Four Decades of Economic Ups and Downs

In the heart of Alaska, the energy sector is buzzing with anticipation as the Alaska LNG project moves forward. The project, which aims to deliver North Slope gas to Alaskans and potentially export LNG, has seen significant progress in recent times.

Last month, Glenfarne completed the first round of its "strategic partner selection process," a crucial step towards securing the project's future. One of the most notable developments came from PTT Public Company Limited, the largest publicly traded company in Thailand, which signed a cooperative agreement for "strategic participation" in the Alaska LNG project.

The current energy surrounding the project is thrilling. The political administration is favourable, partners are lining up, and the markets seem ripe. However, the history of Alaska's energy sector is not without its challenges. In the late '70s, oil prices crashed, reaching less than $10 per barrel, leading to a severe economic downturn known as "petro-besity." Alaska experienced another economic downturn in 2014, caused by booming US shale oil production, leading to an oversupply of oil.

During the '80s downturn, Alaska lost more than 20,000 jobs and 40 percent of its banks failed. Between 1985 and 1987, there were 14,000 empty homes in Anchorage. The crash was caused by a combination of factors, including a low supply of oil, higher oil prices, and reduced oil consumption in industrial countries.

Fast forward to 2020, the economics of megaprojects have fluctuated massively. However, the most recent cost estimate from June 2020 was $38.7 billion, a $5.5 billion decrease from a 2015 estimate. In a positive turn of events, Worley was selected to perform additional engineering work and prepare a final cost estimate for the pipeline, with a target for a final investment decision in 2025.

The Alaska Gasline Development Corporation (AGDC) and Glenfarne Group announced an agreement for Glenfarne to become the majority owner of Alaska LNG. Glenfarne acquired 75 percent of AGDC subsidiary 8 Star Alaska, which is developing Alaska LNG as three subprojects: an 807-mile, 42-inch pipeline; an LNG export terminal in Nikiski; and a North Slope carbon capture plant.

Potential partners have expressed interest for more than "$115 billion of contract value for various partnerships with the project, including equipment and material supply, services, investment, and customer agreements."

Despite the promising developments, it is worth noting that there are no available search results confirming whether Glenfarne Group, the owner of Alaska LNG, made a final investment decision for the project in 2026.

Meanwhile, in a positive sign for the LNG industry, LNG Canada, a multi-national joint venture, announced loading and shipping its first cargo tanker of LNG to South Korea, officially becoming Canada's first large-scale LNG export terminal.

As the Alaska LNG project moves forward, Alaskans and potential investors will be watching closely to see if the lessons of the past have been learned and if the project can successfully navigate the challenges ahead.