Trump administration eyes federal subsidy to boost Alaska LNG project

The one sure way to make the gas line a reality is to increase the state and federal subsidies enough so that the gas will be inexpensive and private investors will see it as a good bet to make money over the long term.

A reporter for the right-wing Washington Beacon claims that Trump cabinet members are talking about funneling federal money directly into the project through a loan from the U.S. Department of Energy.

There already is a $30 billion federal loan guarantee. It’s possible that the Beacon is wrong about the department considering a loan.

But the energy department has programs to loan money at a low cost and that could be in the offing.

If the Beacon reporting is correct, this would be another direct subsidy.

"It's possible the Loan Program Office plays a role at the start of the project to launch just the Alaska part of the pipeline. I think it's very possible that would happen," Energy Secretary Chris Wright told reporters in Deadhorse, the Beacon reported.

"There's tremendous interest in the gas from here, and that's all the project needs," he said. "Once you have off-takers, (buyers of gas) the financing is not an issue.”

At an Anchorage press conference, Wright said it is “quite likely” that a loan guarantee for the pipeline portion of the project would be approved. He did not mention anything about a loan.

Glenfarne and Alaska politicians say the pipeline portion of the project—expected to cost more than $11 billion under an out-of-date estimate—should be looked at as a stand-alone venture justified not just by the need for gas in Southcentral Alaska, but also on national security grounds.

JBER in Anchorage is the only major facility using gas, but the clamor for getting gas to all the major installations on the Railbelt has become a standard part of the political arsenal. Connecting the bases to a gas supply could be pitched as a national security priority.

Interior Secretary Doug Burgum told CNBC that the Pentagon is “ready to sign on to take an off-take agreement from this pipeline to get gas to our super strategic, important bases across Alaska.”

If the pipeline manages to get built, providing gas to Alaska customers from the prospective Pantheon holdings that won’t require treatment, that would take care of in-state needs.

The theory is that with a pipeline in place it would be easier to get customers and financing for the rest of the project to have an export market. That would cost in excess of $30 billion, which would require long-term binding purchase contracts from Korea, Japan, Taiwan, etc.

The Beacon said that like Wright, Interior Secretary Burgum “signaled he would be open to allocating federal money to projects like the pipeline through a kind of sovereign wealth fund.”

"It might make a lot of sense for us to get to make investments in industries that are strategic to our economy and to our national defense," he said. "That could make a lot of sense."

In April, the head of the Alaska Gasline Development Corporation, Frank Richards, told legislators how a military angle might work into this.

Richards told legislators the argument is that if there is no pipeline and LNG imports are required for military bases, we “would be now reliant on essentially a commodity that could be disrupted due to a world event because it'd be coming in by ship.”

To avoid the national security risk of having no gas supplies for JBER, Fort Wainwright, Eielson and Clear, the government would intervene.

“To be able to achieve that though it will require again support through existing statutes and regulations from the federal government to be able to help underpin some of the financing through contracts. Or through Defense Production Act on maybe acquiring some of the long lead time items and getting into the queue. Or the manufacturing process for say, pipe.”

“It's utilizing whatever tools are available within the toolkit that the federal government may be able to help provide to us to be able to accelerate the timeline,” he said to the resources committee.

“So yes, in concept, if everything aligned and there was commitments to underpin the financing and there was ability to get those long lead items started now, we can conceivably construct the pipeline project, once it starts construction, in two-and-a-half to three years,” he said.

Meanwhile, the latest promotional event for Alaska LNG is Glenfarne’s attempt to fool Alaska politicians and the public with a press release claiming that more than 50 companies have expressed “interest” in a combined $115 billion of “contract value” for Alaska LNG.

GLENFARNE ANNOUNCES OVER $115 BILLION OF STRATEGIC PARTNER INTEREST FOR ALASKA LNG

What does it mean to express “interest”?

Your guess is as good as mine.

So far, the press release is working. “It’s the announcement so many have been anticipating,” gushed Suzanne Downing, the unofficial voice of the Republican party. “The momentum continues!” said Sen. Dan Sullivan on X.

A publicly held company would never issue a press release like this, but Glenfrane is a privately held company not bound by the same Securities and Exchange Commission disclosure rules.

A publicly held company would have to disclose that there are no contracts to buy gas, no contracts to become partners, no contracts setting the cost of the gas and no contracts to build the pipeline.

A publicly held company would also be banned from making the declaration that “Alaska LNG can deliver LNG into Asia at a lower cost than Henry Hub pricing from the U.S. Gulf Coast.”

No one knows the cost of delivering LNG into Asia from Alaska compared to the so-called Henry Hub. That’s because no one knows the cost of the gas or the cost of the project.

This Glenfarne press release is another reason to be skeptical about the company and the claims of Alaska politicians.

I would not be saying this had the company merely said that it has talked to more than 50 companies about the project.

With no specifics to justify its assertions, Glenfarne claims the “first round of its strategic partner selection process” has been a great success, with more than 50 companies saying they are interested.

“These potential partners have formally expressed interest for over $115 billion of contract value for various partnerships with the project, including equipment and material supply, services, investment and customer agreements,” Glenfarne boasted.

“Potential partners” means that there are no partners.

Brendan Duval, the CEO of Glenfarne, said in the press release that “The reality is being understood that the energy crisis in Southcentral Alaska can only be solved, in the long term, by the domestic portion of the pipeline, which is independently financially viable. We look forward to selecting our strategic partners and driving the project forward together.”

Glenfarne now says the project is divided into two parts, the first of which is the pipeline from the North Slope to Anchorage. Glenfarne claims it will decide by late this year if it will build the pipeline. An updated cost estimate does not yet exist, but the last one put the price at nearly $11 billion.

The claim that the pipeline is “independently financially viable” is a dubious one, especially since we don’t know what it will cost. Until there are 20-year contracts with binding promises to buy gas, we won’t know anything for sure.

A large federal subsidy, which pipeline proponents haven’t talked about in public—asserting that this would be a project justified on private sector economics—could make all the difference. With enough federal money to eliminate private sector risk and boost profits through a giant subsidy, the pipeline could very well get built.

Speaking in Deadhorse to politicians and oil field workers, Wright said the oil and gas industry workers are the “greatest liberators in human history” because of how life has improved with fossil fuels.

Wright, who claims climate change is nothing to worry about, said that Trump wants to double the flow of oil in the trans-Alaska pipeline and “build the big beautiful twin, the natural gas pipeline from the North Slope.”

He said that if the people of the North Slope can live in this climate for 10,000 years and then welcome oil and gas developers to help themselves and the whole world, “Surely the politicians in Washington can pass the big beautiful bill and restore taxes to a reasonable levels, liberate Americans and set everyone free.”

Sen. Dan Sullivan wrapped up the event with his standard routine of ripping up the alleged list of “70 executive orders” (there was one executive order) from Biden regarding Alaska and tossing the pieces in thge air.

He said the “dream team of American energy” from the Trump administration is Wright, Burgum and EPA Administrator Lee Zeldin.

“We can get back a million barrels a day because of your hard work. And we’re gonna do it” Sullivan said of oil flow in the trans-Alaska pipeline.

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Alyeska President John Kurz speaks at Prudhoe Bay as part of a group that included Gov. Mike Dunleavy, left, and Sen. Dan Sullivan, right.