Alaska LNG Project's High Costs Cast Doubt on Commercial Viability

The Alaska LNG project, touted by the Trump Administration as a major investment opportunity, may not be commercially viable due to its high costs. According to a Reuters analysis, the estimated $44-55 billion cost of the project translates to $2.2-2.7 billion per million metric tons per annum (mtpa) of capacity, which is significantly higher than similar projects in the U.S. Gulf Coast.

To put this into perspective, Cheniere Energy's Corpus Christi Stage 3 was built at around $760 million per mtpa, while other Gulf Coast projects are near the $1 billion-per-mtpa threshold. The Alaska LNG project would need Asian buyers to pay a premium for energy security in order to be commercially investable.

The project aims to deliver North Slope natural gas to Alaskans and export LNG to U.S. allies across the Pacific, but its costs may outweigh any potential benefits. South Korea disputed the U.S. Administration's claim of a $50-billion investment, stating that no sums have been agreed upon.