OPINION: Alaska’s LNG future requires creative thinking

Published 1:30 am Wednesday, July 1, 2026

Many Alaskans have grown increasingly skeptical that the proposed liquefied natural gas (LNG) pipeline is not moving forward because of its escalating cost. Early estimates placed the project near $44 billion; more recent figures — though unofficial — suggest costs approaching $60 billion or more. When projects reach this scale, uncertainty alone can stall even the most ambitious development plans.

That uncertainty is reflected in the caution shown by Alaskan major energy companies such as Exxon, ConocoPhillips, and BP. Their hesitation is not surprising: projects of this magnitude carry significant capital exposure, and investors require a clear path to profitability before committing. In practical terms, that means LNG prices would need to be high enough to recover costs and provide returns, even in a global market where competing supply — including underdeveloped reserves in Russia and elsewhere — continues to exist.

This cost pressure is also evident in current negotiations with prospective project partners. Currently, one example is Glenfarne, which has reportedly emphasized that state corporate taxes would need to be waived as part of any development agreement. While tax incentives are common in large infrastructure deals, the scale of the requested waiver raises legitimate questions about long-term public benefit and fiscal sustainability.

Alaska has faced similar debates before. During the Trans-Alaska Pipeline negotiations, tax structures were part of the broader discussion, but they were not treated as a condition that undermined the project’s feasibility. More recently, companies such as Hilcorp — now a major operator in Cook Inlet following acquisitions from BP — have benefited from favorable operating conditions, as a sub chapter S Corp, and therefore tax exempt.

Yet declining natural gas production in Cook Inlet has already raised concerns about long-term energy security for the Anchorage region, underscoring the need for new reliable supply sources. The central question is: if a project is only viable with extensive tax waivers and escalating public concessions, does it truly serve Alaska’s long-term economic interests? The state relies heavily on a limited set of revenue streams to fund education, transportation, and public services, including the Alaska Highway System. At the same time, Permanent Fund Dividend levels have become increasingly constrained. Against that backdrop, LNG development is often presented as one of the few significant new revenue opportunities on the horizon.

However, waiving broad categories of taxation for a single project could set a dangerous precedent with long-term consequences. Alaska must balance the need to attract investment with the responsibility to maintain a stable and equitable revenue base.

Infrastructure costs are only part of the challenge. Alaska’s unique land ownership structure — where the federal government controls roughly two-thirds of land within the state — adds complexity to large-scale development. This makes innovative approaches to transportation and energy export even more important.

It has been suggested that the proposed LNG line from the North Slope to Kenai be built in two phases. The first would be to build the line to initially serve the Fairbanks and Anchorage metro areas. Later, the final section, including the export dock, would be constructed on the Kenai. The drawback with this approach is the first section would not distribute enough LNG to cover operating costs or debt reduction.

An interesting group that continues to research the Arctic proposal of LNG by ice-breaking tanker to Asia is Oilak, associated with Lloyd Energy Company, with estimates of nearly 40% cost savings in transportation by the Arctic tanker route suggested.

Ice-breaking LNG tanker technology is already in use in Arctic regions, including Russia. Similar approaches could allow North Slope gas to reach Asian markets more directly. This would involve specialized loading facilities and seasonal shipping strategies designed around Arctic conditions.

During the 1967-68 period I worked in state government and during that time, we maintained a State office in Tokyo, Japan. The purpose was to promote Alaska resource potential to the Asian countries. This resulted in stimulating Alaska’s timber and fisheries industry, resulting in pulp mills in Sitka and sawmills in Ketchikan, Wrangell, Haines and Metlakatla, as well as several fish processing plants throughout Alaska.

I believe there is an opportunity to consider international equity partnerships in any LNG proposal. Countries such as Japan, South Korea, the Philippines and Taiwan, as well as other major LNG importers, could potentially participate as investors in infrastructure development in exchange for long term supply agreements. Similar models have been used in Alaska’s resource history, including earlier investment in timber, pulp and sawmills and fisheries operations across Alaska. Our state’s presence in Tokyo, as I’ve indicated, helped facilitate trade relations and market development.

