$65 Billion Alaska LNG Project Crashes and Burns

Alaska’s proposed $45-$65 billion liquefied natural gas (LNG) project that was supposed to help the state refill its coffers from decades of dwindling crude oil production and more than two years of low oil prices, took several steps backward a few weeks ago when three of the project’s four partners, BP , ConocoPhillips COP -0.40%, and ExxonMobil XOM -1.23%, all North Slope producers, pulled out. The fourth project partner is state-owned Alaska Gasline Development Corp (AGDC) . . .

The project proposal was conceived in happier days for global oil and gas producers. When LNG prices in Asia breached $20 per million British thermal units (MMBtu) in February 2014, hopes soared for new LNG project proposals.

However, what a difference a few years can make. After reaching $115 per barrel in mid-2014, global oil prices have more than halved and are hovering in the mid-$40s range, with little hope of market equilibrium in sight. LNG prices, which largely track oil prices, have fared even worse.

LNG prices for November delivery in Asia, which accounts for around two-thirds of global LNG demand though that demand growth is slowing, are trading just over $5/MMBtu. (Read more from “$65 Billion Alaska LNG Project Crashes and Burns” HERE)

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