Governor Dunleavy: Delivering for Alaskans: What's Next for AKLNG

Well, good morning, everybody. And it's. It's good to be back in Anchorage for a day or two. Been doing a lot of work down in Juneau. I don't know if you've ever heard of Juneau.

It's our capital for a great state. But in any event, all the feedback we're getting, it's been a great conference. I'm glad all of you are here. So many different topics, so many different things happening in Alaska. So much support for a lot of the stuff that's happening in Alaska through the federal government, through the state government, and just the geopolitical world right now.

What's happening across the world, you know, we're all looking for where do you want to put investment? Why do you want to put investment there? Is it going to have a return, et cetera, et cetera. And I think what you're learning is that Alaska is really an intriguing, not just an intriguing bet, but really a place to seriously consider. And the conversations I've had already just this morning is, to me, it's really exciting.

America's going to be the place to invest. It's going to be the place to invest for some time. More investments coming to America than the traditional places like Europe, even Asia is coming here into the United States, thanks to what the Trump administration is doing and the work that we're also doing up here in the state. But one of the biggest projects amongst the many that are being represented here at this conference, of course, is our Alaska LNG project. This has been something that's been talked about for decades and decades and decades.

When the Trans Alaska Oil pipeline first was completed in the late 70s and was producing oil, immediately people were pivoting to what do we do with the enormous amounts of gas? Because if you remember, our first oil play was actually just out the window here in Cook inlet in the 1950s and 60s. And there was so much gas that that was one of the reasons why there was an LNG export concept that was developed, because you got to remember the rest of the United States was not exporting LNG at that time. We were trying to import and get as much lng, excuse me, gas as possible. In any event, in the late 60s, the port was developed and we were shipping LNG to Tokyo to Japan for 50 straight years uninterrupted.

We didn't realize then how much, how important that's going to be here today. And then, of course, we had one of the largest fertilizer plants also next to the LNG export plant, to just Monetize that enormous amount of gas that was there. Well, that gas is, that gas is diminishing rapidly. But we've always known. We've had enormous, enormous trillions and trillions of cubic feet of gas on the north slope.

And it's gas that we've recycled. We know the content of that gas, we know how much gas is there. And so the discussions about an LNG project have always been there. The high cost in Alaska is an issue, right. This is not Texas.

There's no interstates. You don't have labor pools that can just drive 40 miles down the road and begin a new project. And Texas is very fortunate. Louisiana, other states in the lower 48, we are basically a county, population wise, at the top of the world. We're the second largest discontiguous part of a nation on the planet Greenland than us.

And so you have to ship things up here. Costs money. You have to do man camps up here. We're going to talk about some of this in just a moment. Cost money.

So what we're trying to do right now in Juneau is rearrange our tax bill, our tax statutes, which I think we're going to get to here shortly. It's just taking a lot longer because this is an enormous project. But in the end, our proximity to Asia, the data farm revolution, what's happening in the Persian Gulf, people thinking about where are we going to put our. What are we going to do now for fertilizer? Not just oil and gas, fertilizer.

What about our petrochemical industry, what about aluminum, et cetera, et cetera. It's all going to depend on long term, low cost energy such as gas. And so we're gonna have a great conversation here at Brendan, because we can't. I don't think we can get the details in how we met and how we talked about this project, but there have been a lot of tire kickers on this project over the years, concerned about the cost, concerned about the cost, understandably. And the pipe is the biggest cost factor.

That's questionable as to what the cost is gonna be. And we'll talk about this. But in any event, this project went last year from discussion. It's gone from concept to discussion to now execution. This is how far this project has gone in such a short period of time.

President Trump views this as if not his top project, certainly one of the top projects that's on his agenda for very good reasons, for Asian allies, for America, for Alaska's security. We just announced a week or two ago that Several billion with a B dollars are going to be invested in our bases up here for national security. That's just the beginning. And you've seen this, what's happened here in the conference and the discussions as to what's going on. So Alaska is one of the hottest place now on the planet.

And Glenn Farn, under the leadership of Brendan, got involved early on in discussions with myself and I want to, I want to, I'm going to start, I'm going to go and give him the opportunity to talk about it. So Brendan, we first met, it seems like yesterday and sometimes it seems like years ago, but we met in Houston during Sierra Week in your office. You became interested in the project. It was a huge project and we talked about phasing it out to make it more digestible for those that are investors, risk taking, etc. Things have rapidly changed since then.