These kinds of partnerships are not without complexity, but they reflect a broader truth: large-scale resource development increasingly requires creative financing structures and shared risk models.

Ultimately, the most expensive component of any LNG strategy is not just production, it is transportation to market. Whether through pipelines, rail systems, or Arctic shipping corridors, the chosen infrastructure path will determine the project’s viability more than resource availability itself.

Alaska should be cautious about allowing enthusiasm for a single project structure to override broader fiscal considerations. The goal should not be development at any cost, but development that strengthens the state’s long-term economic foundation. I believe if consideration of the potential of the Alaska Arctic tanker route were given genuine support by our governor and the legislature, the Arctic route would advance far beyond the current debate over foreign tax forgiveness. The state would generate greater revenue from the cost savings on transportation alone. Let’s take a look at how they are doing it from the Russian Arctic.

Frank Murkowski is a former U.S. senator and Alaska governor.

Alaska transportation officials on Tuesday identified the likely winner of a bidding process for building a $350 million vessel to replace the state’s 62-year-old Tustumena ferry.

The M/V Tustumena has been connecting communities along the Aleutian chain to Southcentral Alaska since 1964. Alaska leaders for years have been discussing plans to replace the ferry with a newer vessel.

But the process of constructing a new ferry has been repeatedly delayed and hampered amid shifts in state and federal administration priorities.

U.S. Sen. Lisa Murkowski was instrumental in adding funding to a bipartisan federal infrastructure bill in 2021 to build new ferries for Alaska. Funding from that bill, signed into law by former President Joe Biden, will be the primary way the state plans to pay for the new vessel.

The Alaska Department of Transportation and Public Facilities said Tuesday that it is nearing the conclusion of a monthslong bidding process, and had identified a Louisiana-based shipbuilder to construct the new ferry at a cost of just under $350 million.

That is an increase from 2021, when Gov. Mike Dunleavy announced a plan to replace the Tustumena by 2027 at a cost of up to $250 million. Both the price tag and the timeline have since been altered. The vessel is not expected to be complete until 2029, according to the latest plan.

In a written statement, Dunleavy said Tuesday that replacing the Tustumena reflects his administration’s “commitment to rebuilding this critical transportation network.”

During Dunleavy’s eight-year tenure, ridership and state revenue from the Alaska Marine Highway System have seen significant decline, with an aging fleet and difficulty in recruiting and retaining workers.

After several false starts, the state began seeking bids for the construction of the Tustumena replacement in January. The bidding process was initially intended to conclude in May, but was extended to provide more time for bidders to complete their proposals, according to state officials.

The department did not share how many bids it had received or details on the other bids.

The requirements for the new vessel include a 330-foot-long ship with a range of 4,000 nautical miles, and a capacity of 250 passengers and 28 crew plus 58 vehicles. That would be larger than the current vessel, which has the capacity to carry 160 passengers and up to 34, 20-foot vehicles.

Transportation officials said Tuesday that Thoma-Sea Marine Constructors, the Louisiana-based shipbuilder, has a 14-day window to submit all remaining requirement documentation. The award won’t be formalized until that process is complete.

Thoma-Sea recently completed work on the Arctic Fjord, a Seattle-based factory trawler operating in the Bering Sea. The Alaska transportation department stated that the project demonstrates the company’s “ability to successfully deliver complex vessels designed for Alaska’s demanding operating environment.”

The ferry system’s Marine Director Craig Tornga said in a statement that the step toward constructing the Tustumena replacement vessel “represents more than a new ship — it represents renewed confidence in the future of the Alaska Marine Highway System.”

“The replacement vessel will provide improved reliability, enhanced safety, increased operational flexibility, and modern efficient systems that will better serve our passengers, crews, and the communities that depend on us. We look forward to working with the men and women of Thoma-Sea Marine Constructors to deliver a high-performance vessel,” Tornga said in a statement.

For months, high-ranking Russian officials insisted that a path to ending the war in Ukraine – largely on Moscow’s maximalist terms – had been decided at a meeting between President Vladimir Putin and President Donald Trump last August in Anchorage. Only Ukraine’s intransigence stood as an obstacle.

