There is one date that matters more than any dollar figure in the story of the Alaska natural gas pipeline, and it keeps moving. Glenfarne, the US developer that owns 75% of the project, once aimed to make its final investment decision by December 2025. It still hasn’t made one. Last Wednesday, President Trump announced that South Korea would put about $54 billion into the project. The next day, Seoul said it had not decided whether to invest, or how much.
So what is a final investment decision, usually shortened to FID? Think of a plane on a runway. Up to a certain speed, the pilot can still hit the brakes and stop safely. Pilots call that speed V1. Past it, stopping is more dangerous than taking off, so the plane goes. FID is a project’s V1. Before it, the money spent is mostly on design work, permits and early talks. Walking away hurts, but not much. After it, construction contracts are signed, steel is ordered and loans are drawn. From that point, quitting costs more than finishing. That is why builders and banks watch for FID, not for press conferences.
Two numbers are keeping this project on the runway.
The first is buyers. Before lenders will fund a project like this, they want customers locked into long-term purchase contracts. The target is about 16 million tons of gas a year. Glenfarne has lined up around 13 million, and most of those deals are non-binding, meaning the buyer can still say no.
The second is cost. Glenfarne puts the whole project at $44.5 billion to $54.5 billion for 20 million tons a year. Per ton of capacity, that is more than twice what a comparable plant on the US Gulf Coast costs, according to Reuters. The reason is geography. Gulf Coast terminals plug into gas networks that already exist. Alaska has to build an 800-mile pipeline across mountain ranges, plus a large gas treatment plant on the frozen North Slope, before a single tanker can load.
This is not the first time those numbers have stopped people. In 2016, ExxonMobil, BP and ConocoPhillips chose not to move the project into its next phase because of the economics. The state’s own gasline company carried it alone for years until Glenfarne took the lead.
So what is the $54 billion? The joint statement released with the announcement says work on the project begins subject to “commercial reasonableness.” In plain words, the money moves only if the deal makes sense on paper. South Korea’s government says it is now running that review. A month ago I wrote about why Korea would only “explore” Alaska LNG and not commit to it. This week’s announcement changed the headline number. It did not change that condition.
For anyone tracking the Alaska natural gas pipeline from here, the useful question is simple. Has anyone signed the FID yet? Until the answer is yes, every figure is a plan, not a pipeline.
My take: Announced is not invested.
Not advice. Just how I see it.