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Alaska isn’t in a ‘window of opportunity’ for natural gas. It’s in a labyrinth.

COMMENTARY

Too many people are again talking about a “window of opportunity” for the Alaska North Slope natural gas pipeline project as if it were some magical portal into a world of wealth and prosperity for the state.

But it’s not a window, it’s a recurring illusion in a maze. No matter how many times Alaskans think they have found the path to the finish line, the maze closes in and we face another dead end.

The world has more than enough natural gas in the ground, with plenty of projects under various stages of development to produce the gas and meet global demand for decades. And it has a long list of liquefied natural gas export projects that would cost less than Alaska to develop.

Besides, in the long term, the largest energy-consuming nations are looking more to renewables and less to fossil fuels. Which is one reason why investors are cautious before committing billions of dollars to gas projects that take years to develop and can take a decade or more to recover their investment at a positive rate of return. They pick only the best. Yes, many LNG projects are getting built, and more will be added in the next several years. But not $38 billion ventures — even if you believe the 2-yearold cost estimate for the Alaska project.

Yet Alaskans continue beating their heads against the 42-inch steel pipe.

Part of the mirage is seeing breakthroughs when in reality it’s not breaking through anything more than a press release.

The governor and his gas line team recently announced they had met in Houston with North Slope producer ConocoPhillips, which confirmed it supports selling gas to the project.

Of course Conoco is interested in selling gas, just as long as no one expects it to invest any money or take any risk. What matters is when a company is willing to write a check and take a risk — that’s how projects get developed.

Up to now, the state has written the biggest check over the past decade to obtain permits and promote the Alaska LNG project. Meanwhile, ExxonMobil, BP, Shell, ConocoPhillips, TotalEnergies, Eni, Chevron, Qatar Petroleum, Chinese, Japanese, South Korean and Malaysian companies have invested several hundred billion dollars in LNG export projects around the world. Just not in Alaska.

ConocoPhillips recently signed up as a partner in Qatar’s LNG expansion plans, as did ExxonMobil, Shell, TotalEnergies and Eni. A big attraction of that project is its low cost — low production costs and less than half the capital investment per ton of output capacity as the Alaska project.

And then last week ConocoPhillips announced it had signed an agreement to take a 30% stake in a proposed LNG export terminal in Port Arthur, Texas. The venture, led by Sempra Energy, is estimated at less than half the capital cost per ton of production as the Alaska project. In addition, Conoco has positioned itself to invest in Sempra’s LNG export development in Baja California, which Conoco described as “ideally located to supply Asia-Pacific markets.” The first phase of the Energía Costa Azul export facility is expected to begin production by the end of 2024. The tentative agreement foresees ConocoPhillips making an equity investment in Phase 2.

This one, too, is cheaper per ton of production capacity than Alaska.

Then there is China’s spot in the maze — or maybe not so much.

China is set to post a record drop in LNG imports this year; only the second time China’s purchases have fallen in the past 16 years. The reasons are both temporary — a weakened economy from COVID lockdowns and high prices for the fuel — but also likely permanent — growth in renewable energy, more domestic gas production and more — cheaper — imports of pipeline gas, particularly from Russia.

Alaska needs to stop looking for an open window and walk out of the maze. It’s a distraction from other issues within our control.

Larry Persily served as head of the Office of the Federal Coordinator for Alaska Natural Gas Projects 2010-2015 and as deputy commissioner at the Alaska Department of Revenue 1999-2003.

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