But that narrative has unraveled – perhaps because the only way to get the United States to help broker a new deal is admitting there never was a previous one.

In recent days, three top Russian officials accused the White House of not honoring the Alaska agreement. Foreign Minister Sergei Lavrov even speculated that the summit was a U.S. “ploy to buy time to rearm the Kyiv regime.”

Secretary of State Marco Rubio, however, pushed back. “If there had been an agreement, we would have had an end of the war,” Rubio told reporters.

“Russia wants the entirety of Donetsk to be turned over to them, among some other things,” he said, explaining Russia’s demand for more Ukrainian territory.

After days of back-and-forth, Putin conceded the point, saying on Sunday that “there were indeed no agreements reached in Anchorage.”

“The spirit of Anchorage – although it wasn’t expressed in any formal documents, and no one put any signatures down – in Anchorage we discussed certain possibilities for ending the crisis in Ukraine,” Putin told a state television reporter Sunday. “And the compromises discussed were precisely the proposals the American side made to us.”

The contradictions started in Alaska immediately after the summit. Putin said an agreement that will “pave the path toward peace in Ukraine” was reached, while Trump said that while the meeting was “extremely productive … there’s no deal until there’s a deal.” Trump also told Fox News afterward that it was “up to Zelensky” now to get a deal done, referring to Ukrainian President Volodymyr Zelensky.

The Russian leader’s decision now effectively to bury the Alaska summit, which the Kremlin and its propagandists had mythologized as a turning point, comes as Russian forces are largely stalled on the battlefield in Ukraine – a sharp change from the previous four summers when they made gains.

Instead, the skies over Russia and the Ukrainian territory it occupies are increasingly crowded with advanced Ukrainian drones, signaling a new phase in which Russia is playing technological catch-up and regular Russian citizens are feeling the war intrude on their lives with gasoline shortages and disruptions to summer travel, including to occupied Crimea.

Russian political analysts have interpreted the indirect spat between Rubio and Lavrov over the alleged deal as a sign that Ukraine has convinced Trump it can keep fighting – and that it can pose a serious threat to Crimea, which Russia illegally annexed in 2014, rather than surrendering the Donbas region, as Russia has demanded.

Trump probably arrived in Anchorage believing that Ukraine’s defeat was inevitable and that the sooner it accepted terms, the better for everyone, Fyodor Lukyanov, a prominent foreign policy analyst who advises the Kremlin, wrote in an op-ed in a Russian publication.

“The goal of Kyiv and the collective Brussels was to convince Trump that the belief in Ukraine’s inevitable defeat was mistaken,” Lukyanov wrote. “Ten months after the Anchorage summit, they succeeded in persuading him.”

Since Alaska, no major breakthrough has materialized in Russia’s favor, Europe so far has managed to sustain its military and economic aid to Ukraine, and Trump has become distracted by Iran.

“Diplomacy in the midst of hostilities is shaped by their outcome,” Lukyanov wrote. “If the balance of power – or the perception thereof – shifts, the understandings reached at an earlier stage lose their validity.”

Ukraine’s push to impose a “logistical lockdown” on Crimea and Kyiv’s growing capability to strike deep inside Russia seem to be part of a 40-day blitz declared by Zelensky to “influence” Moscow to end the war.

Continuing that pressure, Ukraine overnight launched dozens of drones at the Moscow region and struck Russia’s Dubna satellite communications center north of the capital. Zelensky said ​Russia uses the Dubna site for reconnaissance and coordination of its military activities in Ukraine.

Andrei Vorobyov, governor of the Moscow region, confirmed the attack had occurred but said that an “administrative building was damaged by drone debris.”

Amid chaotic scenes in Crimea, the Russia-installed authorities imposed a state of emergency in response to strikes on highways and bridges. There have also been blackouts that have prompted many summer visitors to return home.

“He’s holding his own at least,” Trump said of Zelensky last week, speaking to reporters at the White House. “A lot of people dying on both sides, but I think he’s doing pretty well. You have to say he’s courageous, he’s got great equipment, he’s got great men, he’s got fighters.”

