Gov. Bill Walker traveled to Beijing with a president. He may be returning to Alaska with a pipeline.
At 7:15 p.m. Alaska time Wednesday evening, Walker sat a table in front of President Donald Trump and Chinese President Xi Jinping. He sat next to Keith Meyer, president of the Alaska Gasline Development Corporation. With him were the general manager of China’s version of the Alaska Permanent Fund, the chairman of the Bank of China, and the chairman of China’s state petroleum corporation.
Together, all five men signed a joint development agreement worth up to $43 billion. The agreeement is intended to help Alaska build an 800-mile trans-Alaska natural gas pipeline bookended by a pair of industrial plants.
“There’s no question: Having the support at the highest level of both countries is very, very helpful,” Walker said by phone afterward. “It’s the beginning of what we hope is a long relationship between Alaska and these companies.”
The text of the agreement will be released next week, Meyer said in a teleconference with reporters.
He offered a few details: Under the agreement, the petroleum company Sinopec would buy 75 percent of the gas carried by the pipeline. The remaining 25 percent would be available for other customers, including those in Japan, Korea and Vietnam, countries Meyer said AGDC is specifically courting.
In exchange for a discount price on that gas, Sinopec will work with the Bank of China to get favorable financing to build the pipeline. The CIC, China’s sovereign wealth fund, could invest in the pipeline, Meyer said.
“The price of the LNG is going to be very, very competitive, but very much tied to the price of the financing,” Meyer said.
No cash will trade hands immediately, and Meyer said the Chinese firms are not expected to buy a stake in the pipeline.
It is not clear how binding the agreement is, or whether the North Slope’s major gas producers will sign on to the agreement.
AGDC is the state corporation created to build the pipeline, and it faces a critical go/no-go decision in the next year. The state’s main oil-company partners have said they do not believe the project is economically viable at this point in time, and they are no longer supporting the project.
In order to proceed with engineering and design, the state needs to find long-term buyers for the gas that will be transported by the pipeline. If it can find buyers, then it can find partners willing to pay for construction. Without those buyers, there is no money for construction, which has been estimated to cost between $40 billion and $60 billion.
When fully operational in the mid-2020s, the pipeline is expected to ship $8 billion to $10 billion in natural gas per year.
“I would say this is probably the most significant opportunity we’ve had,” Walker said before leaving on the trip. “We’ve been over on our own trade missions, but to be part of a larger trade mission … it expresses a much higher attention to Alaska in doing this.”
Walker spoke to Jinping about the gas pipeline project when the Chinese president visited Anchorage earlier this year, and Alaskans have repeatedly spoken to Trump about it.
AGDC’s Meyer has been in Asia off and on this year to market the proposed trans-Alaska natural gas pipeline to potential customers. In an October briefing with legislators, AGDC board chairman Dave Cruz said Meyer’s mission is “to get us a gas customer.”
China has been a frequent stop for Meyer, and in a September interview with Chinese state news agency Xinhua, Meyer said Chinese backing of the pipeline would create “a very good marriage” and a very beautiful fit” between Alaska and China.
“We’ve been through the courtship. We’re now engaged,” Meyer said on Wednesday night.
In October, Walker energy adviser John Hendrix told Reuters that China Investment Corp. and China’s state-owned energy company, Sinopec, have held talks with state officials. Sinopec proposed an Alaska liquefied natural gas project under Gov. Sarah Palin, but the state rejected the bid in favor of Canadian pipeline builder TransCanada. (Alaska subsequently bought out TransCanada’s share of the pipeline.)
As the pipeline’s prospects have soured in recent months, Alaska lawmakers have been keeping an eagle eye on funding for the project. A proposal to partially de-fund AGDC was narrowly defeated earlier this year.
Legislators received a briefing from Gov. Bill Walker shortly after he signed the deal.
“This is a $40 billion project at a minimum; there’s a lot of details to look at,” said Sen. Cathy Giessel, R-Anchorage, before the announcement became official.
Exiting the governor’s briefing, Sen. Click Bishop, R-Fairbanks, sounded a note of pessimism: “From what I gathered in there, to me, it’s no different from starting from Day 1 with the big three here in Alaska,” said Sen. Click Bishop, R-Fairbanks, referring to the “Big Three” oil and gas companies operating on the North Slope.
The Empire asked Bishop’s question: How is the pipeline effort better off today than it was in 2014 when it began this latest gas pipeline effort?
“What we found is a very large customer,” Meyer said, adding that this customer has a sister customer that is a bank.
Furthermore, now that the oil companies are no longer participating in the pipeline, the state has control.
“We are leading this project forward, and it’s our mission to complete the project,” Meyer said.
• Contact reporter James Brooks at email@example.com or call 523-2258.