Walker signs non-binding natural gas agreement with Japan-based REI

Today Gov. Bill Walker signed a non-binding agreement with Japan-based Resources Energy, Inc., which, according to a Walker press release “is an extension of Alaska’s longstanding partnership with Japan in energy markets.”

The state already has such an agreement with REI, which is working with AIDEA on the planning stages of an LNG facility in the Kenai which will send LNG to Japan. The project is expected to cost about $2.5 billion, including the gas. The company also has an eye on North Slope gas. It has an office and staff in Anchorage. The state’s agreement with REI was set to expire at the end of this month.

The major difference between this one and the last agreement is that the governor’s signature will be on this one. “That was signed by the commissioner and this was signed by the governor,” Walker said at a press conference announcing the agreement.

Already Alaska has a few natural gas-related agreements with Japan. Last year, then-DNR Commissioner Dan Sullivan signed one with the government-controlled Japan Bank.  And in September, then DNR Commissioner Joe Balash signed one with the government of Japan.


30 thoughts on “Walker signs non-binding natural gas agreement with Japan-based REI

  1. Crude is Rude, Gas is Groovy

    JK is a lawyer…
    ..does he actually do anything besides sit in an office wearing a suit ??
    he’s not an engineer, electrician, surveyor, construction manager, sea-captain, fisherman, pilot, demolition-diver, miner, logger, millwright, farmer, well-driller, geologist, machinist, production manufacturer etc;
    like many of us frustrated and insulted Alaskans.

    Lawyers are great at reading, flimflam & yakketyak…
    …but I’d never hire one to go milk a cow,
    or paint my house, or tune my truck,
    or design a statewide gas infrastructure.
    Lawyers rely on coloring books and paint-by-numbers kits to do their artwork,
    when it comes to a simple plumbing project they hire expensive bogus consultants to produce a study.

    Lawyers often become FLAWMAKERS,
    effing-lawmakers that can’t think their way out of a wet paper bag.
    ……Will Rogers

    When Alaska is broke on it’s ass after a few years of cheap oil,
    that’s when you will see Alaskans sober up and quit flinging BS
    while stuck on stupid for decades.

    A bear jumps out of a bush and starts chasing two unarmed hikers.
    [ a logger & a lawyer ]

    They both start running for their lives,
    but then the logger stops to put on his running shoes.
    The lawyer says, “What are you doing? You can’t outrun a bear!”
    The logger replies, “I don’t have to outrun the bear; I only have to outrun you!”


  2. Forecast

    Governor Walker did in his first three weeks what Parnell was not able to do in five years. Now we read the snotty comments of the saboteurs who have screwed Alaska for decades.

  3. Dee

    This is ridiculous. Is this what we should expect for the next four years ? Note to new administration: Alaskans may have elected Sarah Palin; however, we aren’t stupid enough to think this amounts to squat.

  4. Forecast

    Willis, The legislature was not trying to gain significant revenue from Cook Inlet gas and oil. Their focus was on taking care of Railbelt energy needs.

    The markets are good at making decisions about how to best invest capital dollars. The markets are investing in the Cook Inlet because the capital investment is less than is required to move gas from the North Slope. The move by REI demonstrates the stupidity of the $8 billion dollar “bullet” line- backed by politicians like Hawker who have little business sense.

    North Slope gas can and will be moved under the right set of circumstances, if Alaska does not allow the continued warehousing of Alaska’s gas. Note that REI tried to get gas from the North Slope first, but was rebuffed by morons like Parnell and his pals in the legislature.

  5. Lynn Willis

    You are entitled to your own opinion but not your own facts. Cook Inlet gas to consumers is not cheaper now than before the “Renaissance” and to imply that is disingenuous. The fact is that the current Cook Inlet contracts have resulted in an annual consumer increase for 2014 of 48.5% as of the end of the third quarter. Here are the numbers: 1st Quarter Increase of 19.77%, 2nd Quarter Decrease of 41.18% and, 3rd Quarter increase of 72.76%.
    Another fact is that while gas prices have recently fallen EnStar has asked for a substantial delivery cost increase effective this year which will more than offset any reduction in the actual cost of gas.

  6. Jon K

    Lynn, relative to importing LNG, which was out alternative circa 2013, the current gas supply contracts are a lot cheaper. Moreover, because of all of the competition, the contracts for post – 2018 gas will be cheaper than today’s – guaranteed.

    Re Fbks: There are at least two separate groups working to bring Cook inlet gas to Fairbanks – and other Alaska markets.

    Agrium is now back on the scene.

