The new lead developer of the proposed Alaska LNG pipeline project has declined a $50 million backstop agreement with the Alaska Industrial Development and Export Authority.
Frank Richards, president of the Alaska Gasline Development Corporation (AGDC), told the House Resources Committee on Wednesday that New York-based Glenfarne Group will seek private financing for the entire project. Richards and his team also outlined projected timelines and development goals.
Glenfarne became the majority stakeholder in the Alaska LNG project after the AGDC board approved an agreement in late March. Under the agreement, Glenfarne will fund all necessary front-end engineering and design (FEED) studies, including an estimated $50 million study for the in-state pipeline segment.
In return, Glenfarne assumed 75% ownership of 8 Star Alaska, AGDC’s subsidiary that manages the Alaska LNG project’s assets. AGDC retains a 25% stake.
Before AGDC announced the potential partnership with Glenfarne in January, it had sought funding for the in-state FEED study. AIDEA’s board of directors approved a $50 million backstop in December as a guarantee to any developer who completed the FEED study but did not pursue a final investment decision (FID).
“Glenfarne has made the decision to suspend discussions about the AIDEA backstop,” Richards told the committee. “They were considering this project before the backstop was in place.”
The gasline project includes three key components: an 800-mile pipeline, a carbon capture plant on the North Slope, and a liquefaction plant and export terminal on the Kenai Peninsula.
Each component requires a FEED study. The total estimated cost of these studies is $150 million, though Matt Kissinger, AGDC’s venture development manager, noted that this is only an estimate.
“The agreement we have with Glenfarne is that they will spend what it takes to get it to FID,” Kissinger said. “A big chunk of that is the FEED—the additional engineering it takes to get to a cost estimate.”
If all goes well, Kissinger said Glenfarne could reach an FID on the in-state portion by the end of the year, though he cautioned, “I don’t want to set that stake in the ground yet.”
Rep. Dan Saddler (R-Eagle River) asked whether Glenfarne intends to “spend and spend,” or if the company might back out before reaching FID.
Kissinger responded that Glenfarne would need to “negotiate their way out of that [FID] commitment.” He added that Glenfarne is also responsible for maintaining the project’s permits, rights-of-way, and making diligent engineering progress.
“Because it’s such a big project, it’s hard to know when you hit FID because you have to line up all that funding,” Kissinger said. “But it keeps them on the hook for making those efforts until that happens.”
An FID occurs, he said, when “everyone puts their commitment forward and provides the funds or proof of funds.”
Although Glenfarne has taken on the operator role, the project still needs North Slope gas supply contracts, gas offtake agreements with Railbelt utilities and major customers, and export contracts.
AGDC has a potential supply agreement with Great Bear Pantheon, but the oil prospecting company has not committed to production. Kissinger said conversations are ongoing with other North Slope oil and gas producers.
Agreements with Railbelt utilities and major industrial users are still under negotiation to ensure affordable natural gas.
Securing export agreements with Asian trading partners remains a top goal. While Gov. Mike Dunleavy has heavily promoted the project in Asia, only non-binding expressions of interest are currently in place.
“The debt financing relies heavily on these agreements and the creditworthiness of those agreements,” Kissinger said, adding that the project is eligible for federal loan guarantees to bolster financing.
Rep. Zack Fields (D-Anchorage) asked whether Glenfarne or AGDC has defined “low-cost energy,” Glenfarne’s expected return rate, and what safeguards are in place to ensure Alaskans won’t pay excessive prices.
Kissinger said natural gas prices will depend on the contracts and agreements Glenfarne secures. He said the assumed rate of return is around 12% for what’s considered a “low-risk project.”
Saddler also asked how much authority Glenfarne has in negotiating contracts and securing supply and export deals.
Richards responded that Glenfarne will oversee construction contracts, gas supply agreements, and export deals because it is the majority shareholder.
“They will be writing that contract on 8 Star paper, which they backed with their financing,” Richards said.
Saddler then asked whether the Alaska Legislature retains any final decision-making authority.
Kissinger confirmed that the Legislature will decide whether to approve any additional state investment in the Alaska LNG project.
Rep. Donna Mears (D-Anchorage) asked about the construction timeline, noting that some media reports suggest work could begin earlier than originally planned.
Due to declining natural gas supplies in Cook Inlet, the in-state pipeline has become the top priority. The gas line is projected to cost $11 billion and, under the current timeline, would not begin delivering gas until 2031.
Richards said the original timeline is more realistic but noted that the Trump administration has made Alaska LNG a “key focus” in the first phase of energy initiatives.
He emphasized that accelerating the timeline would depend on federal support, adequate financing, and early procurement of construction materials.
“If everything aligned … we could conceivably construct the pipeline within two to three years once it starts,” Richards said. “We feel it is achievable because of the level of engineering, but also because of Alaska contractors’ experience.”
Mears stressed the importance of staying grounded in reality.
“Having reality infused into the timeline is hugely important because there are other energy projects in the state that investors are interested in,” Mears said. “If there’s supply from the North Slope coming, it changes the economics.”
She said the state should continue exploring other options — including continued Cook Inlet drilling and renewable energy — rather than “sitting on its hands” waiting for a pipeline. She also noted that infrastructure improvements, such as bridges and roads, will be required.
Richards concluded by emphasizing the need to proceed cautiously.
“Ultimately, AGDC and the state must be judicious in our efforts and take into account all the potential risks associated with a mega project for the state of Alaska,” he said.
“What I want is for Alaska to be able to commercialize these North Slope resources because they are developed, recycled, and put back into the ground every day,” Richards said. “My goal is to have that available for Alaskans at a cost that will be lower than we are currently paying.”