Japan and U.S. Looking to Form “Joint Venture” For Alaska LNG Project

Japan has signaled interest in lifting liquefied natural gas from a proposed Alaska-based LNG project. The development was announced during a press conference by Japanese Prime Minister Shigeru Ishiba and U.S. President Donald Trump in Washington DC.

“Japan will soon begin importing historic new shipments of clean American liquefied natural gas in record numbers,” President Trump said. “It'll be record numbers.” 

“We’re talking about the [gas] pipeline in Alaska, which is the closest point of major oil and gas to Japan by far…We’re talking about a joint venture of some type.

Japan’s Ishiba confirmed his country’s interest in procuring additional hydrocarbon resources from the U.S. “And we also want to improve the trade deficit that the U.S. has towards Japan.”

Trump has been critical of U.S. allies, including Canada, Mexico, and the EU over their trade surplus.

Specifics of what the “joint venture” will look like or the level of Japan’s commitment remained unclear. 

Will the project be competitive

The idea of exporting LNG from Alaska isn’t new. In its latest iteration the project, called Alaska LNG, would see the construction of an 800-mile pipeline from the North Slope to a yet-to-be-built export terminal in Nikiski in the southern part of the state. 

The project comes with a substantial price tag of $44bn raising questions over the LNG’s competitiveness on the international market. The pipeline alone adds around $10bn to the construction costs. Alternative proposals had envisioned the use of ice-capable LNG carriers to carry the gas straight from the state’s North shore to markets without the need for a pipeline. With a planned capacity of 20mn tonnes per year, the terminal would be among the world’s largest.

Alaska’s proximity to East Asia and Japan could give it a leg up in terms of shipping costs, compared to other suppliers. LNG carriers could cover the 2,500 nautical miles between Alaska and Japan in approximately eight days. 

U.S. LNG instead of Russian supply

Currently Japan imports around 9 percent of its LNG needs from Russia, including the Arctic Yamal LNG project. With the future of Yamal LNG and other Russian LNG projects increasingly uncertain due to Western sanctions, Alaska LNG may find an opening to become a future supplier.

The project could come online as early as 2031. It already secured regulatory approvals on the state and federal levels, with the Biden Administration green lighting it in 2023. 

LNG is often heralded as a “clean” fuel and essential to the transition to renewables. However, research increasingly suggests that the environmental footprint of the supercooled gas may be substantially worse, even compared to coal. Especially worrisome are LNG’s methane emissions, a relatively short-lived but very powerful greenhouse gas.