Alaska LNG developer: state owes nothing if project fails before FID

Alaska senators asked Tuesday whether the state would owe any reimbursement if Glenfarne walked away from the Alaska LNG project before a final investment decision. The answer they received, on the record, was no.

Glenfarne Alaska LNG president Adam Prestidge told the Alaska State Senate Finance Committee that the company carries all development costs and expects nothing back from the state if the developer abandons the project before a final investment decision (FID).

"Glenfarne is developing the Alaska LNG Project at our own risk and at our own expense," Prestidge said. "There's no request for the state to continue to put in additional development cash, and there is certainly no right or expectation for Glenfarne to be reimbursed for any of our development expenses by the state."

Matt Kissinger, commercial director of the Alaska Gasline Development Corporation, confirmed the position. If Glenfarne abandons the project before FID, he said, "there is no payment obligation of the state back to Glenfarne. There is no payment obligation under that circumstance."

The exchange matters because the question of what the state owes, and what it could eventually be asked to spend, has shadowed recent hearings. AGDC has told lawmakers the state has the right, but not the obligation, to invest up to 25 percent in subprojects. The no-reimbursement assurances address what happens if the project does not proceed to FID, not what the state might choose to contribute if it moves forward. Testimony made clear that the state would face cost-overrun exposure only if it affirmatively chose to become an equity investor.

Senate Finance Committee Chair Lyman Hoffman put the question directly on the record. "I would say this is a very valuable dialogue because there are rumors abound in this building," Hoffman said. "Many questions are revolving around this, particularly in the Senate."

Prestidge offered a concrete illustration of Glenfarne's risk posture. During negotiations, a proposed backstop would have allowed the state to reimburse the developer up to $50 million for engineering study costs if the project proved unviable. Glenfarne declined it. "We asked AEDA to stand down, and we've continued to fund all of the expenses of developing this project ourselves," Prestidge said.

Senator Jesse Kiehl asked what would happen to project assets, including FERC licenses, permits, and engineering studies, if the project did not proceed. Kissinger said those assets would remain with 8 Star Alaska, the joint-venture holding company. If Glenfarne withdrew its 75 percent membership, AGDC would become the sole member and 100 percent owner of 8 Star, with all project data and assets remaining there exactly as before Glenfarne joined. Kiehl noted there is no compensation provision for Glenfarne in that scenario, calling the arrangement "excellent."