Claims that development costs for the Alaska liquefied natural gas (LNG) project, which South Korea is considering investing in, could nearly double previous estimates are drawing renewed attention. There are also calls for tax incentives to attract investment, lending weight to reports that the South Korean government has requested tax relief. Experts said the project would only be viable if Asian buyers, including South Korea, paid a premium for Alaska LNG or U.S. President Donald Trump intervened personally. ■ Could double from $44.5 billion Becky Vint Pearson, Glenfarne’s head of legal and external affairs, discussed the cost of the Alaska LNG project in an interview with regional outlet Alaska Daily News (ADN) on the 20th (local time). “At this point, we don’t know exactly what our budget composition will look like,” Pearson said, adding, “We’re at the conceptual planning stage right now.” The project is structured to transport natural gas from northern Alaska south through a roughly 1,297-kilometer pipeline, liquefy it, and export it to Asia and elsewhere. Glenfarne holds a 75% stake in the project, with the remainder held by the Alaska Gasline Development Corporation (AGDC), an agency under the Alaska state government. In a 2018 report, AGDC estimated the total project cost at $43.4 billion. Glenfarne later said in a report submitted to the state legislature in June that the total cost would be $44.5 billion to $54.5 billion (about 59 trillion to 72 trillion won), with the first phase costing $13.2 billion to $16.9 billion. However, British energy consultancy GaffneyCline said the project cost estimates were inaccurate in a feasibility report it prepared in December last year at the request of the Alaska Legislature’s Budget and Audit Committee. GaffneyCline assessed the estimates put forward by AGDC and others as no more than “Class 5,” an early-stage feasibility review. It said Class 5 estimates are not based on detailed basic engineering design and have a margin of error ranging from -50% to +100% against actual costs. This means the actual project cost could rise to as much as twice the current estimate. Earlier, in May, the Alaska House of Representatives held a Finance Committee hearing to question the cost of the LNG project. At the time, Republican state Representative Alice Galvin said the estimates did not account for inflation, noting, “Even applying only the Consumer Price Index (CPI), the cost would be $57 billion to $60 billion.” ■ Tax relief needed first ... South Korea has also made a request In reports on the 1st, U.S. media said the cost of the Alaska LNG project was at least twice that of typical LNG developments on the U.S. Gulf Coast. Experts agreed that building a long-distance gas pipeline was driving up costs. Higher investment costs ultimately lead to higher LNG selling prices. Glenfarne and other project stakeholders had previously argued that Alaska LNG had a transportation-cost advantage because it was close to major buyers such as South Korea, Japan and Taiwan. Jason Pier, head of business intelligence at U.S. energy consultancy Poten & Partners, said, “The question is whether Asian buyers are willing to pay a premium in exchange for security of supply.” He added, “So far, I haven’t seen evidence of that.” Another issue is taxes. Alaska currently levies an annual property tax equal to 2% of the asset value of oil- and gas-related facilities. Glenfarne had urged the state government to defer property taxes until the pipeline begins operating, arguing that the tax burden made it difficult to attract investment. On the 16th, Korean media reported that the Ministry of Trade, Industry and Energy had recently asked the U.S. government to ease the property-tax burden. GaffneyCline emphasized in its report that a Canadian LNG project under circumstances similar to Alaska’s was able to reach a final investment decision only after securing a total of CAD 4 billion (about KRW 3.8 trillion) in support from federal and provincial governments, including corporate tax cuts, provincial tax rebates, carbon tax exemptions and tax credits. Meanwhile, at a midterm election campaign rally on the 13th, President Trump said the Alaska LNG project had become a “federal government project.” On the 20th, ADN, citing a source, reported that the federal government could acquire some or all of Glenfarne’s stake. ADN said that if the federal government joined the project, its stake would not be subject to state property taxes. [email protected] Park Jong-won Reporter