Sullivan claims pipeline construction could start this year. Not a chance

“We’re talking about laying pipe as early as the end of this year, the beginning of next year,” Sen. Dan Sullivan claimed to Fox News on April 10 about the Alaska LNG pipeline.

“And it’s got President Trump’s name all over it, cause if it happens, it will be largely due to him,” Sullivan said.

Next Sullivan will be saying that Mexico will pay for the Great Wall. And the war with Ukraine ended on Day One.

Gasline construction this year is not going to happen, as anyone who looks at the calendar can tell.

Gov. Mike Dunleavy, drinking from the same fountain of wishful thinking as Sullivan, recently predicted on Fox News that the pipeline would be supplying gas to Cook Inlet by October 2027, which is also not going to happen.

With this latest edition of the never-say-die gasline dream, we would do well to stick closer to reality.

The pipeline is not going to be built unless or until there are binding contracts by major companies to purchase gas for 20 years or so. The long-term deals, worth many billions, would guarantee a steady source of income, which is what will allow the project to be financed. The full cost is likely to be more than $50 billion. Contracts of that type will take time.

Sullivan and other Alaska politicians are getting carried away with the idea that President Trump will instantly strong-arm Asian nations into tying themselves to unbreakable long-term contracts without knowing how much the gas will cost or how much the pipeline and its facilities will cost.

There is no reason to believe that binding agreements can be made until up-to-date cost numbers are available. That will take many months or a couple of years. It will also take about $100 million or more on top of the $50 million that Glenfarne is pledging to spend to get firm costs figures on building the pipeline portion of the project. The state plans to promise to give Glenfarne back its money if it abandons the project.

The dream from Sullivan, Dunleavy, etc. is that Glenfarne will have firm numbers on building the pipeline portion of the project by this fall, allowing a final investment decision to be made late in the year or early next year.

I find it impossible to believe that the pipeline portion of the project, expected to cost more than $11 billion, will be financed and under construction unless there are firm numbers and real contracts on the rest of the project, which will be more than $30 billion to $35 billion more. None of that is a sure bet.

Given the global trade war and the likelihood that savvy investors will not put their faith in Trump, a speedy resolution is unlikely.

It’s one thing for Sullivan to claim “from a business perspective, this just makes complete sense,” but he’s not being asked to sign on the dotted line and put tens of billions of a company’s money at risk.

Sullivan said that Treasury Secretary Scott Bessent “has really been out there tweeting, on TV, saying hey in his negotiations with Japan, a long-term, secure purchase agreement from Japan, 20-year purchase agreement with this LNG, Alaska LNG project, is gonna be a key part of any tariff deal with the Japanese, so this is really, really important for our country. Geostrategically it’s critical and the president and his team have done a great job.”

“When you get long-term secure off-take agreements from buyers that’s a really key component to being able to finance a project,” Sullivan said.

“So if we get those agreements, particularly with the president and his team making them part of these reciprocal trade agreements, then you can finance these projects and start to build them. You know we’re talking about laying pipe as early as the end of this year, the beginning of next year. And you know, think about the jobs that would come with that. Again, the estimates are 15 to 20,000 jobs. This would be one of the biggest construction projects in American history,” he said.

Trusting that Trump’s trade war is the secret to getting this done on a crash basis is crazy, considering the mess he’s made with tariffs and the damage he’s created already within the U.S. economy. It’s not the art of the deal, it’s incoherence.

A more realistic appraisal of the gas line situation comes from Stephen Stapczynski, a senior reporter from Bloomberg News, who says the Alaska project remains a long shot. And the cost, complexity and uncertainty will force potential buyers to take their time. They will sign documents with escape clauses.

“If Asian importers were really serious about snapping up more U.S. LNG in the short term, they’d be signing deals with mature projects on the Gulf Coast that are expanding their output. Another issue is that LNG is sold by private companies, not the White House, and negotiations can last months or years. Buyers have been hesitant to commit to new contracts even with U.S. Gulf projects because inflation has driven up prices,” he wrote.

“Asian governments don’t have the time to wait for private-sector talks to play out. So as an alternative, policymakers or companies can simply sign a preliminary pact with project developers, saying they intend to invest or purchase the fuel. There’s no harm if the plan never actually becomes a reality. Trump, meanwhile, probably doesn’t care. He wants to score some political wins as tariffs roil the markets, and touting multibillion-dollar investment ‘deals’ is one way to do that, even if they subsequently fall apart,” said Stapczynski.

So look for more non-binding deals to be signed and promoted as the next big thing. That does not mean that pipe will be going in the ground this year or that a pipeline will be operational by October 2027.

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