A bill to advance the construction of an Alaska liquefied natural gas (LNG) pipeline has failed to secure sufficient legislative action, drawing a sharp rebuke from Governor Mike Dunleavy, who championed the measure.

"The Legislature's decision to not return to Juneau to take action on the proposed property tax change needed to advance the Alaska natural gas pipeline project is deeply disappointing and has consequences that extend well beyond this session," Governor Dunleavy wrote on X, after the Alaska House Majority Coalition announced late on Wednesday that they had secured enough votes to greenlight the project.

"Alaska is running out of affordable, reliable natural gas. This is a long-standing issue that has grown more urgent over decades of inaction. Delaying action only increases risk, raises costs, and limits future options," Dunleavy added.

Alaska has relied for decades on natural gas produced from the Cook Inlet basin to heat and power homes in the state's populated south-central region, but maturing fields and declining output have raised concerns about supply shortfalls within the coming years, lending urgency to efforts to access the vast gas reserves stranded on the North Slope. The concept of building a pipeline to bring that gas to market has been studied in various forms since the 1970s, though no project has broken ground.

The Alaska LNG pipeline is a critical component of the broader Alaska LNG project, which is designed to deliver North Slope natural gas to Alaskan consumers and export LNG to U.S. allies across the Pacific. The planned 800-mile pipeline would transport gas from production centers on the North Slope to south-central Alaska for export, with multiple gas interconnection points along the route to meet in-state demand. The export facility would position Alaska as a closer-range LNG supplier to Pacific Rim importers such as Japan and South Korea, two of the world's largest LNG buyers, compared with Gulf Coast export terminals that require transit through the Panama Canal or around South America.

The Alaska LNG project is a joint venture between U.S. energy developer Glenfarne Group and the Alaska Gasline Development Corporation, a state-owned entity. In June, Glenfarne stated that energy companies were prepared to commit to purchasing $115 billion worth of LNG from Alaska once the project — described as President Donald Trump's signature energy initiative — is completed. According to Glenfarne, as many as 50 companies have expressed formal interest in offtake agreements.

Governor Dunleavy warned that the legislature's failure to advance the pipeline project would send "a negative signal to investors and potential partners in Alaska, the nation, and around the world. Large infrastructure projects require certainty and sustained commitment."

The legislative stall leaves the project's timeline uncertain as multiple North American LNG export terminals, several along the U.S. Gulf Coast, move through construction or regulatory approval, intensifying competition for the same pool of long-term LNG buyers that Alaska is courting.

By Michael Kern for Oilprice.com