The natural gas-fired power plant Southcentral Power Project, owned by Chugach Electric, produces power during sub-zero weather on Thursday, Jan. 8, 2026. (Bill Roth / ADN)

The developer of the Alaska LNG megaproject said Monday it had struck a preliminary deal with the state’s largest power company that could lead to sales of natural gas, if the project is built.

The letter of intent with the Chugach Electric Association lays out terms of negotiation that could lead to a final agreement for gas sales from the project developer, Glenfarne, to the utility.

The deal is part of the project’s effort to line up gas buyers for the first phase of the project, the construction of an 800-mile gas line estimated to cost up to $17 billion.

The latest iteration of Alaska LNG has made unusual progress compared to similar projects that have failed for decades.

Officials with Alaska LNG have said they expect to start selling gas to Alaskans by 2029, using the gas line.

The second phase calls for construction of a liquefaction plant in Nikiski, along with other facilities, to ship much larger amounts of gas overseas to Asian entities by 2031.

The full project cost is estimated at $45 billion to $55 billion.

The Alaska House of Representatives on Friday approved a bill eliminating property taxes for the project, and replacing it with a much smaller tax based on gas shipped. That could save the project developers more than $800 million annually.

Still, Alaska LNG has not signed final agreements with gas suppliers or gas buyers, and it has not made a final investment decision to build the project.

It has signed numerous preliminary agreements, including for gas sales to Enstar, the natural gas company for Southcentral Alaska, and a preliminary labor agreement with building trades councils consisting of 18 unions that work with construction companies statewide.

Glenfarne, the project developer, and Enstar are working on a 30-year contract that would cap the cost of gas at $16 for every million British thermal units daily, with an annual inflation adjustment.

The House’s bill also includes that limit for the project, to provide long-term stability on gas prices for Alaskans.