Firm led by former Alaska governor seeks to take over LNG project

(Reuters) - Former Alaska Governor Bill Walker said this week he was a founding member of Alaska Gasline & LNG LLC (AGLNG) that wants to take over the state’s Alaska liquefied natural gas (LNG) export project and complete it by March 2028.

The Alaska Gasline Development Corp (AGDC) is developing the LNG project, which includes an 807-mile (1,300-km) pipeline from the North Slope to a liquefaction plant in Nikiski on the Kenai Peninsula.

AGLNG, which also includes former AGDC President Keith Meyer, said on Monday that AGDC has approved a plan to transfer the project to a private entity to be selected by the end of 2020, with the transition to be completed by June 2021.

The state agreed in 2016, when Walker was governor, to take over the LNG project from North Slope oil producers. AGLNG said AGDC received 14 non-binding letters of interest in the project from Asian companies, including Tokyo Gas Co Ltd 9513.T.

But that was before new export plants flooded the market with supplies in recent years that caused gas prices to drop and then collapse this year due to coronavirus demand destruction.

Those low prices have made buyers of the super-cooled fuel reluctant to sign long-term agreements needed to finance new multibillion-dollar export plants.

In response, AGDC looked at the competitiveness of its project and in June reduced its estimated cost to $38.7 billion from the previous forecast of $44.2 billion.

AGDC, which received federal authorization to build the project in May 2020, has already signed agreements with BP PLC BP.L and Exxon Mobil Corp XOM.N to help advance project development.

BP and Exxon produce massive amounts of oil in Alaska and have discovered huge gas resources that are stranded in the North Slope. Alaska LNG would allow that gas to access markets around the world.

Reporting by Scott DiSavino; Editing by Sonya Hepinstall