    So what has happened over the last several years: more gas, which means energy security and cheaper utility bills; billions of private sector investment, which means jobs and economic vitality; several competing proposals to deliver Cook Inlet gas to Fairbanks and rural and coastal Alaska; and more companies coming to the state, which means competition. Not bad for a basin that was considered dead in 2011. Oh, Cook Inlet oil production has doubled and will likely double again in the next several years.

  7. Lynn Willisa

    If only I would write what you want to read. I never said that the stimulus for Cook Inlet did not “work”. Defining that word “work” is the problem. Did it, in combination with opening the gas storage facility, work to lower the risk of sudden loss of supply? Yes. Did it work to lower consumer gas costs? No. Did it work to provide supply contracts beyond 2018? No. Did it work to provide a supply of gas for Fairbanks? No. Did it work to provide state revenues? No. And what about that study regarding cost of importation that Amanda mentioned? What does it have to say?
    The bottom line is we refuse to objectively compare cost v. benefit. That is exactly the problem you face when you can’t differentiate between motion and progress and view “hope” as a viable plan of action.
    Regarding spending, the problem Jon is that we spent (and spend) more than we earned (earn). regardless of what we purchased. Our “leaders” refused (and refuse) to recognize the valid points you make regarding the challenges in Alaska with government funding. I am now haunted by those who are apparently willing to now spend our children’s future as they point out balance of the permanent fund as being an available asset.
    I can assure you that the lesson of over-spending has still not been learned as demonstrated by our future obligations to fund our portion of the AKLNG project. I suggest Walker won’t collapse AKLNG, it will implode all by itself.

  8. Jon K

    Lynn, you continue to be wrong in saying that the incentives put in place to revitalize the Cook inlet basin didn’t work. They did. We now have a ton of gas for years to come. This didn’t happen by chance. The legislature put in place legislation that attracted capital and companies who have found and are developing a ton of gas. We now don’t have to worry about the railbelt’s energy needs, which is a remarkable turnaround from two years ago where the conventional wisdom was that we were running out of gas and would have to import LNG.

    So Lynn, why isn’t Enstar sending notices anymore telling their customers to prepare for rolling brown outs or having to import gas?

    Unlike every other state in a fiscal bind we have readily available solutions – assuming we have the stomach. We don’t tax individuals, we have $70 billion in the bank, and the state covers a huge percentage of local government needs.

    The fiscal bind is largely attributable to three factors: we decided to fund our government almost exclusively oil; costs of government is escalating because of Medicaid, pensions, and health care; and Alaska is an extraordinary expensive place with a dispersed population and no economies of scale.

    Yes, AK LNG is a massive project which huge costs. But it also how gigantic rewards. If Conoco, BP, or Exxon can book those reserves, it will boost their stock. That is why they are pursuing the project. My advocacy for this project has nothing not do with empty-headed cheerleading. I’m looking at their actions, the amount of money and resources that they are pouring into the project, and have concluded that the project, while it has huge challenges, is real and is moving forward. I do, however, question whether Walker will stay the course.

  9. Andy


    Finally a blog that gets to the real reasons for this latest political puffery. The State is spending
    millions of dollars for a plethora of study groups. These groups hire buddies, sycophants, no shows, campaign workers and in-laws as directed by the politicians in charge at whatever juncture in time. Has there ever been an audit of the study groups billings? The horror…

    So it is quite convenient to announce a feckless agreement that is nothing more than
    a handshake on a deal that may or may not happen. It is shocking that folks get all
    stirred up over ineffectual fodder such as this.

    Always follow the money. Dwindling Alaskan reserves are being routed to study groups that hire buddies. The only gas produced by these six figure parasites is some methane resulting from over feeding at the public trough. Here piggy piggy, here’s your study check and oh by the way, keep up the campaign fund raising efforts.

  10. Lynn Willis

    I agree that the trucking scheme is not viable and have said so for years. I apologize for not making myself clear.
    I appreciate your observations. Cook Inlet has “possible” “probable” and “proven” reserves of gas yet only actual drilling results in the “proven” reserves that can be developed. We have spent (or given up) millions of dollars on the “Cook Inlet Renaissance” with little or no state revenue being realized and now paradoxically, Cook Inlet development is no longer in our best interests.
    According to many (not me) , including the majority of our legislators, we belong in a business venture as equity partners as we now are with AKLNG attempting to market North Slope gas. Now what makes no sense to me is that we are both attempting to market North Slope gas at the same time we encourage our “competitors” in Cook Inlet. Is that why we want Fairbanks to not use the gas from Cook Inlet and use only North Slope gas to provide (regardless of consumer cost) a market for AKLNG gas?

