Trump, South Korea at Odds on Whether Korea Is Poised To Invest $54B Into Alaskan Natural Gas Pipeline

Like the northern lights glimmering far beyond the frigid night air, the potential riches of a natural gas pipeline snaking from Alaska’s North Slope to its south-central coast has long been a vision that’s just beyond the reach of investors and developers. Now President Trump has said South Korea is going to plunge $54 billion to bring the pipeline to reality.Mr. Trump announced what looked like a sure deal highlighting $200 billion in Korean investment also going into eight nuclear power plants and a huge six-gigawatt power plant in Texas. “At long last, Alaska liquefied natural gas pipeline,” he said in the Oval Office as the commerce secretary, Howard Lutnick; the interior secretary, Doug Burgum, and the energy secretary, Chris Wright, stood by along with Alaska’s governor, Mike Dunleavy, and Senator Dan Sullivan, waging an uphill fight for reelection next month.Conspicuously, however, no Koreans were there to share in the joy of the moment, and a major Korean newspaper, JoongAng Ilbo, said that Mr. Trump’s “unilateral announcement that Korea would invest in a liquefied natural gas (LNG) development scheme in Alaska seems to run counter to Seoul’s cautious stance about the project so far.”Mr. Trump, eager to show he’s getting South Korea to live up to its promise to plunge $350 billion into the American economy, said the Koreans have already agreed to invest $200 million while he holds tariffs on South Korean exports to 15 percent. Those Korea-funded projects, he said, constituted “a major step towards securing our critical energy supply chain, ensuring American energy dominance and making our partnership with South Korea and the entire Pacific region stronger than ever before.”Not so fast, however, warns Korea’s minister of trade, industry and resources, Kim Jung-kwan. He insists on further study of the project under which natural gas would flow through a pipeline 807 miles north to south to the tiny port of Nikiski on the Gulf of Alaska. There, it would be converted into liquefied natural gas (LNG) and shipped to eager Asian customers, notably Japan and Korea.“First and foremost,” JoongAng quoted Mr. Kim as saying, “We will review the Alaska LNG project under the clear principle that we will proceed only if its commercial viability is established.”That’s exactly the problem that’s been delaying the export of LNG from Alaska since LNG was discovered on the North Slope half a century ago. The company that holds a majority stake in the project, Glenfarne, has yet to come to terms on the project..The Anchorage Daily News reports that Glenfarne executives told the paper’s editorial board that “a final investment decision is contingent on several steps that have yet to take place, including a change to Alaska’s tax structure that has faced obstacles in the state legislature.”Building a natural gas pipeline presents other severe challenges. The project “is considered difficult to make economically viable,” said The Financial News, a Korean newspaper, citing “frigid weather and frozen ground.” Also, said the paper, “Most of the supply agreements secured so far are non-binding,” raising “questions about whether sufficient commercial demand actually exists.”On top of those issues, “the enormous upfront investment is another burden for companies,” said The Financial News. “Pipeline construction alone is estimated to cost $13.2 billion to $16.9 billion. As a large-scale infrastructure project, any significant cost overruns could raise LNG prices and reduce its price competitiveness.”Theoretically, however, it would be possible to get the gas flowing in three years for sale in Alaska and another two years for exp[ort, according to the Glenfarne CEO, Brendan Duval, who attended the Oval Office gathering.The president of Glenfarne Alaska LNG, Adam Prestidge, was not optimistic. “We’ve got a lot of support from the Trump administration,” the Anchorage Daily News quoted him as saying. “There’s a dialogue back-and-forth about potential ways we could take the project forward, but right now there are pieces of the project that need to be sorted out in terms of having all of the contracts in place and having a project that is financeable.”

Trump, South Korea at Odds on Whether Korea Is Poised To Invest $54B Into Alaskan Natural Gas Pipeline

Trump, South Korea at Odds on Whether Korea Is Poised To Invest $54B Into Alaskan Natural Gas Pipeline

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