By Curtis Williams
HOUSTON, (Reuters) – US President Donald Trump is pushing for $54 billion of South Korean investment in the Alaska LNG project. This plan brings attention to a major export initiative aiming to produce 20 million tons of LNG per year, with costs significantly higher than similar projects on the US Gulf Coast.
Trump announced this initiative on Wednesday as part of a larger $200 billion investment package from South Korea. However, the South Korean government quickly stated it was still evaluating whether to invest in Alaska LNG, focusing first on the project's commercial feasibility.
“The real question is if buyers in Asia are ready to pay extra for a reliable supply,” said Jason Feer, head of business intelligence at Poten & Partners. “So far, there is no evidence of this willingness.”
The lead developer, Glenfarne Group, estimates that building Alaska LNG will cost between $44.5 billion and $54.5 billion. This translates to about $2.2 billion to $2.7 billion for every million metric tons per year of capacity, which would make it the most expensive US export project proposed to date.
In contrast, many US LNG projects approved after Russia's invasion of Ukraine have been built at an average cost of about $1 billion per million tons per year or less.
For example, Cheniere Energy’s Corpus Christi Stage 3 expansion is estimated to cost roughly $8 billion for an additional capacity of 10.5 million tons per year, about $760 million for each million tons.
Venture Global’s Plaquemines LNG project requires around $21 billion for a capacity of 20 million tons per year, while NextDecade’s Rio Grande LNG and Woodside Energy’s Louisiana LNG are also approaching the $1 billion per million tons threshold.
Gulf Coast export terminals benefit from well-established networks supplying shale gas from Texas, Louisiana, and Appalachia. In contrast, Alaska LNG would need an 800-mile pipeline from the North Slope in northern Alaska to Nikiski, which could cost between $13.2 billion and $16.9 billion.
Additionally, the project needs a large treatment facility on the North Slope before the gas can be transported south for export. The current estimates for this treatment facility range from $7.7 billion to $9.2 billion, and the liquefaction terminal is projected to cost between $23.6 billion and $28.4 billion.
Alex Munton, director of global gas and LNG research at Rapidan Energy Group, expressed concerns that the project may not meet the necessary financial criteria for investment.
Glenfarne has not yet commented on these concerns. On Wednesday, CEO Brendan Duval expressed optimism that Trump’s announcement would help secure the funding needed to move Alaska LNG toward a final investment decision and construction.
Supporters argue that Alaska LNG's location gives it a strategic advantage, allowing faster delivery of shipments to major Asian markets like Japan, South Korea, and Taiwan, which could lower shipping costs.
“Asia requires stable and secure gas supplies, and they may be willing to pay a premium for that,” said Jack Weixel from East Daley Analytics. He also noted that Canadian projects in the area might have competitive advantages over Alaska LNG.
“These LNG developers should consider all options as the global natural gas market, especially among non-OECD countries, continues to grow,” he added. “However, some projects will certainly be more effective than others.”
(Reporting by Curtis Williams in Houston; Editing by Nathan Crooks and Bill Berkrot)