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Alaska officials still confident on China natural gas partnership

ANCHORAGE, Alaska, (Reuters) - Alaska officials said they remain confident that China will help the state achieve its decades-old dream of building a pipeline to carry now-stranded natural gas from the North Slope to markets, despite growing U.S.-China trade tensions.

China is expected to buy about 75 percent of the liquefied natural gas shipped through the yet-to-be-built pipeline, so any tariffs that result from trade disputes could cause problems, Alaska Gasline Development Corp Vice President Lieza Wilcox said at a legislative hearing in Anchorage on Wednesday.

“That said, this project is very well regarded in the government circles of both countries, in the trade circles of both countries,” Wilcox told lawmakers.

The $43 billion project would send natural gas from the North Slope by pipeline to a liquefaction plant at Cook Inlet in southern Alaska. From there, the gas would be shipped overseas by tanker vessel. The field is expected to produce about 3.5 billion cubic feet per day.

Cook Inlet
Map Source: EWA


The proposed pipeline has been touted frequently by Trump administration members as important to its goal of exporting more energy. However, a series of tariffs levied by the United States and China - and subsequent additional threats - have raised concerns on both sides of the Pacific that the project could be a victim of increased tensions.

In June, China warned that it could impose tariffs on U.S. energy exports, but that list did not include liquefied natural gas (LNG).

Since the United States started exporting LNG from Louisiana in February 2016, China has been the third biggest buyer of the fuel behind Mexico and South Korea.

Chinese firms bought about 169.2 billion cubic feet of gas, or 14 percent of the LNG the United States shipped between February 2016 and April 2018, according to federal energy data. One billion cubic feet of gas is enough to fuel about five million U.S. homes for a day.

AGDC and other state agencies say the project is on track, having secured agreements with institutions in China for help in developing and financing the project.

“It is frequently seen as kind of an olive branch in the trade discussions. And that’s part of the reason why we’re progressing the agreements on a fairly quick pace,” Wilcox said.

For nearly half a century Alaskans pushed for a pipeline to carry gas to markets. But the project has been considered uneconomic because of geographic isolation, competition and high cost. (Reporting by Yereth Rosen in Anchorage, Alaska; additional reporting by Scott DiSavino; Editing by David Gaffen and Grant McCool)

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