A new company has a bold plan to ship liquid natural gas (LNG) straight from Alaska’s North Slope directly to growing markets in Asia.
The company, Qilak LNG, wants to build an offshore facility at Point Thomson and load LNG directly on to massive tankers and ship straight to Asia.
Qilak’s CEO is former Lt. Governor and gubernatorial candidate Mead Treadwell, who said in a press conference Wednesday morning that he had just returned from China where he met with various officials to discuss demand for LNG.
“We’ve had very high ranking people in Japan and South Korea saying ‘why aren’t you shipping right off the North Slope?’” Treadwell said.
Treadwell, who was Lt. Governor to former Gov. Sean Parnell, said shipping Alaska’s natural gas directly to Asia had been a goal of multiple administrations for 50 years. He said new technology in terms of shipbuilding and LNG storage had allowed for what was first conceived of in the 1980s.
Because of the icy conditions in the region, some of the tankers will need to be able to break through sea ice. Those ships don’t come cheap. Qilak’s President and COO David Clarke said that LNG tankers cost between $250 and $300 million and that the company would need about six to be competitive.
Qilak wouldn’t buy those tankers, only contract them out. Qilak’s role is like a merchant, buying LNG from producers on the North Slope, then transporting it and selling it to customers elsewhere.
ExxonMobil has signed an agreement with the company to sell four million tons of LNG per year, according to Treadwell. Hilcorp, which is in the process of purchasing BP’s holdings in the state, could potentially also work with Qilak in the future.
Qilak believes loading the LNG directly onto boats will significantly reduce costs. Treadwell said that one of the biggest challenges in the LNG business was keeping costs as low as possible to get the gas onto a ship.
Clarke said that in the area Qilak was exploring, there was LNG located offshore and in tidewaters.
“The whole facility can be built in a shipyard,” he said. “We don’t need a pipeline but we do need ice breakers. We’re fairly confident we can export year round.”
Clarke and Treadwell said they had also spoken with smaller transportation companies about the possibility of shipping LNG to communities in coastal Alaska, or to ports where the gas could be loaded onto truck or railroad transport.
According to Qilak LNG’s website the company is considering three different options for its North Slope project, all of them offshore. One of the options under consideration is similar in design to the Seawater Treatment Plant at Prudhoe Bay, according to the company.
This project would be in direct competition with the state-owned Alaska LNG project which sought to build a 800 mile pipeline through interior Alaska. That project was valued at $43 billion and has been stalled by environmental review and disinterest from Gov. Mike Dunleavy.
Treadwell said Qilak had encountered “no resistance” from the governor or Alaska’s congressional delegation.
“Governor Dunleavy encourages and supports all business concepts that can successfully monetize the trillions of cubic feet of natural gas at Point Thomson and other areas on the North Slope,” Dunleavy’s Deputy Communications Director Jeff Turner said in an email.
Treadwell said the company hopes to begin production sometime in 2025.
Qilak LNG is owned by Dubai-based Lloyd Energy which is a major financier of the project. The project also has financial backing from the Japanese government, which is eager to import LNG from Alaska. Treadwell said that he learned on his recent trip to China that President Xi Jinping was also interested in importing LNG from the U.S.
Treadwell said Qilak is very sensitive to the environmental and social impacts of the project, and that special precautions will be taken to not adversely impact wildlife and subsistence hunters and fishers.
“We’re very sensitive to food security for Alaskans,” Treadwell said. “We’re not going to do anything to affect whaling or anything that happens (off the north coast).”
Treadwell said the company had been in contact with the North Slope Borough and would work hard to get backing from the community.
“This is a good deal for the state,” Treadwell said. “There will be a good deal of construction jobs, we expect to have onshore facilities with tremendous number of operations jobs.”
The mayor’s office at the North Slop Borough could not immediately be reached for comment.
Qilak LNG was officially incorporated on Oct. 2, but Treadwell and Clarke had been working together on the project for roughly three years, according to the company.
• Contact reporter Peter Segall at 523-2228 or firstname.lastname@example.org.