Expert tells Senate panel Alaska LNG could compete with Gulf Coast but hinges on capital costs and federal support

Nicholas Fulford, senior director for LNG and energy transition at Gaffney Klein, told the Senate Resources Committee on March 5 that a commercially viable Alaska liquefied natural gas project would require a long-term view, alignment among stakeholders and careful handling of capital-cost escalation.

"Many of these projects take a long time even to arrive at some sort of commercially sustainable structure," Fulford said. He told senators that global LNG markets have shifted dramatically in recent years, noting the market is roughly 400 million tonnes per annum today and that the United States has become one of the three dominant exporters alongside Qatar and Australia.

Fulford outlined supply-and-demand dynamics, project structures and cost drivers. He said Alaska’s advantage includes short Pacific shipping distances and comparatively low running costs, but that Alaska’s delivered cost will turn on capital expenditure. He summarized three common project models — integrated, merchant and tolling — and said each has trade-offs for aligning producers, investors and buyers. He also referenced enabling legislation that has been considered in earlier Alaska LNG efforts, including Senate Bill 138.

Key takeaways and figures cited by Fulford:

- Global market size: about 400 million tonnes per year; Alaska’s original Nikiski project delivered roughly 1.5 million tonnes per year, roughly the current Southcentral Alaska consumption level. - Major suppliers: Qatar, Australia and the United States dominate current export capacity; new Qatari expansion and US Gulf Coast projects will shape near-term supply. - Forecast variance: Fulford reviewed ten forecasts ranging from net-zero scenarios to higher-growth outlooks. He cited a recent Shell outlook that forecasts as much as 700 million tonnes per year by 2025 under more optimistic assumptions. - Costs: Fulford used representative scenarios to show delivered-cost comparisons. Using historical Wood Mackenzie inputs, he presented Gulf Coast delivered-cost estimates in a mid‑scenario and a higher Henry Hub scenario where delivered costs can rise substantially; he concluded Alaska could be competitive in principle but ‘‘it will all hinge around the capital cost.’’ - Feedstock and state revenue: Fulford said feedstock costs proposed in scenarios are around $1 to $1.50 per MMBtu in some cases and that a 25% royalty would yield roughly $250 million per year in early runs; if the state held a 25% equity stake, he said, long‑run free cash flow could be in the $2 billion–$3 billion range 15–20 years after start-up under certain scenarios. - Federal policy and tax credits: Fulford said the 45Q tax credit for carbon capture can materially change landed costs, estimating a $10–$20 per‑tonne equivalent impact when factored into landed Asian prices. He also said a federal loan guarantee on a multibillion-dollar project would be highly material to financing costs.

Senators asked about demand, shipping logistics and developer capacity. Fulford told Sen. Hughes that the colored bands on his chart designated existing capacity, projects under construction and projects that are announced but undated; he told Sen. Wilikowski that Alaska’s higher initial capital cost can be offset by lower running costs and shorter shipping distances, and that cost‑escalation risk — not necessarily delivered cost — is the principal Alaska vulnerability.

Fulford also discussed recent project trends: modular off‑site built liquefaction trains have reduced schedule and cost risk on some Gulf Coast projects; many projects announced worldwide have no firm start date and should not be treated as certain capacity additions.

Ending: The committee paused the presentation and asked Fulford to return to conclude remaining slides at a later meeting; no committee action or vote followed the briefing.