Russia, Ukraine, war is still ongoing and then the Persian Gulf data forms like I mentioned. Where do you see the project now as we talked about, gone from theory to maybe a concept to, to now execution. Where do you see the project now? And if you can explain in detail to the extent you can, all the facets of it that are moving forward. Well, maybe I can take a step back to answer that question.

But for us, your leadership and your team, your commissioners, the state employees and then throughout the whole of the state, the level of support and leaning in for us has been outstanding. And so I just wanted to thank you for that. Without someone like you leaning in, we wouldn't have taken on something like this. And then that goes further to the members of cabinet in President Trump's White House and the President himself. When you're doing a project of this scale, the leadership at the White House, at the state, at the borough level here, all the mayors, it's really been fantastic.

So I just want to thank Governor Dunleven, if we give him a round of applause for that support and his whole team.

So when we look at this project, we started talking at about roughly two years ago. We had a bit of a dating game for nearly nine months because I had to do a lot of work to figure out why Exxon hadn't done the project, why Conoco, bp, Hill Corp, A lot of these household names. And ultimately we're a company that focuses on old fashioned fundamental principles and not looking at newspapers or other reports that other people have put together for their own advice. And so it took a while to get into the underpinning principles. And I'll go through some of those simple principles Here shortly.

We then entered into a letter of intent late 2024 and then we ultimately executed a purchase agreement to buy 75% of the company. The state through AGDC owns the other 25% in March 2025. So we've been in it for about a year. And when I did the opening remarks, I met this audience about a year ago. And so the dynamics for the project have just continued to get better and better and better.

And I wish I said a lot of that I had influence over, but the project has just improved independent of our involvement along the way. So when the White House shifted that pro energy, the Energy Dominance Council came into being even just as we were negotiating our purchase agreement. The focus on energy, the allies focusing on US LNG increased and then ultimately that focus went to a pinnacle moment with the weakness of supply coming out of the Straits of Homouts. And so the global macro environment you could never imagine. So I went through the lining up of the regional level, the state level, the federal level and global geo macro.

Geopolitical politics couldn't make it any better. So that's fortunate. But really the underpinning of the project and why it works existed even before this. Most of their permits here came through under the Biden White House, just about every single one of them. So I often get asked, well what happens if the White House changes?

I said, well we'll be back to the type of leadership that we had before that and we got our permits then. So when you've got a project like this, it's very comforting to me that both sides of the aisle have been supportive of this project in Alaska in a more recent history. It may be earlier, not so then we look at what's happened over the last 12 months and if you remember, I might have walked you through the simple math that I did when I figured out this project works. When you look at the feed gas on the North Slope being stranded gas and most of you probably know the amount of gas that's being re injected up on the North Slope, 8bcf a day would be enough to build two and a half projects of this scale. So there is a lot of gas being reinjected.

So when you look at the value of that stranded gas and you compare it to the gas in the lower 48, it's much more cost effective. And when you look at the shipping cost into North Asia, those Asian buyers are comparing to other US lng. And for those who don't know, Gulf Coast LNG used to go through the Panama Canal, there's so much congestion there. And it's managed through fresh water to get the height of the dam up and down for that canal to work. LNG carriers don't go through the canal now, so they go around under Africa, under India and around to Asia.

So we've got about a third of the shipping cost. And when you look at the feed gas cost and the shipping cost, we've got a tremendous economic advantage to start with. And that was what got me comfortable this project would work. But you may remember I was saying the last thing for me to find out is what does it cost to build the pipeline. And we immediately started bidding out the construction.

Worley, our engineering firm, went to all the largest contractors in the state and globally and in the US we got bids in for the construction, we got bids in for the pipe supply. We put together a detailed logistics plan for laying out the construction. And now we know what it costs to build. So once you know what the pipeline costs to build, you know the advantages you've got, you actually have an economic project. And so what I can say, and I said that at the start of the conference, this project now we have all the financial inputs that make us understand it works.

And importantly, the underpinning of a domestic solution here for the gas crisis, where we build the pipeline first, solve the gas crisis in the Cook Inlet, and then have a second financing at a later date for the export. All of that now is an extremely clear and laid out financial plan. And we can talk a little bit about that in a minute here. But this project now has all the diligence, the underpinning to get ready to build it. And we've got a few things to do, but we're ready to go.

Yeah, no, thank you. And just a slight correction, the permits were had under Trump one on their the Biden administration, they didn't try and kill the project. As a matter of fact, their FERC fought on our behalf on some court cases. So. But in any event, you know, people have heard about this project forever.

