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Tokyo goes; LNG woes

tokyo gas

Tokyo Gas’s massive LNG terminal in Japan/Tokyo Gas photo

Scratch Tokyo Gas as one of the candidates for the purchase of Alaska North Slope LNG.

 

A variety of sources are reporting the company, a major Japanese importer of liquified natural gas, is no longer looking for U.S. imports.

Only 11 months ago, the Alaska Gasline Development Corporation (AGDC) was trumpeting the company signing a letter of intent to purchase LNG from a hoped-for state gasline.

LNG World News in December quoted a then-optimistic AGDC president Keith Meyer, saying that the Tokyo Gas agreement “helps round out the sales volumes from the Alaska LNG project.”

The letter of intent was signed a few months after Gov. Bill Walker sat down for meetings and a photo op with Tokyo Gas President Michiaki Hirose and Tokyo Gas America President Shunjiro Yamashita.

But Tokyo Gas has since found other U.S. gas suppliers and is now looking to diversify sources elsewhere.

“The company has started receiving long-term U.S. LNG from Dominion Energy Inc’s Cove Point export plant in Maryland earlier this year, and it also has signed agreements to buy LNG from Cameron project in the United States,” Gas Processing & LNG.

“Following the recent agreements to buy LNG from Mozambique and Canada, the company is beginning to fill up the room for required gas volumes in the 2020s, and that it would look to diversify procurement conditions further by seeking non-U.S. LNG supplies” near Toyko gas president Takashi Uchida told reporters. Hirose now chairs the company’s board of directors.

Still Alaska hope

Japan is the globe’s largest importer of LNG, but demand in China is rising rapidly. Industry analysts says it appears to be the best hope for a deal on Alaska LNG, but the U.S.-China trade war has muddied the picture.

“The outlook for China’s natural gas imports has become cloudy since the country imposed a 10 percent tariff on LNG from the U.S. on Sept. 24, amid an escalating trade fight between Beijing and Washington,” the Nikkei Asian Review reported Sunday.

“China had hoped to import a lot of LNG from the U.S. in response to sharply rising domestic demand, and as a way to cut its trade surplus with the country….But as the trade war intensified, China reversed course.”

The state of Alaska does, however, remain partnered with the Bank of China and investment bank Goldman Sachs in trying to raise funds to finance the project estimated to cost $43 billion, and Walker, who first ran for office in pursuit of a decades-old dream of a gasline from the North Slope to tidewater, remains hopeful.

“In a presentation given this month at its board meeting, AGDC said it continues to have regular dialogue with Trump administration officials to avoid Alaska LNG being affected by the tariff, and that it expects current trade tensions to be resolved well before it starts exporting to China,” Stephen Whitfield reported for the Society of Petroleum Engineers magazine last week.

“AGDC leaders have also acknowledged that the 25 percent (U.S.) tariff levied on Chinese steel imports could affect the viability of sourcing some of the steel and other components for the pipeline, possibly adding between $250 million and $500 million to its cost, but the company said it has a contingency in its budget plan to handle such cost increases. The project’s $43-billion price tag makes it one of the most expensive LNG projects based in the U.S.”

Walker traveled to China with President Donald Trump less than a year ago to sign a deal with Sinopec – China’s giant, state-owned oil company – and other Chinese firms interested in Alaska gas and construction of the proposed, 800-mile pipeline and LNG facility in the 49th state.

The announcement of that gas deal “was made with fanfare as part of U.S. President Donald Trump’s state visit to China,” Reuters reported at the time.

Walker tried to cultivate Trump as a gasline ally after the 2016 election and appeared to enjoy early success as witnessed by the governors invite to China for Trump’s state meeting with Chinese President Xi Jinping in November 2017.

At the time, China Daily reported Trump “believed that cooperation between the United States and China would benefit the two sides, and bring peace, prosperity and security to the world.”

Only two months later, the mercurial president ordered tariffs on Chinese-made solar panels and washing machines. Tariffs on aluminum and steel followed. China accused the U.S. of starting a trade war and implemented its own tariffs on U.S. imported goods in July.

