. And the fact remains that we have not seen realistic cost estimates from Glenfarne. Nothing has changed. So I don’t foresee the Alaska Senate’s position changing very much.”

- What would you say to the South Korean government and public, who are concerned about the financial risks of such a large investment?

“When President Trump spoke as though South Korea had already committed to investing in Alaska LNG, I really appreciated the almost immediate response from the Korean government saying, ‘Hold on, we never said that.’ If Korea were to make an investment of that size, it would be paying for most of the project. In my opinion, the Korean government should have some control over how the project is conducted, ensure that it is being managed properly, have oversight, and secure seats on the project’s board of directors. I appreciate and think it is very wise of the Korean government to seek more information and give the project further consideration.”