Ukraine seems to have scaled drone production to a level that can sustain strikes on Russian cities hundreds of miles from the border and that keeps the frontline kill zone stable. This means that ground action is drying up.

“The war has markedly changed this year,” said Ruslan Leviev, an analyst with the Conflict Intelligence Team, a group that uses open-source data to track the Russian military.

“It’s hard to say the battle initiative is on the Ukrainian side,” Leviev said, “but time is on Ukraine’s side – more problems keep arising for Russia, economically, politically and militarily, and it’s all adding up.”

Russian budget data indicates that its military recruited 71,216 men during the first quarter of 2026, compared with 89,601 over the same period last year, according to Janis Kluge, a Russia expert at the Berlin-based German Institute for International and Security Affairs.

Recruitment stabilized somewhat in the second quarter, returning to around 30,000 contracts per month. But local media reports suggest the overall stream of recruits has slowed compared with previous years as the pool of men drawn by the enormous pay packages that eclipse regional Russian salaries appears to be shrinking.

Rumors have circulated that Russia may declare a fresh mobilization after key parliamentary elections in the fall – the first since the war began – but politically that move could prove extremely costly for the Kremlin. The “partial mobilization” in 2022 drove tens of thousands of men to flee Russia. After four years of war, and mounting economic strain, the mood has soured considerably.

Leviev and other analysts said that they doubt Moscow would call for full mobilization, since this would require significant financial resources to set up new formations, and train and equip them, and that such a move fundamentally wouldn’t unfreeze the line of contact. “At this pace, the war on the ground looks to us as a dead end,” Leviev said.

This poses several challenges for Russia.

Russia still holds an advantage in manpower, conventional arms and ballistic missiles, which it continues to use against Ukrainian cities and infrastructure. But Ukraine’s relentless drone campaign, especially its use of medium-range drones, has chipped away at this advantage, complicating frontline logistics and driving up the costs for Moscow of supplying the front.

Russia’s flagship air defense systems were designed for high-altitude targets like jets and ballistic missiles, not slow, low-flying drones. Interceptor missiles also cost many times more than the drones they shoot down, draining stocks at a rate Western officials have said may be unsustainable.

In his remarks Sunday, Putin commented on the deteriorating situation in Crimea and the wider fuel shortage in Russia after weeks of silence.

Addressing Ukraine’s drone campaign, Putin said that Russia needed to “significantly ramp up production of air defense systems.” He also pledged to ensure the supply of fuel to Crimea by land and sea but did not say how this would be accomplished.

Putin also asserted that Kyiv had put forward what he called “new proposals” to curtail hostilities in four regions of eastern Ukraine – Kherson, Zaporizhzhia, Donetsk and Luhansk – and agree to mutually halt long-range strikes.

Putin, however, cast the offer as a distraction that would allow Ukraine to redeploy units from other regions to these four areas, relieving pressure along the nearly 800-mile frontline. He reiterated that Moscow aims to fight on.

“We have some certainty regarding the challenges facing Putin, but what we can expect from him in response to these challenges remains unclear,” said Vladimir Pastukhov, a Russian political scientist and honorary senior research fellow at University College London.

According to Pastukhov, Putin has several options to escalate the war, all fraught with risk. These include an attack on a NATO nation in the Baltics, the detonation of a tactical nuclear weapon in Ukraine or a mass mobilization of Russian soldiers. Moscow could also adopt a hybrid strategy, potentially striking European military facilities supporting Ukraine.

That would effectively be a limited, undeclared war on Europe, testing Trump’s loyalty to NATO allies.

Putin could also pressure its ally Belarus to allow Russian forces to attack Ukraine from its territory, opening a new northern front.

Putin on Sunday said Russia was expecting a resumption of U.S.-led peace talks and a visit to Moscow by U.S. envoys Steve Witkoff and Jared Kushner – once the “hot ​phase” of the Iran war is resolved.

Lukyanov, the analyst, said Russia believes that Trump’s position on the war in Ukraine will shift again – as it has many times. “But first,” he wrote, “the White House must be brought to the understanding that a military victory for Russia’s adversaries is impossible.”