The war doesn’t seem to be easing. CNN reporters Steven Jiang and Ben Westcott in a Saturday analysis posted at CNN.com wrote of an “unprecedented deep chill.”

Though “Chinese President Xi Jinping may meet with Trump at the annual G20 leaders summit in Buenos Aires in November in an effort to broker a solution,” they reported, “policy experts on both sides worry it may already be too late to find a way back.”

The analysis suggested little likelihood for the softening of U.S.-China relations in the near term.

“In the US, where politics is now highly partisan, China has become an unlikely lightning rod that has united Republicans and Democrats — an amazing feat in Trump’s Washington,” Jiang and Westcott wrote.

“Across the political spectrum, government officials, academic experts and business leaders increasingly agree on the urgent need to shake up US-China relations, which they say have been lopsided for too long to China’s advantage – a point frequently made by Trump.”

Trump’s affections

Trump’s willingness to cut any sort of special deal to benefit far-off Alaska is an unknown although Sen. Dan Sullivan, R-Alaska, did convince the president to back off on U.S. tariffs on Alaska salmon shipped to China for processing and later imported into the U.S.

Sullivan has taken heat in the state for consistently trying to work with Trump. Fairbanks Daily News-Miner columnist Dermot Cole has labeled the senator “a tireless Trump cheerleader” and blasted him for  “his standard practice of never saying anything that might offend the president” and “pattern of obsequious behavior.”

Meanwhile, former-Republican turned independent Walker and running mate Byron Mallott, a Democrat, have taken to challenging the president as part of their re-election campaign. Both weighed in with opposition to Trump’s appointment of Brett Kavanaugh to the Supreme Court of the United States.

They categorized Kavanaugh as a threat to the “nation’s healthcare and labor laws” and said in an official statement that the justice could “jeopardize the Indian Child Welfare Act, Alaska Native Claims Settlement Act (ANCSA), and other laws that enable tribal self-determination due to his overly narrow view of the relationship between federal and tribal governments. Alaska is home to 229 tribes, nearly half of all tribes in our nation.”

Sullivan voted with the Republican majority that confirmed Kavanaugh’s appointment. Sen. Lisa Murkowski, R-Alaska – who with strong backing from Alaska Native corporations won a stunning, write-in re-election bid against the man who bested her in the 2010 Republican primary  – voted against Kavanaugh, but then withdrew the vote as a courtesy to another Republican senator who missed the vote to attend his daughter’s wedding.

The move assured Kavanaugh’s confirmation but angered Trump who called Murkowski’s decision to basically vote a non-declaratory “present” “really unacceptable,” according to The Hill.

Trump’s present thoughts on the 49th state, which could play a pivotal role in any action to free Alaska LNG from the weight of tariff restrictions, are an unknown.

While Walker and the AGDC remain publicly upbeat, the former director of the Federal Office for Alaska Gasline Projects, which once played a key role in efforts to find a way to move the gas on the North Slope to market somewhere, is less so.

“It looks like AGDC will run out of money about the end of calendar 2019,” Larry Persily said Monday, “unless it gets the state legislature to appropriate more funding or private investors to start writing checks. I would not bet on either one happening. I believe most legislators are skeptical of putting any more public money into the quest, and it’s hard to imagine private investors willing at this time to put their dollars into such a risky development.

“The escalating trade war between President Trump and China is a definite turn-off for private investment in the Alaska project, which…continues to face challenges in an increasingly price-competitive global LNG market.”

Still, Persily added that he believes it would be a foolish for the state to walk away from the project without completing the environmental impact statement (EIS) now underway.

As the situation stands today, the Federal Energy Regulatory Commission “is scheduled to release the final EIS in November 2019 and a decision on the application in February 2020,” he said. “If it takes a few million dollars more to get there, rather than walk away from the process just a few months shy of finishing the job, I’d think Alaska legislators would seriously consider a small appropriation.”