This project, this project forever. But this project needs to be defined. They heard about monetizing gas from Alaska, but this project is very different. We didn't have the permits prior to 2020. We didn't want to take those BTUs in terms of gas off the slope before then because it was helping to some degree with the more lucrative product called oil.

And then when you get all of the geopolitical stuff that's changing the world and then you get Trump 2o in here and data farms and Cryptocurrency and electrification. It's a different project. It's a different project. So the other thing that's happened that makes us a different project is we're running out of gas in the very inlet in which we pioneered LNG export. Right out the window here, we're running out of gas.

We have for some time the plants have closed down. The first plant closed down in about 2007.

The export and the fertilizer plant were shut down in the mid-2015, 17. And then what we're experiencing, you've noticed out the window. We have a very cold spring. Normally we'd be in summer right now that a very cold spring. We had a cold winter in Fairbanks, Alaska, record cold temperatures, record cold temperature here in March, I believe, and record snows in January.

What does that mean? What's left in the inlet? We're really drawing that down. And that's a problem when you have sophisticated military bases. This is another consideration that the Trump administration knows and that we talk about very sophisticated military installations that are forward leaning because of the adversarial world we live in here in the Northwest.

They need gas, they need energy. So very different project. But I would ask, Brendan, tell us about another, you know, the execution part. What are some of the partners that are very interested in this project? Where are we on the partner side of things and just growing that, that group of focus of investors, partners, builders, etc.

Well, I think one of our most important partners right now is nstar, your local gas utility. And we've had to come up with an arrangement with NStar that shows you and everyone that we can deliver gas from the North Slope that's more reliable and more cost effective than importing lng. And we're putting the finishing touches on an ability to offer you all here in your homes gas that we can have locked in coming from the North Slope that is better than financially and from a sustainable supply standpoint than importing lng. So Instar and ourselves and the CEO, John Sims and myself, we're about to put finishing touches on that agreement so it can go through the RCA and then off the back of that we can go into a financial close and, and we're just very, very close to finishing that off. So that's one of the important partners for phase one.

The other important partners for Phase one, including John, we did a big gathering here on Monday and we had roughly 50 local, national and global presidents and CEOs that are committing billions of dollars of risk loans, equity investment, construction guarantees, equipment Guarantees. And we went down to the Kenai Peninsula, we did a roundtable and some of those are here today. You know, you might have seen some of the press releases, but Baker Hughes, one of our equipment suppliers, they've become an investor, a big shipping company. We're going to do an LNG joint venture with Danaus out of Greece list listed on the New York Stock Exchange. They're an investor.

Posco, our Korean partners that are supplying a specialized type of steel. They're an investor. They've committed to the project. Many of our construction companies have also committed to investing in the project. We've listed out a lot of those companies.

They're putting up billions of dollars of their balance sheet to take this. So 50 of them were here sitting. The governor and Secretary Burgum went around and listened to why they were involved in the projects, any concerns they needed, and off the back of that, I had a dinner the following night with the leading global project finance banks in the world. And those banks have given me proposals on terms and conditions that allow me to say I can make a final investment decision here once we finish up some of these agreements, possibly this tax bill out of Juneau. And they were all here as well, listening.

And they left even more enthusiastic than when they came because there's nothing like doing a site visit, seeing the enthusiasm and all the stakeholder engagement here. So I can confirm I've received enough proposals of private financing on terms and conditions that once we convert that into long form documentation, we can build the domestic pipeline. And that's very exciting. And so we talked a little bit about this, You know, just to add to this. And again, the geopolitical aspect of.

And we started this before the Persian Gulf war. We were talking about how viable this was before the Gulf has taken off. But if you look at the Gulf right now, and we want nothing but the best for our friends in the Gulf, tremendous allies and friends in the Gulf, forward leaning countries, whether it's the United Arab Emirates, Qatar, Saudi Arabia, et cetera. But they're trying to figure out what the world's going to look like. And as I mentioned earlier when I spoke just a day or two ago, you know, the question was always, can we shave a penny off?

You know, which matters when you're dealing with billions of dollars in tons of gas. Can we shave 5 cents off? And oftentimes, you know, that led to one of the largest gas fields, the largest gas field on the planet, Gutter and over in the Persian Gulf. Now, the questions that are coming out of Investment houses and utilities and so forth is can we be assured of supply and what is the premium, if anything, put on assurance of supply? So remember, we hope the conflict gets settled soon.

