{"id":196,"date":"2026-05-27T18:18:23","date_gmt":"2026-05-27T18:18:23","guid":{"rendered":"https:\/\/movingtoalaskausa.com\/?p=196"},"modified":"2026-05-27T18:18:23","modified_gmt":"2026-05-27T18:18:23","slug":"proposed-alaska-gas-pipeline-has-a-narrow-window-of-viability-estimates-suggest","status":"publish","type":"post","link":"https:\/\/movingtoalaskausa.com\/?p=196","title":{"rendered":"Proposed Alaska gas pipeline has a narrow window of viability, estimates suggest"},"content":{"rendered":"
\n

The proposed trans-Alaska natural gas line faces a narrow road to profitability, even with Gov. Mike Dunleavy\u2019s proposed multibillion-dollar tax break, according to estimates presented to state legislators.<\/span><\/p>\n

Read more Solar power expected to soon be cheaper than natural gas power in Anchorage<\/a><\/p>\n

The more the pipeline costs, the more its builders will need to charge for gas shipped through it in order to make money. But if the cost of Alaska gas is too high, it isn\u2019t competitive with gas from other sources around the world.\u00a0<\/span><\/p>\n

On Tuesday, members of the House Finance Committee met for the second time in a 30-day special session devoted to <\/span>discussing the tax break<\/span>.<\/span><\/p>\n

Nick Fulford of GaffneyCline, the Legislature\u2019s hired analyst for the pipeline project, said previously published financial modeling by the Alaska Department of Revenue remains the best public look at whether the project pencils out financially.<\/span><\/p>\n

\u201cThe main question really is: How much bigger and how much more capital cost can the project support before it becomes uneconomic,\u201d he said.\u00a0<\/span><\/p>\n

In 2018, officials with the Alaska Gasline Development Corp. suggested that building a pipeline from the North Slope to Cook Inlet \u2014 plus large industrial processing plants on either end \u2014 <\/span>, including money earmarked for possible cost overruns.<\/span><\/p>\n

Since then, the official cost has risen only slightly, to $46.2 billion, but many state lawmakers have said they are skeptical of that figure, because it does not seem to account for inflation.<\/span><\/p>\n

Glenfarne, a multinational corporation that now owns 75% of the pipeline project, has not disclosed an updated figure.<\/span><\/p>\n

Rep. Alyse Galvin, I-Anchorage, said that when she uses the Consumer Price Index to judge how much the cost has grown, it\u2019s significant.<\/span><\/p>\n

\u201cWhen I look at cost adjustment, just using CPI, just a straight cut through, that brings us to $57 (billion) to $60 billion,\u201d she said during Tuesday\u2019s hearing.<\/span><\/p>\n

\u201cI would say it seems highly likely that it would be more than $46 billion given the general inflation that we\u2019ve seen,\u201d Fulford said.<\/span><\/p>\n

Publicly available estimates<\/span> suggest gas could be bought from North Slope producers between $1 and $2 per thousand cubic feet. <\/span>That\u2019s what\u2019s technically known as the \u201cupstream price.\u201d<\/span><\/p>\n

In a scenario where the pipeline costs Galvin\u2019s suggested figure, the state\u2019s tax laws don\u2019t change to help the project and the upstream price is $1.50 per thousand cubic feet of gas, the Department of Revenue estimates that an end buyer in Japan could expect to pay more than $11 per thousand cubic feet.<\/span><\/p>\n

That\u2019s likely a problem for the pipeline project, because according to GaffneyCline\u2019s estimates, the average contract price in Japan over the past 10 years has been $10.41 per thousand cubic feet \u2014 less than what the Alaska project would have to charge to earn its expected profit target.<\/span><\/p>\n

Read more Trump administration will make green card hopefuls return to home countries before applying<\/a><\/p>\n

Under a tax change proposed by the governor, the end buyer\u2019s price would drop to about $10.40, using Galvin\u2019s cost estimate and the $1.50 upstream price.<\/span><\/p>\n

But if the cost of upstream gas rises, or if the cost of the pipeline rises, even the governor\u2019s proposed tax break isn\u2019t enough to keep the project economically competitive.
\n<\/span><\/p>\n

Fulford, speaking to the House Finance Committee, said he thinks Asian LNG prices will rise in the coming years, possibly offsetting any rising costs and keeping the project viable.<\/span><\/p>\n

But he also acknowledged that with so many unknowns, it\u2019s not clear where the project becomes uneconomic.<\/span><\/p>\n

\u201cThe question is \u2026 if the price of LNG goes up and if the capital cost goes up, then where\u2019s that sort of tipping point where the project can still go ahead, even if it\u2019s a much higher capital cost?\u201d he said.<\/span><\/p>\n

Under Dunleavy\u2019s proposal, the state\u2019s existing petroleum property tax would be largely replaced by a tax on gas that moves through the pipeline.\u00a0<\/span><\/p>\n

Speaking last week in Anchorage<\/span>, Glenfarne CEO Brendan Duval said the governor\u2019s proposed change is necessary for Glenfarne to get financing for the project.<\/span><\/p>\n

\u201cIt won\u2019t be financeable in the form that we\u2019re trying to do it without the tax stabilization law,\u201d he told the Anchorage Daily News.<\/span><\/p>\n

Legislators appear favorable to the general idea, but they don\u2019t know what tax rate to use for the \u201calternative volumetric tax,\u201d as it is formally known.<\/span><\/p>\n

Dunleavy has proposed 6 cents per thousand cubic feet of gas. House and Senate lawmakers are each considering different, higher rates.<\/span><\/p>\n

They\u2019re also considering mandatory impact payments to compensate cities and boroughs that collectively would lose out on $14 billion in property taxes through 2063 if the governor\u2019s plan is adopted. A mandatory natural gas spur line to Fairbanks is also being discussed. As currently planned, the pipeline runs to the west of Fairbanks.<\/span><\/p>\n

Rep. Calvin Schrage, speaking Tuesday, said legislators are working with a large amount of uncertainty, and that is slowing their work.<\/span><\/p>\n

\u201cIf we could eliminate some of these variables and have it known, it would really help us in figuring out where this might be going, but we don\u2019t have that right now,\u201d he said. \u201cWhat this is ultimately showing is that under our current tax structure, there\u2019s a very small window of break-even profitability for a developer.\u201d<\/span><\/p>\n

Read more Land named for colorful character \u2018Herring Pete\u2019 added to Alaska\u2019s Kachemak Bay State Park<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

State lawmakers are considering a tax break, proposed by Gov. Mike Dunleavy, to encourage investors, but they’re struggling to finalize it.<\/p>\n","protected":false},"author":1,"featured_media":195,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-196","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-interesting"],"yoast_head":"\nProposed Alaska gas pipeline has a narrow window of viability, estimates suggest - Moving to Alaska<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/movingtoalaskausa.com\/?p=196\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Proposed Alaska gas pipeline has a narrow window of viability, estimates suggest - Moving to Alaska\" \/>\n<meta property=\"og:description\" content=\"State lawmakers are considering a tax break, proposed by Gov. 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