When Gov. Bill Walker held a press conference in February to announce changes coming for the Alaska LNG project, he left most observers scratching their heads over what’s next for the proposed pipeline.
Standing beside representatives from the state’s three partners – ExxonMobil, BP, and ConocoPhillips — Walker said he would release more details in March.
Friday, Walker said he doesn’t expect to have any update for the public before April, as negotiations continue.
“Things seem to take a bit longer than everyone anticipates,” Walker said. “When we had our press conference … we thought there’d be something out this month, and it doesn’t look like that’s going to happen.”
In February, the governor and oil companies said they were “exploring options” to keep the project going at a time of low oil and gas prices. It’s still unclear what that means.
“We’re just analyzing what the options are, and evaluating the pros and cons of each from a structural standpoint,” Walker said. “That has not concluded yet, so when it does, we’ll have something to report.”
The original goal was to hammer out agreements between the state and companies for lawmakers to vote on this spring — and to put a constitutional amendment on the ballot this fall, to lock in tax rates for the pipeline.
The administration believed that amendment would be necessary before the partners could decide whether to enter the next phase of the project, called FEED or Front End Engineering and Design, in 2017.
But slow negotiations, crashing oil prices and a weak natural gas market have combined to throw that timeline into question.
Walker said Friday it’s clear there will be no amendment vote this year. But, he said, he believes there’s a way forward without it, and he is adamant the project must still aim to come online as planned in the mid-2020s.
“It’s a good target time in the market for this to come online,” Walker said. “That part has not changed.”
The question is whether that’s still realistic, especially for a so-called gigaproject expected to cost $45 billion to $65 billion.
Larry Persily, an adviser to the Kenai Peninsula Borough, just returned from a conference of liquefied natural gas producers and buyers in Singapore.
“The main takeaway is the market has gotten worse in the past year, not better,” he said.
With new projects coming online around the world, there is too much supply chasing too few customers, driving down natural gas prices. Analysts expect the market will need new suppliers in the middle of the next decade, Persily said, but there are a lot of projects competing to meet that need. Alaska can only compete if it can keep costs very low.
That may be what the state and its partners are trying to figure out — behind closed doors, for now.