It'll be good for everybody, it'll be good for the world. But when you look at alternatives, do we send gas cross pipelines to the Mediterranean Persian Gulf states? That costs money. That's going in a different direction. Do you try and ship your gas then down through the Red Sea?

You got a problem with a group down there, the Houthis, that's an issue. You're going around the peninsula then. But then when you look at Alaska, it's not 25 days, it's not 30 days, it's not 16 days, it's eight days to Tokyo Bay in uncontested waters where you got the 7th Fleet of the US Navy and the 3rd Fleet in the North Pacific of the US Navy. No straits to go through, no canals to go through. You don't have to ask anyone permission to go through.

The moment you leave Nikiski, Alaska, which is probably by air only about 30 miles south of here, 40 miles south, you are clear sailing right into Tokyo Bay. That's a surety, but that's security, that's certainty. And those discussions are also buoying this project. Do you want to talk a little bit about that when you're having discussions with folks? So albeit this is a two phased financing and a two phase construction, so we've let everyone know, construction on the export portion, which is a separate financing, that's about a year behind the actual pipeline construction.

Notwithstanding that, we've had tremendous interest in the buying of the LNG from that facility and we're still a year away from launching the construction.

And so when you do a facility like this, there's 20 million tons of LNG that is a really big LNG facility. To finance it, you want to have stable cash flows for the bulk of the contracts. So we go and enter into 20 year contracts for roughly 80% of the revenue, which is about 16 million tonnes. And I can tell you today I know where every one of those tonnes is going to be. And 80% of the 80% we've already publicly announced.

And so the first 6 million tonnes is going to Taiwan. And that was announced actually when we were here last time. 2 Million tons to Thailand, another 2 million tons to Japan. The two biggest buyers out of Japan, JIRA and Tokyo Gas. A million tons to Korea with POSCO, 2 million tons to the global French champion for LNG total.

And then we have another custom we haven't announced yet that we've negotiated all the pricing on and our company will take a million tonnes. So that gets us. We know where all of our LNG is going now. And that's amazing for a project that is still a year from taking construction. Why is that?

To the governor's point, most of those Lois were announced and reservation agreements were announced before the Straits of Vermouth event. Actually, all of them. All of them. Now I think people were saying this is an important location to take lng. The important part now is everyone is accelerating.

How do they move from their reservation agreement to a binding long term contract? Because their boards of directors, their National Energy Councils, their Ministers and Secretaries for Energy, when they go to them for approval or their board of directors, their approvals are coming faster and quicker than they would have if that highlighted problem of LNG being locked in the straight. And so that just accelerates negotiations that often can just drag out and out and out. And then it also gives our lenders confidence when they start doing all the studies that the contracts will show up because it takes a long time for a lender or an investor to study a project like this. So they've got even more confidence to put all the effort in to get their approval.

So it's just reinforced and highlighted what attracted everyone here and it's just made it so much easier for everyone to go and get their approvals. So from your perspective, what are the next steps? We're confident that our work in Juneau will provide an environment for investment, larger investments, more long term investments in the project and we should hopefully hammer that out here pretty soon. But what do you see are the next steps? What do you see happening?

You come back here next year, what would you be telling the audience when things progress through the various steps? So right now, these financing proposals that are in A, the pricing of the financing and the terms and conditions, they are subject to a couple of key things. One, a form of this tax abatement stabilization arrangement that is being negotiated in Juneau. That's a critical condition. Another condition is the RCA approving the nstar agreement that at some point in time we'll have to file with those two key milestones I expect to be happening here in the very near future.

We can then go into documenting those loans and getting all of our construction contractors actually in mobilization phase. And what we've asked our contractors to be ready for is to be having their equipment up on the slope and on the right of way in Q1 of this next year in 2027 to have construction seasons going through 27 and 28 and, and have commissioning in 29 so we can deliver gas here through the pipeline late in 2029. And so the next steps are to really focus on getting these two conditions behind us. Putting all of every single agreement we have goes from like a five page key terms and conditions and then they have to be converted to a couple of hundred page documents. And we're doing that now with all of our gas suppliers.

One, one thing to remind everyone and we were very pleased we got to our final details with Conoco and we had announced earlier in the year Exxon and Hill Corp and Pantheon have also agreed to gas supply. So we're going through, turning those into what are called precedent gas supply agreements into long form contracts. But we've got enough agreements from the North Slope now to, to make our final investment decision. So they're all going into their contractual long form conversion. And then we have some other customers in the state here beyond Instar, some of the electric utilities we're working with to try and put a final agreement together.

