Anchorage, Alaska — A deal between Chinese companies and Alaska's state gas corporation to build the $43 billion Alaska LNG Project appears to be on scheduled despite the trade war brewing between the US and China.
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The target is still to have key commercial agreements signed by the end of 2018, Leiza Wilcox, commercial vice president of Alaska Gasline Development Corp., said Friday in an interview.
AGDC officials are largely shrugging off worries over the trade dispute, figuring it will be resolved before it will impede the long-term schedule for the project, which is expected to be operational in 2024.
The Chinese partners in a joint development agreement for the project will be in Alaska next week to continue negotiations on commercial terms, Wilcox said. The partners include Sinopec, which would purchase 15 million mt/year of LNG; Bank of China, which would provide about $30 billion in financing; and China Investment Corp., which would provide part or all of $10 billion in equity financing.
Governor Bill Walker's goal when the deal was announced in late 2016 was to have terms finalized by the end of December this year, Wilcox said.
Keith Meyer, AGDC's CEO, told the state corporation's board Thursday that Sinopec hopes to have engineering and technical service subsidiaries involved in the project, but that it does not intend to play a major role in construction management.
"Sinopec feels it does not have the required experience in Arctic construction to manage construction, although they would hope to provide engineering and other services," Meyer said.
Given that, AGDC is looking for a major construction and engineering company to manage construction and is currently interviewing two contenders, Meyer told the board.
Under the proposed deal, Sinopec would purchase 75% of Alaska LNG's planned 20 million mt/year of production. AGDC is holding 25% of output, or 5 million mt/year, for other potential purchasers, primarily in Asia.
Discussions are underway with Tokyo Gas, Korea Gas and PetroVietnam and others for the remaining 5 million mt/year, Meyer told the board.
Alaska LNG is one of eight export LNG projects before the US Federal Energy Regulatory Commission, and there is concern that approvals of some projects may be delayed because of resource constraints at FERC, AGDC's vice president for engineering, Frank Richards, told the board.
FERC's schedule is to have the Draft Environmental Impact Statement complete by next spring. "We believe we have a greater than 50% chance of meeting that," Richards said, but there is still concern.
The estimate is based on work by a consultant hired by AGDC to analyze other LNG applications and FERC's internal workload.
Richards said FERC has started asking applicants to hire technical consultants to work with agency staff directly to cover gaps in FERC's own staff.
One gap identified so far is in FERC's review of fire suppression in LNG plants, Richards said. To cover that on Alaska's application, AGDC is close to issuing a request for proposals for a firm with relevant expertise to work with FERC staff, he said.
FERC's timeline on the EIS and the commission's overall authorization in 2019 needs to stay on track for the Alaska LNG partners to meet a planned 2020 Final Investment Decision and the goal to be operational in 2024.
--Tim Bradner, firstname.lastname@example.org
--Edited by Keiron Greenhalgh, email@example.com