Japan seeks long-term LNG supply from Alaska as $44 billion project moves forward

Alaska's governor is meeting with “a number of business and investment entities” in the UAE

Drill rigs and oilfield support facilities near Deadhorse airport in Prudhoe Bay, Alaska. Bloomberg

Japan is interested in securing a long-term liquefied natural gas (LNG) supply from the US state of Alaska, which is moving forward with a long-delayed $44 billion LNG project, a senior official said.

The Alaska LNG project, which has a decades-long history of failed attempts to secure funding and LNG buyers, recently took a big step forward. Last week, the Houston energy company Glenfarne signed a deal with the state-owned Alaska Gasline Development to develop the project, which aims to start delivering natural gas in 2031, with LNG exports commencing shortly after.

“In our discussions with Japanese [officials], they're very interested in securing a long-term supply like they had before, and we're talking enormous amounts of gas … trillions of cubic feet on the slope,” said Mike Dunleavy, Alaska’s governor. A 1,300km pipeline is set to transport up to 3.3 billion cubic feet of gas per day from Alaska’s gas-rich North Slope to local communities and an export terminal located south of Anchorage, Alaska's capital city.

“It's an eight-day shipping time from Anchorage to Tokyo in uncontested waters in the North Pacific, so they're interested. Our South Korean friends are interested as well,” Mr Dunleavy told The National on the sidelines of the Abu Dhabi Sustainability Week. “I think you're going to be seeing some very interesting announcements over the next several months.”

Mike Dunleavy at ADSW. Victor Besa / The National

LNG demand

Japan and Alaska have a long history of LNG co-operation. In the late 1960s, Japan became the first Asian country to import LNG, and some of the initial shipments came from America’s 49th state. “Alaska pioneered LNG export for the Western Hemisphere. In 1969, we had the first LNG export plant, so we were sending gas to Japan for almost 50 years out of [the] Cook Inlet gasfield,” Mr Dunleavy said.

Japan, which is the world’s fourth-largest economy and second-biggest LNG importer, has been securing long-term LNG contracts from allies such as the US and Australia. However, the country still depends on Russia for around 9 per cent of its LNG supply, most of which is linked to long-term contracts at the Sakhalin-2 project, operated by the state-run energy company Gazprom.

Japan has also signed energy deals with major players in the Middle East, including UAE’s Adnoc. Last year, Adnoc signed an initial agreement with Osaka Gas, one of the largest utility companies in Japan, for the delivery of up to 800,000 tonnes per annum of LNG. Global demand for the fuel is projected to rise by more than 50 per cent by 2040, as industrial coal-to-gas switching gathers pace in China and South Asian and South-East Asian countries, Shell said in its LNG outlook report last year.

LNG trade worldwide reached a record high in 2022, when Russia’s invasion of Ukraine triggered a scramble for the fuel in Europe. However, agencies and experts expect the LNG market to go into a glut in the second half of the decade as new supply comes online from the US and Qatar – two of the largest suppliers.

More drilling

If oil and gas companies see a "clear runway" under the incoming Trump administration, there will be more bids for drilling leases in the state, Mr Dunleavy said. Drilling is largely restricted in the Arctic National Wildlife Refuge, a vast protected area in north-eastern Alaska.

The refuge's coastal area contains 11.8 billion barrels of recoverable oil, according to government data. The federal government had planned to auction off about 400,000 acres of the refuge on January 9, but it did not receive any expressions of interest from energy companies by the January 6 deadline.

"We have large conventional fields [and the] infrastructure in place," Mr Dunleavy said. "We believe if businesses see a clear runway under the Trump administration, I think you'll see more leases bid on, more leases sold, and work start happening."

Gulf partnership

Mr Dunleavy is meeting with “a number of business and investment entities” in the UAE as he seeks partnerships in sectors ranging from energy and mining to data centres.

“Given what's happened recently, we're going to need two to three times as much energy for data farms, computing, [and] for electrifying the entire world,” Mr Dunleavy said. “Alaska … is going to have a prominent role over the next several decades. We have enormous gas reserves, oil reserves, [and] we have 49 of the 50 world's critical minerals,” he added.

Alaska possesses a wealth of critical minerals essential for the US economy and the global energy transition. These include several listed by the US Geological Survey, such as antimony, cobalt, graphite, lithium, nickel, tin, tungsten, and platinum. Furthermore, Alaska has abundant copper reserves, a vital component for renewable energy projects.

Alaska could benefit from a push towards domestic onshoring of critical mineral supply chains under the incoming Trump administration, Mr Dunleavy said. The Republican governor expects the US president-elect to sign a “flurry of executive orders”, possibly on his first day in the office, “reasserting the ability for the US [as well as] the individual states, to market their minerals, rare earths, gas and oil at levels that we may not have seen in some time”.