Unnamed energy company is negotiating takeover of proposed trans-Alaska gas pipeline

The state-owned corporation in charge of developing a trans-Alaska natural gas pipeline said Monday that it is in secret negotiations with an energy company to lead and fund the project.

The pipeline and associated infrastructure is expected to cost at least $44 billion, and that cost has been an insurmountable hurdle for a project that has been discussed for more than 50 years.

Frank Richards, head of the Alaska Gasline Development Corp., declined on Monday to share any details of the potential agreement, including the name of the state’s partner.

“I’m announcing that AGDC has reached an exclusive framework agreement with a qualified energy company to privately lead and fund the development of the Alaska LNG project,” he said at a news conference.

“I expect a formal announcement of the definitive agreements in the next few months,” Richards said.

Gov. Mike Dunleavy, speaking at the conference, said he has previously been skeptical about the gas line but now believes actual progress is being made.

“A large gas line has been challenged for decades — the cost, the size, the engineering, you name it,” Dunleavy said. “But there has been significant movement in a positive direction, not just theoretical, but actual, significant movement.”

Last year, AGDC suggested that it could instead seek to build a smaller pipeline for in-state use, but on Monday, Richards said the proposed energy company deal includes an export facility, signaling that it involves the larger plan.

Dunleavy said the pipeline is a long-term solution for a looming energy crunch in Southcentral Alaska, and that the region will face a “bumpy” few years in the meantime.

In 2023, state legislators were warned that Southcentral Alaska may run short of available natural gas by the end of the decade.

Though the region has extensive natural gas deposits, development has been slow, and local utilities are considering plans to import gas, an act that would sharply increase heating and electricity prices for Alaskans in the region.

[Hilcorp wants to build a Kenai Peninsula natural gas storage facility as a ‘buffer’ against shortage]

Dunleavy said he intends to introduce legislation this year that will incentivize gas production in Cook Inlet.

The state Legislature approved incentives during an almost identical gas-shortage crisis a decade ago, but lawmakers later repealed those incentives because of their billion-dollar cost.

That cost, coupled with the state’s worsening long-term finances, has made legislators reluctant to repeat their prior acts.

Last year, legislators considered but did not pass financial incentives for new drilling. They’ve also grown skeptical of AGDC itself, with some legislators proposing to eliminate a corporation that has failed to deliver on its core goal.

At Monday’s news conference, Dunleavy noted that because Alaska is so large, one energy source alone will not be sufficient to meet the state’s needs.

Hydroelectric, geothermal, wind, solar, coal and nuclear power are all options for the state, he said.

“Alaska has all of it, but we have got to agree that we’re done talking about the theoretical and now we have to make sure that we put things into reality,” Dunleavy said.

“I have no doubt … the large line will be disparaged or questioned. I questioned it for years, to be perfectly honest with you,” he said, “but there’s some real, concrete steps going forward and I think we’re entering a phase of reality for this pipeline.”

Originally published by the Alaska Beacon, an independent, nonpartisan news organization that covers Alaska state government.