Alaska Policy Commentary  ·  July 23, 2026

The Cost Will Kill This Project: Why Alaska LNG's Own Numbers Show It Cannot Be Built at a Price the Market Will Bear

Glenfarne estimates $44.5–$54.5 billion. Public Citizen's analysis of comparable LNG projects shows average cost overruns of 59.7%. LNG Canada — the most comparable project — ran 130% over budget. Apply historical overrun rates to Alaska LNG and the project could cost more than $100 billion. At $100 billion, the math doesn't work at any realistic LNG price. Alaska is being asked to permanently restructure its tax code for a project the numbers say cannot be built at a price anyone will pay.

By Tom Lamb  ·  Post XII in the Alaska Policy Series  ·  July 23, 2026

The Alaska Legislature just voted down HB 381 on a 19-19 House tie — ending a second consecutive special session without passing the tax break Glenfarne says it needs to finance the project. Governor Dunleavy has called a third special session. The same debate will resume. The same arguments will be made. The Legislature will be told, again, that the tax structure is the obstacle between Alaska and its gasline.

It isn't. The obstacle is the cost. And no tax break — however structured, however generous — changes what it costs to build an 807-mile Arctic pipeline and LNG terminal from Prudhoe Bay to Nikiski.

"Apply historical LNG cost overrun rates to Alaska LNG and the project could cost more than $100 billion. At $100 billion, the math doesn't work at any realistic LNG market price. No tax break fixes that."

What LNG Projects Actually Cost vs. What Developers Say They Will Cost

Public Citizen published a comprehensive analysis in June 2026 examining more than twenty LNG export terminals operating or under construction in the United States, Canada, and Mexico. The findings are unambiguous and directly applicable to Alaska LNG.

LNG Project Cost Overrun Reality — Public Citizen June 2026

Average cost overrun — completed projects: 59.7% above original estimate

Average cost overrun — projects still under construction: 38% above original estimate already

LNG Canada — most comparable project: Required a custom-built pipeline over hundreds of miles of challenging terrain — ran more than 130% over budget

New Fortress Energy: Forced into sweeping restructuring in March 2026 — split company in two, transferred Brazilian assets to creditors — as direct result of LNG cost overruns

Applied to Alaska LNG at 59.7% average overrun: $44.5B becomes $71B · $54.5B becomes $87B

Applied to Alaska LNG at LNG Canada's 130% overrun: $44.5B becomes $102B · $54.5B becomes $125B

Glenfarne's CEO Brendan Duval has said the company "understands what the pipeline costs to build and can confirm the project is economically viable." He made that statement in May 2026. He has not released the Worley contractor bids that supposedly support it. The Legislature has been voting on a tax break for a project whose developer says it's viable but won't show the numbers that prove it.

The Pricing Chain — What the Gas Actually Has to Sell For

The cost overrun problem isn't just about construction. It's about what the gas has to sell for to make the construction cost worthwhile. Every dollar added to construction cost must be recovered through the pipeline tariff — which flows directly into the delivered cost of gas to Asian buyers.

Henry Hub natural gas today: $2.94/MMBtu. The EIA forecasts $3.50–3.70/MMBtu for 2026–2027. North Slope producers need approximately $1–2/MMBtu at the wellhead — a benchmark established in 2018 that hasn't been updated publicly despite 8 years of inflation.

The Alaska LNG Pricing Cascade — What Asian Buyers Pay vs. What's Left for Alaska

Asian LNG spot price (JKM) today: ~$12–13/MMBtu

Less liquefaction cost at Nikiski: ~$3.00–3.50/MMBtu

Less pipeline tariff (807 miles): ~$3.00–4.00/MMBtu — higher if construction costs overrun

Less shipping to Asia: ~$1.50–2.00/MMBtu

Wellhead netback to producers at $12–13 JKM: $2.50–4.50/MMBtu — barely above the 2018 benchmark

JKM in 2024 dropped below $8/MMBtu. At $8 JKM: wellhead netback = negative to zero.

At $100B construction cost: Pipeline tariff rises sharply to service debt — wellhead netback to producers goes negative even at $13 JKM. Project is unfinanceable.

