Two years ago, Alaska LNG was struggling to secure the private financing needed to move forward, as high Arctic construction costs, logistical complexities and large upfront property tax burdens made lenders and potential Asian buyers reluctant to commit. Since then, the outlook for the $55 billion megaproject—one of the largest private infrastructure investments ever proposed in the United States—has improved significantly.

The proposed 800-mile pipeline and LNG export project has received strong backing from the Trump administration, with President Trump urging Japan and South Korea in particular to invest in the project and buy its gas as part of broader efforts to reduce their trade surpluses with the United States. Japan and South Korea are the world's second- and third-largest LNG importers, respectively, making them critical anchor customers for any major new export venture. "If you get the commercial offtakers for the gas, financing is pretty straightforward," Energy Secretary Chris Wright told CNBC last year. "There [are] countries around the world looking to shrink their trade deficit with the United States, and of course, a very easy way to do that is to buy more American energy," Wright said.

Now the project has moved a step closer to becoming reality. Lead developer Glenfarne Group said it is speaking with two additional potential buyers as it seeks offtake agreements for another 3 million metric tons of LNG before making a final investment decision (FID). Glenfarne said it needs 80% of its 20-million-ton target capacity covered before proceeding with FID, and it has already secured offtake agreements for more than 13 million tons.

Japan's LNG majors Tokyo Gas and JERA are among the companies that have already signed preliminary offtake agreements with the company. Glenfarne owns a 75% stake in the venture, while state-backed Alaska Gasline Development Corporation (AGDC) holds the remainder.

"The last 3 million tons will move very quickly," Glenfarne CEO Brendan Duval said at a business forum in Tokyo.

Alaska LNG is being developed as a two-phase project intended for accelerated execution. Phase One is focused on unlocking North Slope natural gas resources to provide affordable and reliable energy to homes, businesses and industries within Alaska. The North Slope holds approximately 35 trillion cubic feet of proven natural gas reserves that have remained stranded for decades without a pipeline connecting them to markets. That phase includes construction of a 765-mile, 42-inch main pipeline divided into four sections to be built simultaneously. The pipeline would carry gas from Prudhoe Bay on the North Slope to the Anchorage/Southcentral region. The plan also includes an optional 63-mile, 32-inch Point Thomson Lateral Pipeline to gather gas from secondary North Slope fields.

Phase Two would turn the project into a global export hub once local demand and pipeline infrastructure are established. It would extend the pipeline to its full 807-mile length, ending in Nikiski on the Kenai Peninsula on Alaska's northwest shore. This phase would also require a three-train LNG liquefaction and storage terminal capable of producing 20 million tonnes per annum (MTPA) of LNG.

In January, Greece's Danaos Corporation said it would invest $50 million in Glenfarne Alaska Partners LLC to become the project's preferred tonnage provider. Danaos plans to build and operate 6 to 10 LNG carriers to transport LNG to buyers across Asia, including Japan, South Korea, Taiwan and Thailand.

The shipping route from south-central Alaska across the North Pacific offers a geographic advantage. The North Pacific Great Circle line links Alaska and western North America to major Asian ports through some of the shortest maritime distances available. It also provides a canal-free route to East Asia, avoiding bottlenecks such as the Panama and Suez canals and reducing transit delays and geopolitical risks.

"Alaska, from a trade standpoint, is about one-third the distance to Japan or Korea than it is to the Middle East," U.S. Interior Secretary Doug Burgum said during the Tokyo conference. "This dramatically shortens transit times, but also dramatically increases energy security."

Even so, South-central Alaska ports require specialized cold-weather handling and strong local logistics to support steady, high-volume shipping operations.

Alaska LNG would also enter the market amid a major buildout of U.S. LNG export capacity. Venture Global's Plaquemines LNG, QatarEnergy and ExxonMobil's (NYSE:XOM) Golden Pass LNG, Cheniere Energy's (NYSE:LNG) Corpus Christi Stage 3, NextDecade's (NASDAQ:NEXT) Rio Grande LNG, Sempra Energy's (NYSE:SRE) Port Arthur, Venture Global's CP2 and Woodside Energy's (NYSE:WDS) Louisiana LNG are all under development. Together, those projects could add as much as 14 billion cubic feet per day (Bcf/d) of capacity between 2025 and 2029, effectively doubling current U.S. LNG export capacity.

Most of that new capacity is concentrated on the Gulf Coast. Alaska LNG would give the U.S. something different: a major LNG export hub on the Pacific, much closer to key buyers in Japan and South Korea. Both countries have been actively seeking to diversify their LNG supply sources after the Russia-Ukraine war upended global gas trade in 2022, sending prices to record highs and underscoring the risks of overreliance on any single supplier.

By Alex Kimani for Oilprice.com

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