Japanese company halts project to develop Cook Inlet LNG
A Japanese Energy Company with plans to construct a billion dollar LNG export facility at Port Mackenzie has decided to halt the project and withdraw from Alaska completely.
Tokyo-based Energy Resources Inc. has been looking to develop Cook Inlet natural gas since 2011, but the company says the project can no longer be supported under current market conditions.
“Today there’s a glut of projects that are marketing to Japan,” said Mary Ann Pease, general manager at the company’s Anchorage offices. “LNG prices are a fraction of what they were, so it made the economics of a small-scale Cook Inlet project challenging.”
The announcement is the latest in a series of blows to Alaska’s ailing energy sector. Governor Bill Walker described the news as “disappointing” but said he’s still confident in the viability the state-owned Alaska LNG Project, a multi-billion dollar gas-line project aimed at monetizing North Slope gas reserves.
“We look at what the prices will be in 2023 and 2025 and there’s no question. The economy of scale to a larger project is very different economically from a small-scale, small-volume project,” Gov. Walker said. “So we’re very comfortable with where we’re seeing the market going and the economics of a large project.”
While the company’s plans for Cook Inlet did not materialize, ERI executive vice president Eiji Hashio says he also sees strong potential for North Slope gas in Japanese markets.
“I personally think Alaska has big gas in the North Slope that should be brought to Japan as a reliable and cheap energy source,” Hashio said.