U.S. Allies in Asia Snub Alaskan Natural Gas.

"TOKYO -- Japan and South Korea have rebuffed U.S. overtures about joining a proposed $44 billion Alaska natural-gas project that would be one of the biggest energy investments in American history.

The snubs have put a roadblock in front of a liquefied natural gas project that recently has made strides. Washington says exporting gas from Alaska would strengthen global security by giving Asian nations an alternative to Russian gas.

The plan, called Alaska LNG, features an 807-mile pipeline that would carry natural gas from fields north of the Arctic Circle to the southern part of the state, from which it would be shipped primarily to Japan, South Korea and other countries in Asia.

The project won a green light from the Energy Department in April and aims to begin operating by roughly 2030. Under federal law, it is eligible for more than $30 billion in loan guarantees.

After more than a decade of planning, the project is closer than ever to launching, said Sen. Dan Sullivan (R., Alaska). The next step, he said, is lining up buyers in Asia. "That private sector component is really important and that is happening as we speak," he said.

But people familiar with the plans of several top prospective buyers in Japan and South Korea said the companies said they weren't interested in investing in the project or signing contracts to purchase its gas. Energy officials also have given Alaska the cold shoulder.

Potential buyers aren't confident in the project's timeline, said officials at companies and in Japan's government. They believe Asian countries will have other sources of stable natural-gas supplies by 2030, although the gas market is volatile and competing projects also carry risks.

Moreover, the Asian buyers are concerned about the lack of major investment commitments by big U.S. energy companies, these officials said. Exxon Mobil handed over the project to the state of Alaska in 2016. It has remained involved in other ways, such as advising on how the project could be made more competitive.

During the past year, officials from Alaska Gasline Development, the company behind Alaska LNG, and other advocates have pitched the project to Japanese and Korean government leaders and potential buyers at meetings in Tokyo, Seoul and Washington, D.C.

The community of Nikiski on Alaska's Kenai Peninsula south of Anchorage would serve as the endpoint of the gas pipeline. At a facility in Nikiski, the gas would be chilled to liquid form at minus 260 degrees Fahrenheit and loaded onto tankers.

Japan and South Korea, both U.S. allies, are two of the world's biggest importers of liquefied natural gas. Both still rely on Russian LNG in part to keep the lights on.

Alaska's U.S. senators, both Republicans, and U.S. ambassadors in Japan and South Korea representing the Biden administration say the project would link the U.S. and allies more closely while sidelining Russia.

"It is imperative that our allies in Asia, Korea and Japan, get off of Russian oil and gas," said Sullivan.

Japan buys about 10% of its LNG supply from Russia's Sakhalin-2 project. With current contracts set to expire by roughly the end of this decade, it is in the market for new suppliers. For Japan, buying from Alaska "means long-term energy reliability from the number-one reliable ally," said Rahm Emanuel, the U.S. ambassador in Tokyo.

Shipping LNG to Japan from the Middle East or from the U.S. Gulf Coast via the Panama Canal typically takes several weeks. From Alaska, LNG can be shipped to Japan in seven days and to South Korea in eight, with "zero strategic choke points," he said.

However, LNG consumers in Asia say they are looking for supply contracts that could provide gas in the next three to four years, when supply conditions are predicted to remain particularly tight. Other projects in places such as Canada and the Gulf Coast promise to deliver faster, they say.

Japanese officials said the further out a project's timeline extends, the greater the worry that it would bump up against the country's commitment to have zero net carbon emissions by 2050.

"People are so unsure about the future of LNG. As of now they see huge demand, but what will happen 10 years or 15 years from now remains a question mark," said Tatsuya Terazawa, head of the government-affiliated Institute of Energy Economics Japan.

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Slow Going For Project

After starting major permitting efforts in 2014, the Alaska LNG project struggled for years to make progress. At the time, other U.S. export projects were fueling a boom in global natural-gas supply.

In 2019, Alaska Gasline Development said it was scaling back operations while evaluating the project's viability.

"The most important thing for buyers is evaluating how feasible an LNG project is, and with Alaska LNG, we've seen too little progress for too long," said an official in charge of LNG projects at one of Japan's top importers." [1]

This is a clear example of how sensible people refuse to buy natural gas because of the fight against climate change. Lithuania needs to take an example and get rid of the LNG terminal "Independence" timely.

1. World News: U.S. Allies in Asia Snub Alaskan Natural Gas. Davis, River;
Lebrun, Sylvan. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 26 July 2023: A.9.