The Trump administration has backed efforts to develop U.S. oil and gas. That’s not necessarily guaranteed in the nation’s capital in the future. There is environmental opposition to the gasline.

The Center for Biological Diversity, which has a long history of trying to stop development projects in Alaska, has criticized Trump for rushing the project.

“It’s incredibly reckless for Trump to try to fast-track the biggest natural gas project in U.S. history,” an attorney for the organization told Salon’s Sarah Okeson earlier this month. “A proper review would show this risky venture endangers Alaska’s wildlife and deepens our dependence on dirty fossil fuels.”

Okeson described the gasline as threatening to accelerate climate change and help fuel Chinese manufacturing industries at the expense of U.S. businesses. If gas replaces the coal China now burns for fuel, however, it is thought to be a net positive for the environment. The jobs isssue is a complicated one that goes deep into the issues of cheap labor and automation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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25 replies »

  1. Persily is wrong in saying the state would be “foolish” to walk away from the EIS. Even if the EIS is completed in a year, if the project sits dormant for X years, another EIS will be deemed necessary. Cut the losses, shut down the project. Let the private sector deal with the EIS when the time is fiscally right.

    Liked by 1 person

  2. Bill Templin hit it out of the ballpark yesterday and today. KRSA & Virgil U. had no credible answer. Science won, so-called fish pundits lost!

    Like

  3. Not good news for a project barely on life support.
    Which could mean more reliance on other peoples money(feds).
    Seems like more muddling thru.And theres still a decent size budget deficit to deal with.

    Liked by 1 person

  4. If Walker were serious about developing this, he would not have appointed a political hack/son-in-law of a political ally with ZERO oil and gas experience (in violation of the statute) to the AGDB.

    Like

  5. There is a reckoning coming. Now is our chance to take out the blue stain and give Trump the mandate to fix this screwed-up country. We have a $20+Trillion Debt that necessarily becomes more expensive as interest rates rise.

    Like

    • Give Dump Trump the mandate? Are you joking? You want to give, an arrogant, narcissistic, egotistical maniac free reign? Unbelievable? What have you been smoking lately?
      Have you seen the budget deficit growth, in the last two years? It was always the GOP, wanting to reduce the deficit, now it is growing larger? The Corporate tax cuts, did not help the middle class, and he wants to spend $50 Billion on a wall, that will not stop drones or tunnels underground.
      What a gigantic waste of taxpayer money. Actually, did he not not promise, that he would build the wall and Mexico would pay for it? How did that work out?
      What a load of BS, garbage in and garbage out. Can you spell LOSER?

      Liked by 1 person

      • James, are you kidding? Trump has taken us from the Democrats “the good times are behind us, we will never see above 3% growth” to 4.5%+. Of course Trump’s tax cuts benefited the Middle Class and kept corporations here to produce jobs. Corporations create jobs. The Trump economy and consumer confidence is breaking records. Unlike Obama, Trump has made America the #1 gas and oil producer in the world. Can you spell WINNING???? Sure James, we should have kept that “higher energy costs, highers gas prices, job killing, highers taxes, Democrat, Marxist Obama. How did you say it “You want to give, an arrogant, narcissistic, egotistical maniac free reign?” How about DOUBLING the National Debt in 8yrs? Truly unheard of but, leave it to a Democrat. Then you have that limp wristed idiot Bernie “the Bolshevik” Sanders. What an utter moron.

        Like

      • James, ask the Israeli’s how their walls workout. Guess in typical Democrat fashion – “open borders are the solution”. Clapping my hands in a sarcastic – BRAVO!!!

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      • Bill, if you are going to dispute it, dispute what I wrote. But, do we need the childish name calling to mask what you cannot dispute?

        Like

      • Bryan, Why did you not speak to Trump’s campaign promise “that we will build a wall and Mexico, will pay for it”,
        what a load of BS.
        Actually, the increase of inflation has decreased any gains for the American middle class, from the so-called tax cuts.

        Liked by 1 person

      • Winning! U.S. job openings rose to a new record high in August, an indication that the U.S. economy continued to expand rapidly as the trade war with China escalated and Hurricane Florence hit the Carolinas.