Sen. Myers told the Legislature that Department of Revenue modeling shows more than a 30% cost increase makes the project unprofitable. Glenfarne's own high-end estimate of $54.5 billion is already 22% above its low end. The average LNG project overrun is 59.7%. LNG Canada — the most comparable project — ran 130% over. Myers' own 30% profitability cliff is almost certainly already breached before a shovel hits the ground.

LNG Canada — The Comparison That Ends the Argument

LNG Canada is the project most comparable to Alaska LNG. It required a custom-built pipeline over hundreds of miles of challenging terrain in a remote northern environment — just like Alaska LNG. Its original cost estimate was approximately $14 billion Canadian. Its final cost was over $40 billion Canadian — more than 130% over budget. It is the only recently completed project that directly mirrors Alaska LNG's physical and logistical profile.

LNG Canada was built by Shell, PETRONAS, PetroChina, Mitsubishi, and Korea Gas Corporation — a consortium of the world's most experienced LNG developers with combined balance sheets measured in hundreds of billions of dollars. They still ran 130% over budget. Glenfarne is a privately held company that has raised $48.5 million at the corporate level and has no prior mega-project completion record.

Rep. Kevin McCabe wrote in May that LNG Canada Phase 2 is moving toward FID by end of 2026 and that Alaska should feel competitive pressure. He is right that Canada is moving. What he did not note is that LNG Canada Phase 1 — the comparable project — ran 130% over budget. Phase 2, building on existing infrastructure at the same site, faces dramatically lower cost and execution risk than Phase 1. Alaska LNG has no existing infrastructure. It starts from zero. In the most challenging Arctic construction environment in North America.

What a $100 Billion Project Means for Alaska

Apply LNG Canada's 130% overrun to Glenfarne's low-end estimate of $44.5 billion and the project costs $102 billion. Apply it to the high end and it costs $125 billion. These are not worst-case scenarios conjured by opponents. They are the outcome of applying the most comparable completed project's actual cost experience to Alaska LNG's own developer estimates.

What Alaska Has Committed Against a Potentially $100B+ Project

Assets transferred to Glenfarne: 75% of $1 billion in publicly funded project assets — for $150 million in development spending

25% equity stake: Option to invest 25% of construction costs after FID — potentially $25 billion of state capital at $100B total cost

Property tax permanently surrendered: $16 billion over 30 years per Alaska Beacon — gone regardless of whether the project is ever built

Buyback mechanism: If project fails and Alaska seeks to reclaim assets, Glenfarne proposes the price — based on "value added" from a cost basis Alaska never independently verified

DOE loan guarantees: Up to $30 billion in potential federal loan guarantees that attach to the project — potentially backed by US taxpayers if the project fails

The Glenfarne defense — repeated in multiple legislative hearings and in the Alaska Landmine — is that "the private sector is taking on 100% of the financial risk" and "Alaska has no exposure to cost overruns." That claim has two problems.

First, Alaska's 25% equity option means the state can be called to invest up to 25% of total construction costs after FID. At $100 billion total cost, that is $25 billion of state capital — against a project whose economics are already underwater at that price point. Second, the DOE loan guarantee program that Glenfarne is pursuing transfers default risk to federal taxpayers. "The private sector bears all the risk" is true only in the narrow sense that Glenfarne's $150 million pre-FID development spending is at risk. After FID, the risk spreads to state equity, federal loan guarantees, and North Slope gas producers whose wellhead netback goes negative.

The Tax Break Cannot Fix a Cost Problem

The DOR testified that under current property tax law the project faces up to $750 million annually in tax burden by 2033 — making financing "substantially more difficult." That is a real number and a real problem. HB 381 addresses it by replacing the property tax with a volumetric rate generating approximately $59 million annually — a $691 million annual reduction in tax burden.

That $691 million annual reduction sounds significant. Against a project that may cost $100 billion to build, requiring perhaps $6–8 billion annually in debt service, it is a rounding error. The tax break improves project economics at the margin. It does not change the fundamental cost problem. A project that costs $100 billion to build cannot be made financeable by reducing its annual tax burden from $750 million to $59 million.

