Iran war could boost Trump's Alaskan gas vision
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HOUSTON — The stunning Middle East supply disruption could lower hurdles to building a long-planned Alaskan gas pipeline and export project that the White House covets.
Why it matters: "That's probably our single most important energy infrastructure project of this whole administration," Energy Secretary Chris Wright said at CERAWeek on Tuesday.
- Alaska LNG envisions an 800-mile pipeline to bring gas south from wells on the state's North Slope to be liquefied and shipped.
The big picture: The proposal, estimated at $44 billion, has long been an uphill climb amid expanding Gulf Coast exports, high upfront costs, and tricky logistics.
- Environmental groups — who have waged multiple legal battles — call it a "carbon bomb."
- But the Iran conflict highlights risks to supplies that transit through unstable regions. The de facto Strait of Hormuz closure and attacks on Qatari LNG plants are causing soaring prices in Asia and Europe.
What they're saying: Execs here and analysts see new momentum for projects from stable suppliers like the U.S. — already the world's largest LNG exporter — and Canada.
- The Iran crisis means that "cargoes and contracts from countries with low political and shipping risks become more attractive," Wood Mackenzie researchers said in a note.
- "U.S. LNG is a much sharper trade weapon than it was a month ago and the U.S. administration's willingness and ability to extract capital from potential Asian LNG buyers is about to go on full display," Ira Joseph, a gas market analyst with Columbia University's energy think tank, said via email.
State of play: Brendan Duval, CEO of Alaska LNG developer Glenfarne, is at CERAWeek for meetings to advance it and the company's Gulf Coast LNG project.
- The Middle East crisis accelerated Alaska LNG customers' interest in turning preliminary purchase plans into firm contracts and pricing deals, he said.
- Those customers are saying "'Please, can we speed that up?' Because they want to make sure we don't change our mind and take our volumes to someone else," he told Axios.
Reality check: Proposals for an Alaskan pipeline and export project have been around in one form or another for decades.
- Alaska LNG's competition is global and domestic. A wave of Gulf Coast export projects — fed by abundant production in the region — are online, under construction, or on the drawing boards.
Yes, but: There's a strong business case, backers say.
- Alaska has huge, economic North Slope gas reserves that lack a way out, and a short export and chokepoint-free route to massive Asian markets.
Catch up quick: The Alaska project, which envisions LNG exports starting in 2031, hasn't reached a final investment decision.
- Glenfarne has preliminary long-term agreements with gas buyers including Tokyo Gas, Japanese power giant JERA, TotalEnergies, Taiwan's CPC and others.
- Those total 13 million tons per year. Glenfarne hopes to finance the LNG part of the project once it has 16 million — or 80% of the total capacity — under binding contracts.
- But it's still seeking debt and equity investments for the LNG terminal and pipeline.
What we're watching: Trump's team was trying to boost it long before the Iran war by helping to broker offtake deals and investment.
- Wright also said Tuesday that support from DOE's loan office, now called the Office of Energy Dominance Financing, is a possibility.
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