Wall Street Journal: Limited interest in Alaska LNG from Asian buyers

The Alaska Liquefied Natural Gas project has promised for years to bring north Slope natural gas supplies to Nikiski in order to export it to Asia. The optimism of Alaska lawmakers has been high despite the lengthy time frame and the cost associated with the plan. In the last month, however The Wall Street Journal reported that buyers from Japan as well as South Korea aren’t confident in the project and don’t expect to invest in the project or sign agreements.

KDLL spoke to River Davis, one of the reporters who wrote the Journal report.

Listen:

Riley Board Can you begin by describing a more about what your work is and the areas you usually do?

River Davis: I’ve been a reporter for The Wall Street Journal here in Tokyo in Japan covering Japanese companies, over the last five years. The majority of the subjects I cover are related to the automotive industry, but I also cover energy security as well as the energy transition in Japan.

Riley BoardAnd what made this specific article regarding the AK LNG project have you heard about it?

River Davis:Well we’ve heard many times from Japanese companies as well as Korean companies too — – that they were being approached by political figures and industry in Alaska and were basically soliciting deals and contracts to these companies, and asking whether they’d like to sign up for Alaskan LNG.

We began the project very neutrally examining the trade-offs associated with the project. There are positives, naturally are that this project could aid in the security of energy and assist Korea and Japan to move away from Russian energy sources like oil and gas. This is the positive aspect of energy security. On the other hand we were considering the climate issue. There has been some criticism of the plan going forward and a particular fossil fuels project that is scheduled to begin in 2023.

This was the kind of perspective we initially approached the subject. However, after we started research, we discovered that the narrative focused on the fact that there wasn’t any interest in the project outside of Asia as they were one of the major target markets for the gas-related projects. This was the most important angle we realized wasn’t known in the past.

Riley BoardCould You provide more details about the opinions you observed that people from these countries expressed regarding the project?

River Davis:So the feeling, especially in Japan I’d say is that people felt that this project had been in the making for quite a while and hasn’t seen any development. This is why for Japan particularly businesses here, government officials claim that they’d like to see natural gas quickly; within the next few years, they’re likely to feel the most severe pain when it comes to supplies. Therefore, the timeline of the project is a bit long for their needs. Also, since it’s been delayed for a considerable amount of time the team is doubtful about whether the plan can ever be able to get off the ground.

Of of course, it’s an enormous project, an enormous investment. These are just a few of the aspects they’re contemplating. It’s crucial to businesses in this case, to ensure that if they actually sign up for an offhand gas contract and electricity, they move the project forward because they’ll be able to give up different contracts in other areas. This security aspect, I believe was a significant aspect that was a deterrent for the company.

Riley BoardDid those buyers know that they had alternatives the matter of getting gas in the timeframe they’re seeking?

River Davis:They do. Naturally, Alaska officials and others in support of the project would argue that Alaska is a great place to live and has many advantages. Of course there are benefits in the case of Japan and Korea it’s only one week to get natural gas delivered to Alaska. There’s also no choke points the gas must pass through. It could be a security concern.

On the other the other hand, Japan thinks that it could obtain gas from other types of secured projects. There’s lots of new supplies coming into market, for instance, in 2027 and 2028 out from Australia, the US, Australia, the Middle East. So Japan is aware of many options that go beyond only Alaska in the present.

Riley Board:In Alaska Politicians are extremely optimistic about this project. Lisa Murkowski voiced her optimism about the project in this area. She was in Kenai Peninsula Kenai Peninsula and expressing her confidence in the project in the last week. Why do you think this attitude persists here, despite the fact that interest is declining in Asia?

River Davis:Yeah I believe that it’s in the interests of those who support the project to ensure that there’s an optimistic outlook moving forward. They’re at a point of looking for investors for the initiative. So I’d say if the tone is excessively an uninteresting tone, that could be a problem.

I also have the impression that from South Korea and Japan, perhaps a small amount of…information that hasn’t been transported through Alaska in the manner that might be the case in other circumstances. When I talk to businesses here, for instance they’ll say, ‘we’re no longer interested in the particular project. However, I’m not sure if this information was communicated to the people living local in Alaska. It seems like there’s some kind of information gap.

Riley BoardDo believe that your account was one of the first methods by which this information could be communicated within the US?

There has been a fair amount of doubts about the project because it has taken a lot of a long time to get it moving. The project has been in the process of achieving the definitive investment choice for a long time. Therefore, we’ve seen different publications asking whether it will achieve the ultimate FID stage. But it was a story that portrayed the perspective of the potential off-takers for gas, which includes Japan, Korea, other nations in Asia This was probably among the very first pieces I’ve read that conveyed this particular angle.