Alaska pipeline boosters hope Trump will declare it a matter of national security, boosting subsidy options

The promoters of the Alaska LNG project hope that the Trump administration will boost the economics of the project by branding it as essential for national security, which could create new ways to subsidize and speed up the project.

A declaration of this sort could go along with long-term contracts in which the federal government would promise to buy gas from the project for decades to supply Alaska military bases from Anchorage to Fairbanks.

One obvious question is whether the federal government will attempt to justify signing long-term contracts when the price of gas is not known and the major oil companies have yet to agree on terms to sell the gas.

The Dunleavy administration has not spelled out any of this in detail, but Frank Richards, CEO of the Alaska Gasline Development Corp., presented an outline of how the Trump administration could boost the project as a military matter.

The current thinking is that the pipeline would be operating by 2030-2031, but that could be accelerated somewhat if the Trump administration claims the pipeline is essential to U.S. defense strategy.

It’s not clear if the Trump administration will do what Gov. Mike Dunleavy and AGDC desire.

Richards told legislators the argument is that if there is no pipeline and LNG imports are required for military bases, we “would be now reliant on essentially a commodity that could be disrupted due to a world event because it'd be coming in by ship.”

To avoid the national security risk of having no gas supplies for JBER, Fort Wainwright, Eielson and Clear, the government would intervene.

“To be able to achieve that though it will require again support through existing statutes and regulations from the federal government to be able to help underpin some of the financing through contracts. Or through Defense Production Act on maybe acquiring some of the long lead time items and getting into the queue. Or the manufacturing process for say, pipe.”

“It's utilizing whatever tools are available within the toolkit that the federal government may be able to help provide to us to be able to accelerate the timeline,” he said to the resources committee.

“So yes, in concept, if everything aligned and there was commitments to underpin the financing and there was ability to get those long lead items started now, we can conceivably construct the pipeline project, once it starts construction, in two-and-a-half to three years,” he said.