GaffneyCline — the state's own adviser and a Baker Hughes subsidiary — testified that the project faces a "narrow window of viability" even with the tax break. That testimony came before Public Citizen's analysis showed average LNG cost overruns of 59.7% and before anyone applied LNG Canada's 130% overrun to Alaska LNG's numbers. "Narrow window of viability" was the optimistic assessment.

What Happens When the Project Fails

HB 381 is dead — for now. But the third special session will bring the same pressure, the same arguments, and the same fundamental cost problem that no legislative session can solve. If the Legislature eventually passes a clean tax break and the project proceeds to FID — what happens when construction costs overrun?

The confidential AGDC document revealed that if Alaska tries to invoke the clawback and reclaim the project, Glenfarne proposes the buyback price. At $100 billion in actual construction costs, "value added" by Glenfarne is enormous — and the price Alaska pays to reclaim what it already owned could be catastrophic. The Senate passed asset protection amendments requiring no-cost return of assets. Those amendments are in a dead bill. If they don't survive into whatever passes in the third special session, Alaska has no clawback protection against a project that cost 130% more than estimated.

The Legislature is being asked to make a permanent, irrevocable tax commitment for a project whose historical peer — LNG Canada — ran 130% over budget, whose developer has a corporate equity base of $48.5 million, whose wellhead economics go negative at Asian LNG prices seen as recently as 2024, and whose cost overrun risk falls ultimately on state equity, federal loan guarantees, and North Slope producers whose supply agreements are non-binding.

The Hidden Public Infrastructure Cost Nobody Added to the Project Total

Glenfarne's $44.5–$54.5 billion estimate covers the pipeline, the gas treatment plant, and the LNG terminal. It does not cover what Alaska must spend to make construction physically possible. That cost falls entirely on Alaska DOT&PF — and it has never appeared in any project cost estimate, any legislative fiscal note, or any Department of Revenue revenue modeling.

The Alaska LNG pipeline parallels the Dalton Highway corridor for approximately 230 miles — from the GTP at Prudhoe Bay south to the point where the pipeline route departs toward the Interior. The Dalton Highway is the only overland construction access route for that section. There is no alternative. Every pipe section, every compressor, every piece of heavy equipment, every load of construction materials for the northern pipeline section moves up that road.

Sen. Robert Myers said it himself in January 2026: "Trucks are going up that road, things are getting beat up because of all of the potholes and the washboard and everything that we're dealing with. Freight gets damaged. That means you're either having to fix it on site or order replacements. That increases costs. It delays projects. It could delay the gas line." The DOT commissioner responded by noting that DOT&PF budgets had been slashed by the Legislature last session — the same Legislature that is now being asked to grant a $16 billion permanent tax break to the project that road must support.

Dalton Highway Upgrade Cost — Documented Per-Section Benchmarks

MP 397–414 reconstruction (17 miles): $43 million — $2.5M per mile. Included raising grade 7 feet, replacing culverts, flood protection. Alaska DOT&PF actual expenditure.

MP 289–305 permafrost reconstruction (16 miles): $74.5 million in IIJA funds — $4.7M per mile. Required literally raising the highway to address permafrost subsidence. Alaska's most expensive per-mile Dalton project.

MP 18–37 reconstruction (19 miles): Substandard geometry, failing embankments, Hess Creek Bridge replacement. Cost consistent with $3–5M per mile range.

Permafrost acceleration baseline: Southern reaches face thaw depths reaching 6 meters by 2033 — driving per-mile costs up to $150,000 annually for stabilization and resurfacing maintenance before any Alaska LNG construction traffic begins.

Apply those benchmarks to the 230-mile Alaska LNG construction corridor and the upgrade cost picture becomes clear:

Cost Category	Low	High
Full reconstruction to heavy haul standard (230 miles at $3–5M/mile)	$690M	$1.15B
Bridge upgrades and replacements (est. 15 structures at $15–25M each)	$225M	$375M
Accelerated permafrost stabilization (230 miles × $150K/mile × 10 years)	$345M	$345M
Post-construction road remediation (230 miles at $1–2M/mile)	$230M	$460M
Total estimated Dalton Highway upgrade cost	$1.49B	$2.33B

For context: Alyeska built the entire 415-mile Dalton Highway from scratch in 1974 for approximately $125 million — roughly $750 million in 2026 dollars. Alyeska paid for it because it was their project. Alaska LNG construction would require upgrading 230 miles of existing state-owned road at a cost approaching the full replacement value of the original highway — and every dollar falls on Alaska DOT&PF, not on Glenfarne.

