Just like that, Alaska LNG project soars to $54.4 billion
Adam Prestidge, the president of Glenfarne Alaska LNG, tried to defend the company’s stonewalling without success before the House Finance Committee:
“At this time we can’t disclose what the, what the full project estimate is, what the full project capital cost is. It’s still at the end of the day, it remains a project being developed by a developer that is negotiating with a number of different counter-parties. And there is a kind of a foreseeable, possible kind of a range of what this project could, could cost. And that’s been discussed in this forum and others by DOR and others. And the possible tax impact and the range of tax generated by that is associated with that range. But it’s not possible for me as a developer to come sit in front of the committee and say the full project cost is going to be X. It’s just not something we are able to do,” Prestidge told the House Finance Committee.
Asked what range of estimates he was talking about, Prestidge refused to give a range, but referred to the Department of Revenue estimate of $46.2 billion.
That number is the one that Sitka Sen. Bert Stedman calls “complete garbage.”
Glenfarne’s insistence on keeping its numbers secret has not gone over well with the Legislature or the public for months. The patience of legislators ended Tuesday.
By Wednesday, Glenfarne admitted that $46.2 billion “ballpark number” was not a defensible number.
It turns out that Glenfarne was in a different ballpark, one with total costs estimated at $8.3 billion above what Prestidge claimed on Tuesday was a “ballpark” number that he wanted the Legislature to focus on.
Glenfarne says its cost estimates now range between $44.5 billion and $54.5 billion.
And it is safe to assume that $54.5 billion is probably too low. Why? Because a detailed cost breakdown has not been completed.
The big thing to know is that the bigger the cost, the greater the risk and the financial challenge. The Legislature has not seen any independent analysis that confirms the new $54.5 billion estimate.
The $46.2 billion estimate formerly used by the Department of Revenue and quoted by Glenfarne until this week was based on an estimate provided by AGDC in 2023 and scaled up to 2026 based on inflation, the Dunleavy administration has claimed.
In March the state estimated that the pipeline alone would cost $15.5 billion.
Now Glenfarne claims the cost is between $13.2 billion and $16.9 billion. The final number is going to be higher.
The $1.4 billion increase in the pipeline portion of the project also increases the level of risk for the project.
The estimates for the LNG plant and the gas treatment plant in so-called Phase 2 are not based on the detailed level of analysis necessary to get the real costs pinned down.
The new cost estimates for the pipeline create new levels of risk, especially if the pipeline portion of the project is the only part that gets built.
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After weeks of claiming it would not release updated cost estimates, Glenfarne relented Wednesday and said the cost of the so-called Phase 1 project had climbed to $16.9 billion, while the overall project had climbed to $54.5 billion.