State proposes full leases for Alaska LNG pipeline route, replacing conditional leases

Alaska's natural resources commissioner proposed Friday to give the Alaska LNG project full leases for its pipeline route across state land, replacing the conditional leases it issued in 2021.

The leases cover the 807-mile route from Prudhoe Bay to Nikiski and a 63-mile line along the North Slope coast. Until the leases are converted, the project can't get state authorization to start construction, Alaska News reported Oct. 5. Even with full leases, the state would still have to sign off on each phase before work begins.

In his proposed decision, Commissioner John Crowther found that the Alaska Gasline Development Corporation, the state's gasline corporation, which holds the leases, is now "fit, willing, and able" to carry out the project. In 2021, the state said AGDC had not yet shown enough technical or financial capability.

Without full leases, Crowther wrote, investors, gas producers, Railbelt utilities, foreign buyers and Alaskans lack certainty that the state will let the project use its land.

The decision also measures AGDC differently than it would a private pipeline company that builds and runs its own line. AGDC's job is to coordinate partners, the decision says, so its fitness "lies not in its ability to weld pipe, operate compressor stations, or manage field construction, but in its ability to coordinate and direct the entities that will perform those functions."

Since 2021, the decision says, AGDC has worked on engineering, financial restructuring, federal permitting and commercial deals to fix what the state found lacking.

On money, the decision cites a Department of Revenue analysis of the project's economics, which is confidential, and a financing plan the project says would support more than $50 billion in capital. It also cites nonbinding letters from seven international energy companies for more than 60% of the planned LNG, precedent agreements with ExxonMobil, Hilcorp and ConocoPhillips to supply gas, and Glenfarne's record of financing other projects. As evidence of expected commercial deals, the project also referenced public press releases, the decision says.

The project's Oct. 1 report to the U.S. Department of Energy says it holds no long-term LNG export or supply contracts. No closed financing or final investment decision had been announced as of last week, Alaska News reported.

In May, Glenfarne CEO Brendan Duval said he expected a final investment decision within 90 to 120 days, pending a state tax deal and regulators' approval of a gas sale to Enstar. As of last week, the Legislature had not passed a tax deal. "It does look like a challenging project even with the tax relief," Department of Revenue chief economist Dan Stickel told lawmakers in June, discussing the Senate's version of the tax break.

Glenfarne, a private company, owns 75% of the project company, 8 Star Alaska. The state owns 25% through AGDC, which keeps the leases. They can't be transferred without the commissioner's written approval. Commerce Secretary Howard Lutnick told a Wasilla rally Oct. 13 that President Donald Trump had "federalized" the project, without saying what that meant. The decision doesn't mention the remark.

Some pieces aren't done. The highway use agreement with the state transportation department is still a draft. At a planned landing for construction materials on the west side of Cook Inlet, issues with two shore fishery leaseholders, a private landowner and a barge landing are not fully resolved. Where construction restricts access to set-net sites, AGDC has committed to work with leaseholders to find other sites or, if there are none, pay for lost harvest or use.

Written comments are due by 5 pm Nov. 25. The state will hold hearings Nov. 23 online and Nov. 24 in Anchorage.