High Capital Costs Pose Major Challenge for Alaska LNG Project
A consultancy warns that the Alaska LNG project's steep capital expenses are its biggest obstacle, with costs still highly uncertain.
In a briefing to the Alaska State Legislature’s Budget and Audit Committee, GaffneyCline Energy Advisory delivered a Class 5 cost estimate for the Alaska LNG project, the earliest and most uncertain forecasting level. Because front-end engineering design has not begun, the consultancy highlighted that the baseline cost could swing dramatically, potentially doubling from its current range. Approximately 84 percent of the projected outlay is allocated to facilities, intensifying worries about cost inflation. Glenfarne, the project's lead developer, reported the estimate to the committee and emphasized that moving toward a final investment decision will require a comprehensive economic model and defined gas supply terms, among other steps.
Why it matters
The project's cost uncertainty could delay or derail a major energy development in Alaska.
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