Glenfar suspends ADA backstop while advancing Alaska LNG project to FID

In a recent meeting of the Alaska Legislature's House Resources Committee, significant discussions centered around the financial aspects of the Alaska LNG project, particularly the costs associated with its various subprojects and the implications of funding agreements. The meeting highlighted the estimated costs for three key components of the project: the gas treatment plant on the North Slope, the pipeline, and the liquefaction facility in Kiski, each projected to cost approximately $50 million.

Frank Richards, a representative from the Alaska Gasline Development Corporation (AGDC), clarified that the funding required to reach a Final Investment Decision (FID) is substantial, with Glenfarin, the project's partner, committing to cover all necessary expenses to reach this critical milestone. This includes pre-FID spending, which encompasses front-end engineering design (FEED) and other preparatory costs.

A notable development discussed was Glenfarin's decision to suspend discussions regarding the Alaska Development Authority (ADA) backstop, which had previously been a point of contention. This shift indicates that Glenfarin is willing to proceed with the project using private capital, thereby removing the ADA backstop from the equation. This decision could streamline the financing process but raises questions about the project's risk management.

The committee also explored the commitment Glenfarin has made to advance the project towards FID. Richards emphasized that this commitment is not open-ended; Glenfarin must demonstrate diligent development efforts, including maintaining permits and continuing to invest in the project. The FID itself represents a pivotal moment when all stakeholders formally agree to proceed, backed by necessary financing and agreements.

Additionally, the committee sought clarity on the milestones associated with the project’s development schedule. While specific dates for these milestones remain confidential, the focus will be on entering FEED for the pipeline and other facilities, which are crucial steps in the project timeline.

Overall, the discussions underscored the complexities of financing large-scale infrastructure projects in Alaska and the importance of clear communication regarding costs and commitments. As the project progresses, stakeholders will be closely monitoring these developments, particularly in light of Glenfarin's strategic decisions and the implications for future funding and project viability.