  11. Lynn Willis

    The fact is the current political structure in Alaska is badly broken and the current legislature, abided by the previous Governor in particular, has placed this state in serious fiscal jeopardy. We can sign agreements until the “second coming”,force Exxon to develop Pt. Thompson, and have some land purchased in Kenai yet that means very little until we realize revenue. Apparently I am not alone in that assessment based on the analysis of those who evaluate such things as state credit ratings.
    After watching them for years, I seriously doubt if this legislature can accomplish anything of meaning to solve our problems. They have mostly governed in an atmosphere of bountiful revenues with them seeing slogans and money as providing all political solutions. Now I am worried that they will go the route of bonded indebtedness to forestall having to deal with reality and to keep themselves in office. The one thing Walker has going for him is that he can hardly make things worse and I wish him all the best in his efforts.
    In my description of the haphazard approach to energy development in this state, where was I wrong? And now we find ourselves obligated as equity partners in what has been described as a “giga project” never before attempted involving private enterprise and a single state of the United States. And all this speculation from those who label themselves as “fiscal conservatives”?
    I didn’t mean to imply to Forecast that I have any faith that the ridiculous trucking scheme will work and those “facts that get in my way” seem to bearing out my prediction long ago that this wasn’t going to work except to provide income to some of those involved.
    All the “spin” and cheer leading in the world cannot change that fact that we are in trouble. I am not happy that we are in this situation yet I am willing to face it and would like to hear possible solutions that might come from an open government forum; however, the Alaska ruling class would rather govern in secret then travel on another junket or hold fundraisers for themselves with a close circle of supporters.

  12. Jon K

    Forecast is correct that Cook Inlet has a ton of gas that is currently stranded. Lynn is once again refusing to allow facts get in the way that we are doomed and nothing good ever happens in Alaska.

    Forecast is absolutely wrong on pretty much everything else.

    AK LNG is real. Exxon is spending $4 billion at Point Thomson, which is a gas field. You cannot have a large scale LNG project without Point Thomson. The skeptics need to explain why Exxon is spending all of this money if it wasn’t serious about AK LNG.

    The AK LNG project has also acquired hundreds of acres of land in Kenai. It is employing hundreds of people, including the top talent at Conoco, Exxon, and BP. The FERC and DOE processes have been initiated. AK LNG has spent hundreds of millions to gather the necessary information to make it through the permitting process and to get a real cost estimate – you don’t have a project unless you know the costs and permitting requirements.

    Ak LNG has also engaged the markets. The Parnell administration was courting customers in China, Japan, and Korea. The companies have done the same.

    This project has a ton of momentum. The question that still remains unanswered is whether Walker will continue to pursue it.

    Finally, one of the most dangerous illusions underlying Forecast’s comment is that the customers don’t play the market. The Japanese are courting projects all over the world, signing MOUs, and telling the Australians, Canadians, Russians, East Africans, Texans, etc., that they are very interested in their gas and want to have it delivered as soon as possible. Why? Because their game is to make as many projects viable in order to drive down price. The Japanese don’t care about Alaskan gas. They want cheap gas. Alaskans need to stop being sentimental and we need to stop deluding ourselves that we are special. Alaska LNG will go forward if we can beat the competition by proving to the market that we can execute and deliver a low cost commodity. The two most important questions that we need to answer are: how do we drive down the cost of this project and what entity instills more confidence in being able to deliver on the project: Exxon partnered with BP, CP, and the state, or some group working at the behest of governor Walker or AIDEA?

  13. Anonymous

    Walker Administration, Day 24:

    Many moons have passed, yet still no first-day-in-office energy emergency declaration. Can’t hold breath for much longer…

  14. Jimmy

    I don’t like to say unkind things. I do appreciate the truth. Forecast should keep using this moniker to protect himself from having everyone know how lame his comments are regarding the gas line. Pathetic. It’s probably Jim Whittaker, Walker’s COS. Maybe not. But lame.

  15. Forecast

    You do not quite understand, Willis. The LNG trucking nonsense is all but dead. A stupid idea, that does not provide cheap energy.

    There is a LOT of gas under the Cook Inlet. Some of this gas is stranded due to lack of critical infrastructure needed to move it to market. Why drill for more gas, if gas already discovered is stranded? The solution is more infrastructure- like LNG plants.

    Japan can take gas from a few, smaller projects instead of one mega project. This approach “right sizes” the LNG delivery to existing ports in Japan- without expensive upgrades there.

