We note with interest that the Alaska Gasline Development Corp. is telling lawmakers it has as many as 15 letters of intent from potential LNG buyers in Asian markets. Yippee!
The quasi-government agency, along with the departments of Revenue and Natural Resources, met with the legislators to bring them up to date on the progress of the $45 billion Alaska LNG Project that would move North Slope gas south to Nikiski for liquefaction and shipment to Asian markets.
“It has been absolutely amazing to see the reception and seriousness of these agreements that we’re getting,” AGDC board Chairman Dave Cruz told the assembled lawmakers.
What the AGDC does not have, despite the reception and all that seriousness, is a single, signed-on-the-dotted-line purchase agreement, needed to get the project off the starting blocks. Non-binding memorandums of understanding and letters of intent are just swell, but not worth squat. They are the business equivalent of kissing your sister.
It just may be there are reasons for all that; for the concerns here and elsewhere about the project. It has eaten up hundreds of millions of dollars, with little but promises to show as a result.
After spending $500 million or so of their own money, BP, ConocoPhillips and ExxonMobil bailed out of the project, saying it was a no-go. Why Alaska feels it can do better in the pipeline business that those three companies remains a mystery. Their leaving the project left Alaska in charge, and, to date, there have been no takers for Alaska’s gas.
While the AGDC continues to tout letters of intent and MOUs with the likes of China’s Sinopec or the Korean Gas Corp., the reality is that it has no buyers to pay for the massive project.
You have to wonder: How long that can go on?