ANCHORAGE (KTUU) - The stars have finally aligned in the long-elusive effort to get Alaska's massive gas reserves out of the ground, or at least it seems that way right now.
Late Wednesday, state officials announced that Chinese firms and the state-run Alaska Gasline Development Corp. ("AGDC") have inked a joint development agreement to advance the liquefied natural gas project.
Presidents Donald Trump and Xi Jinping were in attendance as the State of Alaska, AGDC, Sinopec, China Investment Corp., and Bank of China signed the deal at the Great Hall of the People, a famed building at the edge of Tiananmen Square in Beijing which is used for legislative and ceremonial activities of the Communist Party of China.
AGDC said in a news release that the parties have agreed to work cooperatively on LNG marketing, financing, and investment model, with periodic results by 2018.
Bloomberg reports that Beijing is prepared to invest up to $43 billion in the effort.
What remains unclear at this point is how firm the financial commitment really is.
The China Investment Corp. is the nation's sovereign wealth fund, similar in structure to Alaska's Permanent Fund. In a statement, CIC described itself as "an experienced financial investor in the energy and infrastructure sectors (which) has long been interested in investing in American LNG infrastructure," wrote the firm, which has $813.5 billion in investments. "CIC Capital is pleased to work with fellow industry and financial partners on this project."
Sinopec, one of the largest oil and gas firms in the world based on revenue, said its interest is the opportunity to purchase a stable flow of gas from Alaska.
The Bank of China added, “As the most internationalized bank in China, Bank of China is willing to facilitate the China-U.S. energy cooperation and provide financial solutions for this transaction by taking advantage of its vast experiences and expertise in international mega-project financing," the bank wrote in a release.
Gov. Walker held a media briefing by phone from Beijing late Wednesday evening, along with AGDC president Keith Meyer.
They described the agreement as an “engagement” that came after a long courtship, saying the talks began when Xi Jinping visited stopped in Anchorage briefly in April. Walker and Meyer returned to China in September, and Meyer has been there ever since, working on an agreement.
The agreement is not a definitive one – the parties are hoping to finalize agreements by the end of 2018, and hope to have gas flowing by 2024 or 2025.
Those yet-undefined agreements include an LNG purchase agreement, a debt agreement, investment, construction, and the regulatory process.
Sinopec is one of the largest companies in the world, and was one of the bidders on the Alaska gas line project back in 2008. Then-Governor Sarah Palin disqualified it because the project required approval from China’s government.
Wednesday, Walker said the deal had to be approved by those on both sides – and that the Chinese government couldn’t commit to something it hadn’t yet seen.
When asked what makes this agreement different than others announced in the past, Walker said the difference this time is the market. “You can’t legislate your way into a project, you can’t permit your way into a project,” Walker said, “You can do it all day, but without a market, you don’t have a project.”
The agreement may be released publicly as early as next week.
Speaker of the House Bryce Edgmon (D-Dillingham) issued the following statement Wednesday night before lawmakers were briefed, saying the deal brings hope about the state's future.
“I look forward to seeing the details, but at first glance, this joint development agreement is very encouraging for the thousands of Alaskans who never lost hope that a natural gas pipeline could one day become a reality. Alaska is home to tremendous natural gas reserves and today’s agreement shows that we are perfectly situated to supply liquefied natural gas to Asian markets,” said Rep. Edgmon's statement. “The members of the Alaska House Majority Coalition fought to keep the AK LNG project alive by keeping money in the budget, and it appears that was the right decision. A pipeline project will bring jobs, investment, and, perhaps most importantly, a renewed sense of hope that Alaska’s best days are ahead of us, not behind.”
In a news release, Walker described the deal as historic.
“This is an agreement that will provide Alaska with an economic boom comparable to the development of the Trans-Alaska Pipeline System in the 1970s,” the governor wrote.