Futures markets suggest imported LNG could undercut North Slope gas by the time a pipeline is built, making a floating terminal worth a hard look.
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The problem is cost : an estimated $13.2 billion for the in-state pipeline, which is a mere down payment on an estimated $44.5 billion gas export project that would include gas treatment plants on the North Slope and export facilities in Kenai. The estimate from developer Glenfarne is the same as the low end of a 2016 estimate. And if you believe the cost to build an 807-mile-long pipeline through Alaska hasn’t changed in a decade, we have a bridge to Chukotka that might interest you.
[ Related coverage : Alaska gas pipeline developer offers concession, proposes to cap natural gas costs for Alaskans ]
To help pay for this expensive pipeline, Glenfarne plans to charge Alaskans $16 for 1,000 cubic feet of gas until an export market is developed. Prices would also rise with inflation, which is no guarantee of stability. Just ask anyone who bought a house in 2023, shopped for groceries in 2024 or filled up their gas tank this week.
Advocates claim gas from the pipeline will be less expensive than importing LNG from the Lower 48 or a foreign source. But that’s not rooted in the current reality. Prices are high right now because of the conflict in the Persian Gulf, which has bottled up almost 20% of global LNG supplies behind the Strait of Hormuz .
There’s a bigger catch, too. A massive amount of new gas export capacity is coming online, both in the United States and around the world. Global LNG supplies could grow by more than 40% by 2030, as new gas projects come online and Middle Eastern LNG output resumes. As that tidal wave of new terminals crests, the world is likely to be awash in inexpensive LNG.
The futures markets agree. In northeast Asia, futures contract markets show LNG import prices falling from $18.90 per thousand cubic feet late last week to $12.50 by June 2027 and $7.57 by June 2031. It’s almost the same story in Europe , where the current contract price of $16.32 falls to $11.31 by this time next year and to $7.18 by June 2031. In Alaska, we’d be paying more than double those amounts by the time gas begins flowing from an LNG pipeline.
These price trends spell bad news for Glenfarne , which could see projected revenues crater as its expensive project comes online. But it could be good news for Anchorage consumers, who may be able to buy gas at a lower price from the global market than they can get from Glenfarne.
One of the lowest-cost alternatives would be to lock into those 2027-31 futures contracts and build an LNG floating storage and regasification unit, or FSRU , anchored in Cook Inlet. The unit could supply natural gas to Anchorage and the Interior while the state works to increase the amount of electricity generated by wind, solar, battery and hydropower projects.
To be sure, the FSRU option wouldn’t be cheap. Operating and maintenance costs can be about $150,000 per day. A brand-new carrier can cost $300 million, although used or older LNG carriers can be bought and retrofitted for as little as $80 million. And someone in Alaska probably knows a guy, right?
It’s not pocket change, but an FSRU with relatively low prices and appropriate hedging against higher costs would still represent a significant discount from the Glenfarne estimate.
In addition, an FSRU can be set up in as little as 18 months. If pipeline construction begins late this year, developer Glenfarne claims that it can complete 20 construction camps, 46 storage yards, 619 segments of access roads and 98 bridge crossings by 2028, with gas flowing by early 2029.
Certainly, the state needs to do something. An LNG pipeline may be a well-intentioned effort to solve Alaska’s energy crisis, but we don’t need a luxury vehicle. What we need is a beater with a heater that has good snows while we save money and expand renewables that can take us to a low-cost, reliable energy future.
Frank Bass is a recovering investigative journalist and University of Alaska Fairbanks graduate who specializes in the history of renewable energy.
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