Alaska LNG deal far from final as Vance says details still being worked out with Seoul

While President Donald Trump has been treating South Korea's participation in the Alaska liquefied natural gas project as a done deal, Vice President JD Vance said Monday that the two sides still need to work out "some of the details" — making clear the project has not been finalized.

The South Korean government has maintained that its decision on whether to join the Alaska project will hinge on "commercial viability." Japan, which announced its own US investment package before South Korea did, has also yet to put forward any official investment plan for the Alaska LNG project.

Vance said Monday (local time) that he believes the Alaska LNG project "is ultimately going to happen," according to foreign media reports. Unlike Trump, who has spoken of South Korea's involvement as settled, Vance made clear the deal is not yet final, saying the two sides still need to coordinate on specific terms.

"The pipeline project is something we really want, and it's something that a lot of Asian allies, not just Korea, want," Vance said. "Of course, there are still some details that need to be worked out, and the Korean side has acknowledged that as well."

The Alaska LNG project involves extracting natural gas from fields in northern Alaska, transporting it roughly 1,300 kilometers by pipeline to a terminal near Anchorage in southern Alaska, and then exporting it to Asia and other markets.

A fact sheet released by the US Commerce Department after the announcement said only that the parties had "agreed to begin work" on the Alaska LNG project "subject to commercial viability and all applicable domestic legal requirements," with no specific timeline or dollar figures included.

The project has been a priority for Trump since taking office, with the president repeatedly citing potential investment from South Korea and Japan. But questions about its commercial viability have persisted in Japan, where the enormous construction costs and price competitiveness have drawn skepticism.

Nikkei estimated last year that the total project cost stood at $44 billion, with pipeline construction alone accounting for $11 billion. Nikkei Business noted that the pipeline would need to cross three mountain ranges and hundreds of rivers, with construction windows in the Arctic severely limited by the climate.

Takafumi Yanagisawa, a senior research fellow at the Institute of Energy Economics Japan, said at the time that factoring in inflation and the impact of tariffs, the total cost was likely to rise further.

The high costs could also weigh on LNG sale prices. Nikkei reported in August last year, citing a source at a major Japanese trading house, that the long pipeline route and other factors would push sale prices above those of conventional LNG, making it difficult to secure buyers.

Katsuya Nakanishi, president of Mitsubishi Corp., said last April that the project had been discussed many times before and that the 1,300-kilometer pipeline made it an exceptionally difficult undertaking. Daisuke Yamada, a director at INPEX, raised doubts in May of the same year about whether private companies could realistically expect a return on investment.

A separate US plan to build coal-fired power plants in Alaska has also been flagged as a potential complication. Nikkei reported on Sept. 8 that a plan to construct coal power plants with a combined output of 1.25 million kilowatts near Anchorage, along with carbon capture and storage facilities, could create headwinds for the Alaska LNG project.

According to Reuters, the project aims to produce up to 20 million tons of LNG per year, with total costs estimated at between $44.5 billion and $54.5 billion. The current plan calls for a final investment decision on the pipeline this year, a final investment decision on the export facility next year, and first LNG exports in 2031.

The pipeline's final investment decision had originally been targeted for late last year but was pushed back to this year after Glenfarne Group, the US energy infrastructure developer leading the project, failed to secure the volume of LNG purchase contracts it had sought.

The idea of developing natural gas in northern Alaska has been in circulation for more than half a century, since the discovery of gas fields there in 1968. The project gained serious momentum in 2014 when major oil companies including ExxonMobil, BP and ConocoPhillips joined in, but all three withdrew in 2017 over the massive costs and questions about economic viability. Environmental concerns over pollution and ecosystem damage have also dogged the project.

Alaska's state-owned Alaska Gasline Development Corp. (AGDC) has since kept the project alive. Last March, Glenfarne acquired a 75 percent stake in 8 Star Alaska, an AGDC subsidiary that holds the project's assets, with AGDC retaining the remaining 25 percent.

The Alaska LNG project is widely regarded as difficult to make economically viable, given the harsh cold, frozen terrain, and the need to build a 1,300-kilometer pipeline along with gas fields and liquefaction facilities.

The maximum federal loan guarantee the United States can legally provide for the LNG portion of the Alaska project is just $2 billion — meaning Washington is limiting its own exposure while pressing South Korea to commit on a far larger scale.

An analysis of an official Congressional Research Service report by the office of People Power Party lawmaker Choi Su-jin found that the federal loan guarantee ceiling approved by Congress for the Alaska natural gas pipeline, specifically the portion allocated to LNG, stood at a maximum of $2 billion.

The CRS also found that the Bush administration formally rejected a price-floor subsidy for the Alaska natural gas project in 2002, citing concerns that it would "distort market structures and cause annual tax revenue losses of more than $1 billion."

"This is a project that even the US federal government drew a line on in terms of loss risk and refused to subsidize," Choi said. "Asking the South Korean government to shoulder $50 billion in astronomical costs and risk without any federal guarantee is a textbook example of an unfair and toxic contract."