Alaska LNG Project Under FERC Review

on April 19, 2017 at 9:38 AM

The state of Alaska, along with Alaskan government officials, are making major strides to ensure the approval of their LNG export project.  This week the government and energy officials involved submitted a formal application for review to the Federal Energy Regulation Commission.  Supporters of this extensive project will be patiently waiting for a response from the FERC in the coming weeks.Demonstrations Over Construction Of Gas Pipeline

The LNG Project that is being considered consists of three phases to be carried out if the FERC gives their approval.  Alaska’s goal is to construct a natural gas processing plant in close proximity to the North Slope oil industry.  In addition to a processing plant, the construction plans include the development of a gas pipeline that will stretch across 800 miles of the state delivering the processed natural gas to the Kenai Peninsula.  The goal of this gas production is to export the finished, liquefied, natural gas product to Asia for sale.

Some may be wondering, why Asia?  Many Asian countries anticipate a substantial growth in energy resource demand in the coming years.  China is one of the greatest examples of this.  Because of this anticipation, Alaska is positioning itself to foster relationships with these countries and profit off of these relationships.

Opportunity knocked this week for Alaskan officials who are aiming to export their liquid natural gas to the Asian region.  Xi Jinping, the President of China, arrived in Alaska this week and arranged time for discussion with officials.  China is very interested in the importation and development of energy resources.  The meeting Jinping had with Alaskan Governor Bill Walker addressed these interests, allowing Alaska to lay the ground work for a potential trade relationship if the FERC is to approve the LNG project.

A trade relationship between Alaska and China is not a new or foreign idea.  China and Alaska have engaged in trade relations frequently.  Reports state that Alaska exported goods worth more than $1 billion to China last year, making the country Alaska’s largest trade relationship.

In addition to gaining foreign support for the LNG project, Governor Walker has been working to foster domestic support.  Walker recently spoke with Vice President Mike Pence about the potential LNG project and the details associated with the project.  Some feel that support for the LNG project from the White House would catalyze the approval process of the FERC.  Support from the White House will have to come in the form of financial means as well as verbal agreement.  Walker hopes to receive $40 billion worth of federal loan guarantees to carry out the proposed project.  Reports state that President Trump and his administration have expressed some favor towards the LNG project, but no official statements have been made.

Government support will be important since initial supporters of the project have decided not to move forward with assisting the project’s completion.   Originally, the project was to be supported by BP Alaska, Exxon Mobil Corp., and the state of Alaska, but plans have changed.  BP Alaska and Exxon Mobil Corp. made the decision to withdraw from the partnership.

At this point in the project schedule, the next steps are reliant on the approval of the application that has been submitted to the FERC.  Until then, Alaskan state officials can continue to foster relationships trade relationships with Asian countries and financial support from U.S. government officials.