Tokyo Gas has not said it would buy Alaska LNG
Contrary to news reports in Alaska, Tokyo Gas has not said “it would buy up to 1 million tons of liquefied natural gas per year from the proposed trans-Alaska natural gas pipeline.”
What Tokyo Gas actually said was that it signed an agreement to “advance meaningful negotiations regarding the purchase of LNG from Alaska LNG.”
There is an enormous difference between those two statements.
The first one originated with this press release from Glenfarne, the promoter of the Alaska project, an organization that has been addicted to overstatement since its identity became public early this year.
The second is from the company that would allegedly do the buying.
As I wrote here in June, Glenfarne insists on exaggerating its actions, relying on fuzzy language and vague terms, a practice that Alaska political and business leaders have failed to recognize as a red flag.
In Japan, the coverage of the Tokyo Gas announcement was more realistic.
“Tokyo Gas will consider procuring 1 million tons of LNG annually from the Alaska project starting around 2030,” nippon.com reported. “The letter of intent is an initial-stage procedure to examine the possibility of procurement and is not legally binding.”
On September 11, Glenfarne announced that it had signed a “letter of intent for the sale of one million tonnes per annum of liquified natural gas from the Alaska LNG project over a 20-year term” to JERA, the largest power generation company in Japan.”
This led to an Alaska Beacon story that said, “Japan’s largest electric company has agreed to buy 1 million tons of natural gas per year from the proposed trans-Alaska natural gas pipeline, developer Glenfarne announced Wednesday.
As with Tokyo Gas, however, JERA did not say it had agreed to buy LNG. The Japanese electric company only said that it had signed a letter of intent to “advance discussions about liquefied natural gas (LNG) offtake from the Alaska LNG Project.”
“This LOI (letter of intent) provides a platform for continued dialogue with Glenfarne, and as more details become available, we look forward to deepening our understanding of the project,” JERA’s chief low carbon fuel officer said in the press release.
In September, Glenfarne claimed it had “preliminary commercial agreements for more than half of Alaska LNG’s available third-party LNG offtake capacity.”
The translation of that claim is that Glenfarne does not have commercial agreements. There are only agreements to keep talking about agreements.
Glenfarne also said it will soon have an updated cost of the project, formerly $44 billion, but the company wants to keep the new number a secret. Some estimates have put the likely cost at $70 billion.
In August, Frank Richards, the president of the Alaska Gasline Development Corp. signaled approval for keeping the cost of the project secret, saying that Glenfarne is a private company and “LNG pricing, not project costs, matters to buyers.”
But the state still owns 25 percent of the project and the updated cost should be made public. To claim that buyers don’t care about project costs is absurd, given that excessive costs could easily undermine any promises about LNG pricing over time.
The Glenfarne dream, I believe, is that Donald Trump will make this a government-funded public works project, paid for by diverting federal funds to it and shaking down Japan, Korea and Taiwan for tons of cash.
I still don’t see how it would make sense for any private builder to construct a pipeline costing $12 billion or $15 billion for instate use without having long-term exports pinned down and financing for the additional $30 billion or $50 billion that would be needed.
Meanwhile, on his Asian tour this week President Donald Trump has not announced a gas line agreement. He has repeatedly claimed for months that there is a Japanese joint venture to build the pipeline.
In February, Sen. Dan Sullivan had a press release that claimed “PRESIDENT TRUMP ANNOUNCES ‘JOINT VENTURE’ ON ALASKA LNG PROJECT WITH JAPAN.”
There was no joint venture then. There is no joint venture now.
Commerce Secretary Howard Lutnick has repeatedly claimed that Trump’s trade agreement with Japan means that the president can order Japan to pay for the pipeline, even if it costs $100 billion.
Lutnick told Bloomberg in September that the Japanese government will give $550 billion to Trump before the end of his term to be invested in any manner that Trump sees fit.
“Alaska pipeline, scale, $50 billion, $100 billion, Donald Trump wants to unleash the Alaska pipelines. The Japanese will finance it. And it’s great for America. It’s fantastic,” Lutnick said.
When Lutnick spoke in Japan this week about $490 billion of alleged deals that he claimed have been signed—though it’s not clear where the money is coming from—he said nothing about the joint venture that doesn’t exist for the Alaska pipeline.
This document from the Japanese government also mentions nothing about the Alaska pipeline, but refers to about $400 billion in potential projects, including $300 billion for energy projects. These could be part of the $550 billion Lutnick says Japan will give Trump.
Lutnick spoke as if the projects are already funded, which they are not.
“Anyway, so these, these deals are driven by the Japanese Strategic Investment Initiative, which was created by your tariff policy and by your historic trade agreement with Japan,” Lutnick told Trump.
“So that was the under, underlying reason that we were able to get all these deals done today. So the commitments ensure the economic and national security of the United States of America. We’re gonna be developing energy. We’re gonna be developing nuclear, semiconductors and strengthening the entire domestic supply chain.”
No one knows where the money Lutnick was talking about is coming from and how much will be loans.
“Exactly how that pledged investment would be structured has been a source of uncertainty,” the Wall Street Journal reported.
WHEN POLITICIANS DISCUSS the Glenfarne project and the company’s inflated press releases, they need to be skeptical, not gullible.
Former Attorney General Tregarrick Taylor, now running for governor, is one of those who needs to pay attention to the difference between millions and billions.
On a Fairbanks radio show last week, for instance, Taylor praised the Glenfarne press release and the Tokyo Gas claim as great news for the state.
“They got another billion tons letter of intent from a company out of Japan. That puts the total at 11 billion tons. They need 16, that’s their sweet spot,” Taylor said.
“They’re obviously shooting for 20 billion tons a year, but 16 is the sweet spot, so it seems when that project absolutely takes off and is absolutely profitable. And so they’ve got 11 accounted for and they’re working hard to get the remaining 5, but you know that’s gonna be a huge project for Alaska as well.”
The Alaska LNG project would deal in millions of tons per year, not billions.
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