We believe there's an opportunity to restart the fertilizer plant. And I was in the North Slope with our lenders explaining that to them. We also believe there's an opportunity to use the old LNG facility with a little bit of maintenance it can be restarted once we announce the pipeline construction is starting. The number of mining operations in this state that could use gas instead of barging or driving diesel around is phenomenal. So there's a whole second category or wave of smaller customers, including mines that can come.

But many of them we have to focus on the biggest customers to draw the financing against. So over the next 90 days, 120 days, so long as there's not too many of the governmental approvals here coming up, we'll be going through a 90 to 120 day documentation period with our lenders and investors and hopefully announce a final investment decision here as soon as possible because we want to get that construction going and ordering pipe. You know, I always am amazed at the size of this project. Right. This would be the largest project ever in the Arctic.

This and depending how you def. How you define size or you know, how large, largest project in the Pacific and from a construction funding perspective, most likely the largest project, single project ever on the planet here in America, here in Alaska, serving our in state customers, but serving a wider group of customers, our Asian allies and potentially if necessary, West coast, west coast of the United States and the Projection the Runway for this for producing gas. I'll give you an example. Taps the Trans Alaska oil pipeline which nobody thought would be built, which only was built with a tie breaking vote through an act of Congress and that tie breaking vote was by Spiro Agnew, the Vice President of the United States. Without that vote we would not have had the Trans Alaska oil pipeline.

The state would not look the same. The country would not look the same. This came in during the Arab oil embargoes. The North Sea came in at the same time. This super giant came in at the same time.

You saw earlier when these fine gentlemen from Epoch did their presentation. There's about $18 billion worth of oil on the North Slope that's still recoverable and that they're shooting for. This is the hottest place in the planet right now for oil and gas, critical minerals and other resource development. But nothing's ever a given. A lot of this policy and like we mentioned, we're working on this tax policy in Juneau.

But this project is enormous. The benefits to the country, to the world are enormous. The benefits to us in Alaska. The difference is if the project were not to happen, which we are confident it's going to, we would have to import gas. We would have to import gas at ever increasing costs for our in state customers and utilities.

Well, that, that would be a death knell for business coming to Alaska, especially if you're looking at $16 a unit gas or higher. And so what this project would do for us, because 500,000 people on what we refer to as the rail belt between Fairbanks, Anchorage and where the gas would be exported, we're an afterthought. I mean we're so small, but that enormous amount of gas would enable us to get incredibly low prices, relatively speaking here in state in Alaska, which would reduce, as opposed to what's happening in other parts of the country, reduce the cost of energy for Alaskans for the long term. You know, we got about a minute and 40 seconds left, Brandon, and I want to give this time to you to just opine on, you know, where you, where you think this is going, what you want people to think about. Because I am confident.

And the next year at this time, and I'll be in the audience next year at this time, you'll be up here with somebody else. But I am confident that between now and then some significant announcements are going to be made. But take the time. I think the most important thing is I made a commitment to the governor and I've also made a commitment implicitly to all of you to offer you domestic, stable gas at a price that is better than imported lng and then dropping that down to a price that's competitive to the lower 48 gas by building this pipeline. So I urge you to get behind the pipeline because if you it will give you gas supply uncertainty better than imported lng.

And then when we build the export facility, we can offer it at a third the cost of that. And then you've got gas here that's comparable to the lower 48. So please talk to your mayors, your elected officials, your legislators, your community leaders, your union leaders, and get them behind any rally here to call to arms. Let's get this thing over the line and we can get this state the gas that it needs right now. This is an Alaska solution project.

That's all we're focused on, solving the gas needs for Alaska. Phase two is the international portion of it. But for me, right now, my job is to get you guys gas so that when that Cook Inlet isn't producing enough for the winter here, you can pull it off the pipeline with certainty, with absolute abundance. And it's guaranteed to be delivered for 30, 40, 50 years. And that's the most important thing right now.

Better than imported LNG moving to gas that's comparable with the lower 48. And that's what we're here to get done. And hopefully with a few final approvals here, we can announce that construction project starting later this year. This will be the most transformational, generational project this part of the world has ever seen. So, Brendan, thank you for everything you're doing.

Thanks, folks. Thank you, everyone.