    The AKLNG project is only propaganda. At the company I have an interest in the folks in the board room hate having to pretend like they are moving forward with a project in Alaska. All the past pretend projects just make Exxon, Conoco, and BP look silly. Why would Exxon want LNG from Alaska to compete with its other projects, and pricing structures?

    The answer it, it does not. Alaska needs to take control, starting by aligning wit our customers, not our competitors.

  16. Forecast

    To you doubting Thomases…

    What is different between this and all the nonsense that went on in the past is:

    1. This agreement was signed by the governor.

    2. It was with the markets- where the project must begin.

    3. It sets the tone, only three weeks into the job.

    4. There is no legal language in this agreement that says it means nothing- like the last “agreement” signed by a lowly DNR commissioner.

    5. REI has spent tens of millions trying to start a project in Alaska.

    6. REI wants gas by 2020.

    7. REI tried to get gas under AGIA in 2012, but was IGNORED by Parnell and Exxon- one of the many reasons Parnell was fired by the voters.

    8. Japan is an important friend and partner of the USA.

    9. The Japanese could be moving forward with a project in lots of other places, but they are sticking with Alaska.

    10. We have a governor who was 100% vindicated. Walker has been saying for almost 2 decades that the only project that makes sense is one of a LNG project to tidewater, for LNG export. If Walker had been listened to, we’d have a project up and running today- and we would not have a crushing $3.5 billion dollar deficit that could wreck our economy.

    The damage the last governor and legislature have left us is sickening. We have a lot of work to do to repair the damage they’ve caused.

  17. FCV

    Wow, Gov. Walker you are amazing. Incredible! You’ve been able to secure a non-binding agreement to build a gasline in less than 30 days. Alaskans, especially the stupid ones, must be jumping for joy. You are a fraud.

  18. Jardo

    This NON-BINDING agreement isn’t worth the paper its written on. We all know that the Japanese love the decorum of MOUs, especially when they are NONziBINDING. Truth is that Walker is proving to be worthless. His cabinet is still not complete. His budget submission isn’t close to what he promised in the campaign. I don’t think his COS has a clue. They certainly aren’t dealing with the fiscal crisis as a crisis. I hope not but am starting to believe that these guys are jokes. His candidacy was the least vetted candidacy in state history. Alaskans were ready to vote for anyone but Captain Zero. As a result, they might have picked even a bigger loser.

  19. Lynn Willis

    Oh Boy! Another signed “agreement”! How about a moratorium on announcements of “signed agreements” for anything. We have had enough of these announcements in the past few years to last a while. All they seem to accomplish is a further drain on the state treasury.
    This state simply cannot get out of its’ own way. For example, the key, I have been told, to success for the AKLNG project (or the parallel state funded AGDC/ASAP gas project) is a huge volume of gas to sell. So why would we continue to fund this effort of the AIDEA (Alaska Industrial Development and Export Authority) to involve us with REI, who is not one of our “partners” in AKLNG, in what appears to be competing LNG export facility in Kenai? Perhaps it might be the same reason for participating in the funding of a separate LNG facility on the North Slope to support the Fairbanks LNG trucking scheme even after spending (or giving credits) for how many millions for the “Cook Inlet Renaissance” with little realization of state revenue from Cook Inlet. Or, maybe this is same reason we have no signed contracts for South Central gas supply beyond 2018 even after that very expensive “Cook Inlet Renaissance” with announcements of significant additional proven gas reserves. Now that lack of long-term contracts is being used as a justification for Fairbanks to turn away from Cook Inlet for supply by rail and justify the North Slope LNG trucking project. How long can the state government keep this juggling act going before the music stops?

  20. Forecast

    An outstanding first step, only three weeks into the job for Gov. Walker. Walker knows a project begins with the market, our customers. Since Japan is looking to buy gas as soon as possible, this is good for both Alaska and Japan. Alaska would enjoy new revenue, and affordable gas, and Japan benefits by supplies of gas from a stable, friendly country.

    Congratulations to REI, and Gov. Walker!

  21. Django

    Well said Ah. One question we need to ask Walker: Who is going to get the highest value for our gas – the producers or the Asian customers?

  22. AH HA

    And of course, since both are both agreements are ‘Non-Binding’ it really makes no difference who puts his mark at the bottom.

    I’ll give the Co-Governor’s this, they are really good with the political theatre.

  23. Anonymous

    If REI was for real, why do they need the state to pay hundreds of thousands of dollars for their studies? We are cutting state services but have a ton of money to give to a Japanese group. Why?

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