The Dalton upgrade cost alone — $1.5–2.3 billion — represents 3–5% of Glenfarne's low-end project estimate. It has never been included in any cost comparison. It has never appeared in the DOR's revenue modeling. It has never been the subject of a legislative appropriation request. The Legislature that cut DOT&PF's budget last session is now voting on a $16 billion tax break for a project that requires that same DOT&PF to spend $1.5–2.3 billion to make construction physically possible.

The Complete Hidden Public Cost Alaska Is Not Counting

Dalton Highway upgrade: $1.49–$2.33 billion — borne by Alaska DOT&PF. Not in Glenfarne's estimate.

Ambler Road: $2 billion — borne by AIDEA revenue bonds backed by Alaska. Not in any Alaska LNG cost analysis.

Interior road network upgrades south of Dalton: Unquantified. Not estimated. Not requested.

DOT&PF maintenance surge during 5+ years of construction: Annual baseline $16.5M multiplied by construction traffic surge — unquantified. Not estimated.

Total documented hidden public infrastructure cost: $3.49–$4.33 billion — none of which appears in Glenfarne's estimate, the DOR's revenue modeling, or any legislative fiscal note.

Add these hidden public costs to Glenfarne's low-end estimate of $44.5 billion and the true total cost to Alaska — public and private combined — is already $48–49 billion before a single historical cost overrun is applied. Apply the 59.7% average LNG overrun to the private construction cost alone and the combined public-private total approaches $75–80 billion. Apply LNG Canada's 130% overrun and it exceeds $105 billion.

None of these numbers have been presented to the Legislature in a single document. The DOR modeled revenue against Glenfarne's self-prepared private construction estimate. Nobody modeled Alaska's total financial commitment — private equity option plus permanent tax surrender plus hidden public infrastructure costs plus buyback risk — against realistic construction cost scenarios.

That document should exist before the third special session convenes. It should be publicly available. And it should be the starting point — not the afterthought — of any serious legislative debate about whether Alaska LNG can be built at a cost the market will bear.

Before the Legislature convenes for a third time on Alaska LNG, it should require one thing that has never been provided: an independent assessment of whether Alaska LNG can be built at a cost that produces positive wellhead economics for gas producers at realistic Asian LNG market prices.

Not Glenfarne's self-prepared estimate. Not the 2018 AGDC figure inflation-adjusted. Not Worley's contractor bids that Glenfarne controls and hasn't released. An independent engineering and economic assessment, commissioned by the Legislature, benchmarked against LNG Canada's actual cost experience, stress-tested against JKM prices at the 2024 low of $8/MMBtu, and presented publicly before any vote on any tax structure.

If that assessment shows the project is viable at realistic costs and market prices, Alaska should offer a fair competitive tax incentive — structured as a time-limited mill rate reduction on certified assessed value, as every comparable jurisdiction does. If that assessment shows the project is not viable at realistic costs and market prices, the Legislature should say so clearly and stop consuming special sessions, public funds, and legislative bandwidth on a project the numbers say cannot work.

The cost will kill this project. The only question is whether Alaska finds that out before or after it has permanently surrendered its tax authority, committed its equity, and signed away its clawback rights. The third special session is the last opportunity to find out before it's too late.

Tom Lamb  ·  July 23, 2026  ·  Post XII · Alaska Policy Series  ·  thomasalamb.blogspot.com

Sources: Public Citizen "Billions Over Budget" June 2026; Alaska Beacon; Alaska Public Media; GaffneyCline House Finance testimony May 2026; EIA Short-Term Energy Outlook July 2026; Trading Economics Henry Hub July 23 2026 $2.94/MMBtu; Sen. Myers commentary June 7 2026; Glenfarne cost presentation Senate Finance June 3 2026; Hilcorp Alaska letter July 23 2026; American Prospect June 2026. This is independent public policy analysis.