At a Thursday morning meeting in Anchorage, the former leader of the roughly $40 billion Alaska LNG Project in Gov. Bill Walker’s administration made a last pitch to take it over again with private backers.
Keith Meyer — who was president of the state-owned Alaska Gasline Development Corp. from early 2016 until being fired by the board of directors a year ago after Gov. Mike Dunleavy replaced several members — said the state’s current path virtually assures a long-sought North Slope gas line project won’t be built for at least another decade.
Meyer insisted he put together a private group that could take over the Alaska LNG Project from the state and develop it without the need for any additional state funding but the move needs to be made quickly before Alaska is left out of the quickly evolving global LNG industry.
“The state will not have to invest another dime in the project, but you cannot continue to drag your heels while the opportunity turns to dust. Waiting two or three years hoping someone will fund (final design) is not a strategy for success,” Meyer said.
He made his comments during the public testimony portion of a monthly AGDC board meeting.
Meyer highlighted AGDC’s achievements in attracting large potential financiers and Asian LNG customers — Korea Gas Corp., Tokyo Gas, PetroVietnam Gas Corp. and a consortium of Chinese mega-corporations — to the project during his tenure with the state.
“We rose to a point of admiration in the global industry,” he said, thanking those who supported the Walker administration’s efforts on Alaska LNG. “Those accomplishments formed a strong business development foundation to move the project forward and build a new economic future for Alaska; an economic future with reduced energy costs and increased job opportunities.”
However, he said, the Dunleavy administration’s decision to “systematically dismantle AGDC to cut expenses” has put the state at a significant disadvantage if the ultimate goal is truly to get the gas line built.
This past July, Interim AGDC President Joe Dubler announced the corporation would cut its staff by 60 percent to reflect its reduced mission: focusing on finishing major Alaska LNG permitting with the Federal Energy Regulatory Commission without continuing the marketing or commercialization work that occurred under Meyer’s leadership.
Under Dubler, AGDC has allowed nonbinding agreements with prospective customers and gas sales term sheet agreements with BP and Exxon Mobil to expire.
Dubler has said AGDC previously engaged customers prematurely and the state would look to privatize Alaska LNG once it received a favorable decision from FERC if the project was deemed economic after an ongoing review.
According to Meyer, he first tried to pitch his plan to a reshaped AGDC board of directors in March after he saw the agency start to “unwind” the work that he had led.
That plan would transfer Alaska LNG Project information and control to Meyer and the undisclosed company backing him. Meyer’s group would then see the project through permitting by utilizing current AGDC staff on a contract basis to maintain the deep knowledge base on the work that has been done.
If the decision is made to construct the megaproject, the state would get $100 million back from the group for its work, according to Meyer.
His group would honor previous AGDC labor agreements to give Alaskans the first chance to work on the project and utilize union labor, he added.
If the transfer were made immediately, natural gas could be flowing from the North Slope to Alaska communities a Southcentral liquefaction plant by 2028, he estimated.
Overall, the state has spent $237 million on the project, according to Dubler.
Meyer said board members refused to meet with him in March and the generalities of the proposal were relayed largely via email because the plan would be “politically inconvenient” for the Dunleavy administration, which has been highly critical of much of the work Meyer did on the project.
Since leaving AGDC, Meyer made four trips to Asia on his own to keep the potential customers the corporation had been courting engaged, with a message of, “Please be patient. Please don’t give up on Alaska,” he said in an interview.
“You have to appreciate the value of the momentum we had,” he said further, adding that AGDC was in the process of drafting firm customer contracts when the leadership change was made and commercial work was all-but stopped.
According to Meyer, several of those customers have moved on and secured LNG supplies from other projects around the world but there is still significant interest in Alaska.
He said there was financing available for the project roughly a year ago and there is still interest, but AGDC’s actions over the past year have made private investors skeptical that the state is truly interested in advancing the project.
Meyer stressed that time is of the essence if the state does not want to wait many more years for another potential opportunity to monetize North Slope gas to come along.
“If you miss the 2020s window, nobody is going to contract for five years or more,” he said, echoing a message that was common at AGDC during his tenure.
“The global market is moving whether we’re moving or not.”
Qilak LNG, a firm led by former Lt. Gov. Mead Treadwell, is trying to capture a portion of the growing global LNG market with a North Slope project as well. Announced in October, Qilak is proposing an offshore North Slope LNG plant and has an agreement with Exxon Mobil to source gas from the producer’s Point Thomson field, which has also been seen as a source for approximately 25 percent of the gas that would feed Alaska LNG.
AGDC board chair Doug Smith said the board has not vetted Meyer’s proposal but he knows the company backing Meyer is also working on a large LNG plant on the Gulf Coast, which amounts to competition for Alaska.
Smith also questioned the appropriateness of handing the currently public project over on a sole-source basis to a company that wants exclusivity without going through a formal proposal process. That is going to come when AGDC has its approval from FERC to move ahead with construction.
Meyer said he’d be happy to compete for the project in a traditional request for proposal process but it needs to be done now instead of June or later when FERC is scheduled to rule on the Alaska LNG Project environmental impact statement.
The company backing him wants to remain confidential for the time being but “It’s a capable entity,” Meyer said. “The board liked them. They did not like my involvement.”
Dubler said Meyer presents an opportunity for the state, but added that the AGDC board has shown “good restraint” in not moving on it at this point.
“As a state corporation we can’t just hand something over,” Dubler said.
Dubler and other Dunleavy administration officials have stressed that getting a favorable decision from FERC will greatly de-risk the project and help attract private investors that could take over the project.
Meyer countered that the benefit of having FERC’s approval in-hand for investors has been overblown. While FERC is a highly technical agency, it has a prescribed process that everyone in the LNG industry is familiar with.
“We had a project. We could easily move it to the private sector if that was the desire,” Meyer said. “What scares me a little is whether this board and this administration will be sincere in moving this project forward.”