In the wake of criticism about Gov. Sean Parnell's willingness to work with a Japanese group interested in buying Alaska's natural gas, state officials announced on Wednesday that the state has signed a memorandum of understanding with a Japanese bank known as a leading financier of liquefied natural gas projects.
The agreement with the Japanese Bank for International Cooperation was signed in Tokyo yesterday, when it was Tuesday in Alaska, by Natural Resources Commissioner Dan Sullivan and the bank's managing director, Koichi Yajima.
“We are pleased to begin this formal dialogue with JBIC," said Sullivan in a statement issued Wednesday morning. "The agreement we’ve signed focuses on opportunities for Japanese companies and JBIC to become involved in resource development projects in Alaska – in particular, a large-volume liquefied natural gas pipeline and export facility."
Alaska leaders have long tried and failed to unlock the state's vast reserves of natural gas in the Arctic, in part because the major oil producers hold leases to the gas, and they’ve labeled many of the projects uneconomic.
Currently Exxon Mobil Corp., ConocoPhillips and BP, with pipeline builder TransCanada, are studying a liquefied natural-gas project they said could cost more than $65 billion. The idea is that they would ship North Slope gas some 800 miles in a pipeline and liquefy the gas at a Southcentral Alaska plant before shipping it across the ocean in tankers.
The LNG project is becoming increasingly critical as Alaska's oil-field production wanes, and the state looks for a second industry to bring in revenue.
Parnell was recently criticized for not taking seriously Resources Energy Inc., a Japanese consortium that has said it's interested in participating in an LNG project to secure a long-term energy source for Japan. State officials called that criticism unfounded, and provided records showing the state has met dozens of times with REI leaders, including at the highest levels.
The Japanese bank could provide the funds for REI to invest in a state LNG project, whether it's the one that Big Oil is studying or a different one, such as a smaller project pursued by the state as a potential competitor.
Mary Ann Pease, a representative for REI in Alaska, called the signing with the Japanese bank excellent news.
"This is a wonderful step forward to keep all these options on the table and to look at these ways to promote positive relationships between Alaska and Japan," she said.
Sullivan, speaking from Japan, said the agreement is an important step in helping Japan address its changing energy needs. And for Alaska, it could represent potential financing support for other projects beyond LNG.
Elsewhere around the world, LNG projects that could potentially compete with Alaska are advancing. Meanwhile, the big Alaska project seems to have fallen behind schedule, what with the major oil producers and TransCanada recently saying they would not study the project this summer to the extent Parnell envisioned. Many fear those companies will drop the project as they have in the past.
Sullivan, a U.S. Marine reservist, had just ended a temporary call for duty and was back to work on Friday as the state's Natural Resources Commissioner, a day before heading to Japan to represent Alaska.
Earlier this week, Sullivan spoke at the Japanese government’s second LNG Producer-Consumer Conference in Tokyo. The event attracted more than 800 guests from some 50 countries, providing a platform for Sullivan to tout Alaska's gas to some of the world’s largest energy companies, utilities and top government officials from across Asia.
Despite the session’s focus on new players and projects, Sullivan reminded conference attendees that “Alaska has supplied LNG to Japan for more 40 years and has an unmatched record of reliability," the state's press release said, referring to the LNG plant on the Kenai Peninsula now owned by ConocoPhillips.
Sullivan's trip also included meetings with top Japanese officials as well as executives with Japanese consortiums, utilities and leading energy and mining companies, including REI, Mitsui and Co., Osaka Gas Co., BP-Asia Pacific, ExxonMobil, DOWA Metals and Mining Co., and Sumitomo Metal and Mining Co.
Contact Alex DeMarban at alex(at)alaskadispatch.com