FAIRBANKS — China’s top oil company Sinopec announced earlier today it has agreed to help develop Alaska’s long-awaited $43 billion natural gas pipeline megaproject, according to the U.S. government.
Alaska Gasline Development Corp., the state of Alaska, Sinopec, China Investment Corp. and the Bank of China have signed an agreement to advance the pipeline in Alaska.
According to initial reports, the investment could be as much as $43 billion. The deal also has the potential to create as many as 12,000 U.S. jobs during construction, reduce the trade deficit between the United States and Asia by $10 billion each year and provide China with cleaner energy, according to the announcement.
“Because Alaskans need well-paying jobs and affordable energy to power our homes, schools and businesses, this Alaska LNG project is critical,” Alaska Gov. Bill Walker said in a statement. “The gasline is key to building a stronger Alaska. Today was an important day for Alaska.”
Walker said this signing is a big step toward development of the pipeline.
“This agreement has all five necessary signatories — the buyer, the lender, the investor, the developer and the state,” he said. “This is a big project with big players and big benefits.”
Walker said 100 companies applied to be part of the agreement. That number was then narrowed to 30 and finalized with the 12 that signed agreements today.
“We’re fortunate to have them at the table,” he said. “It’s one that is the result of a lot of hard work.”
Keith Meyer, president of AGDC, traveled with Walker to China. He estimated total revenue of the pipeline to be between $8 billion and $10 billion each year. Of that, producer revenue would be about $1 billion. The state of Alaska would receive about 25 percent — roughly $250 million — of that revenue, Meyer said.
Walker said more steps must be taken before the investment is finalized but that this is good progress.
“Having the largest LNG buyer in the world participating in this project means the Alaska LNG project has favorable market engagement at the highest level,” he said. “This project will finally allow Alaska to reach its full potential as a state. As we move from having one of the highest unemployment rates in the country to the lowest, we will build a stronger Alaska.”
Since his election in 2014, Walker has made the construction of the 800-mile pipeline a priority.
If constructed as hoped, the pipeline would bring massive amounts of North Slope natural gas to a port in Nikiski, on the Kenai Peninsula. From there, the gas would be chilled into liquefied natural gas before being shipped in tankers to Asia. Walker said most of the LNG will be going to China, but he has been in the process of marketing to other Asian countries, including Japan and Vietnam.
Meyer said construction is expected to begin in 2019.
John Hendrix, Walker’s oil and gas adviser, said multiple entities in China and other Asian countries previously have expressed interest in the project.
Meyer has made several trips to China during the past year to drum up interest in the pipeline. He said this deal has been a long time coming.
“This has been a long courtship with these folks,” Meyer said. “We’ve had some very good dialogue with the big three companies. We found quickly we had a good connection with Sinopec. We’ve been through the courtship, we’re now engaged.”
This most recent visit was not the first interaction between China’s President Xi Jingping and Walker.
In April, Xi briefly visited Anchorage on his way home from a meeting with President Donald Trump at Trump’s Mar-a-Lago resort in Florida. Walker said he made his original pitch for a natural gas project during that visit.
Walker thanked President Trump for support in the deal, saying the agreement brings the U.S. one step closer to energy dominance.
“When President Xi visited Anchorage six months ago, he shared with me his desire for deepening the mutually beneficial ties between China and Alaska. I thank him for expediting that vision to reality. I especially thank Commerce Secretary Wilbur Ross and his team for their strong belief in the Alaska LNG project, and all of the hard work they put into making this day happen.”
Walker traveled to China from Hawaii, where he met with President Donald Trump and governors from Hawaii, American Samoa, the Northern Mariana Islands and Guam for a discussion on security in the Pacific.
After corporate meetings, Walker and Meyer rejoined the president in Beijing as part of a larger group of corporate leaders and members of the private sector.
Meyer, representing Alaska Gasline Development Corporation, was only one of 29 business leaders on a roster for the trip. Walker was the only state governor on the list.
Alaskan lawmakers are celebrating the deal as a progress forward.
House Speaker and Dillingham Democrat Rep. Bryce Edgmon said at first glance the agreement looks good.
“This joint development agreement is very encouraging for the thousands of Alaskans who never lost hope that a natural gas pipeline could one day become a reality. Alaska is home to tremendous natural gas reserves and today’s agreement shows that we are perfectly situated to supply liquefied natural gas to Asian markets,” Edgmon said. “The members of the Alaska House Majority Coalition fought to keep the AK LNG project alive by keeping money in the budget, and it appears that was the right decision. A pipeline project will bring jobs, investment and, perhaps most importantly, a renewed sense of hope that Alaska’s best days are ahead of us, not behind.”
Walker said he hopes this is the beginning of a solid partnership between Alaska and China.
“It’s the beginning of what we hope is a long relationship between Alaska and these companies. This is the market responding and we’re please with that,” Walker said.
Contact staff writer Erin Granger at 459-7544. Follow her on Twitter at twitter.com/FDNMPolitics.