        The monthly Job Openings and Labor Turnover Survey, or JOLTS, released by the Labor Department on Tuesday showed job openings rose to 7.136 million. Economists had forecast 6.9 million.

        The prior month was revised up to 7.077 million, the first time this number has ever exceeded 7 million. Until April of 2017, there had never been more than 6 million job openings.

        Like

      • James,
        Well said…
        Inflation is creeping up once again (just load up a grocery cart at your local market).
        The deficit is through the roof and expanding.
        Our milatary budget is 10 times that of Russia and yet we have no real threats.
        Savings accounts at our local banks offer worse interest rates than our grandparents received.
        Wages and Salaries are lower than our parents made in the same similar fields…
        And yet…
        “Bank profits soared to a record $56 billion in the first three months of 2018, federal regulators announced Tuesday, as tax cuts stoked the already hot industry…the GOP tax law tacked on roughly $6.6 billion in additional profits.”

        https://www.google.com/amp/s/www.washingtonexaminer.com/policy/economy/bank-profits-soar-to-record-56-billion-on-tax-cuts%3f_amp=true

        Like

      • Steve, how long would a business be in business if it wasn’t making a profit, because making a profit is the name of the business isn’t it?

        Like

      • Bryan,
        This is about the “Banksters United” mafia making record profits after Trump’s banking deregulation and the huge tax break that highly benefited them…
        Conversely as our federal government’s milatary spending is driving us further and further into a multi trillion dollar deficit spiral with creditors such as China holding the Government “T Notes”.
        Not too mention these banksters were never held responsible for the last financial crisis that they caused in America.
        20 percent more Americans will never own a home.
        Many of that 35 million plus now relies on government vouchers to help pay rising rent bills.
        “Amid a roaring stock market and a planet of upbeat CEOs, few are even thinking about the havoc that a multi-trillion-dollar financial system gone rogue could inflict upon global stability.”
        “But watch out. Even in the seemingly best of times, neglecting Wall Street is a dangerous idea. With a rag-tag Trumpian crew of ex-bankers and Goldman Sachs alumni as the only watchdogs in town, it’s time to focus, because one thing is clear: Donald Trump’s economic team is in the process of making the financial system combustible again.
        Collectively, the biggest US banks already have their get-out-out-of-jail-free cards and are now sitting on record profits after, not so long ago, triggering sweeping unemployment, wrecking countless lives, and elevating global instability.”
        (Not a single major bank CEO was given jail time for such acts.)

        https://www.thenation.com/article/here-comes-the-next-financial-crisis/

        Like

      • Steve, seems you agree with Trump. You need to give tue Don more credit.
        “During a portion of an interview with the Fox Business Network set to air on Tuesday’s “Trish Regan Primetime,” President Trump said the Federal Reserve is his “biggest threat” because the Federal Reserve is raising interest rates too quickly, a move he blamed on Federal Reserve Chairman Jerome Powell.

        Trump said, “My biggest threat is the Fed. Because the Fed is raising rates too fast. And it’s independent, so I don’t speak to them. But I’m not happy with what he’s [Powell’s] doing. Because it’s going too fast.”

        Like

      • Bryan, you’ve shown yourself to be as ignorant of “The Fed” and interest rates as Don Trump. The Fed is often accused of “taking the punch bowl” away before it’s necessary in order to slow/stop inflation from an overheated economy.
        Back during Reagan and Savings and Loan Crisis, the developers were allowed to own banks and were able to keep loaning themselves the money to keep building those condos as far as the eye could see (without tenants). Those developers thought they could wait out a recession but we saw how things turned out.
        The testimony of one bank official, when asked where the money went, said: “we spent $250k on prostitutes and the rest was wasted.” Of course “The Donald” would be against raising interest rates but remember his attitude before this Fed chief was that we needed to raise interest rates. He needs to get out of the way of an independent Fed chairman and, as it’s been all along, “his biggest threat” is not necessarily the country’s “biggest threat.”

        Like

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