Look for Trump to declare a gas pipeline victory, but it won't be real

I expect the meeting between Japanese Prime Minister Shigeru Ishiba and President Donald Trump Friday will be followed by noise from the White House about Japan backing an Alaska natural gas pipeline.

Trump will declare victory and strut upon the stage, but as Macbeth moaned about the course of all life, look for a “tale told by an idiot, full of sound and fury, signifying nothing.”

Because liquefied natural gas from Alaska was mentioned in the Trump executive order, UNLEASHING ALASKA’S EXTRAORDINARY RESOURCE POTENTIAL, Trump will want to boast that he has accomplished what no one else could do—build the gas pipeline.

Japan will not promise to put up the money for a gas pipeline. It may promise to study a gas pipeline, which would be one of the most expensive LNG projects in the world.

Reuters reported last week that Japan is considering the possibility of talking up a gas pipeline deal to avoid tens of billions in Trump tariffs.

A promise to study would be enough for America’s Gasbag to tell himself that this is another great business achievement by the very stable genius. Any pipeline breakthrough will be like a degree from Trump University.

It costs nothing to talk and nod in assent when Trump demands that it’s time to make a deal. Hundreds of millions have been spent on gas pipeline plans over the last 50 years, but buyers willing to put up tens of billions with promises to buy gas for decades to come have failed to appear.

Reuters reported Tuesday that the chief financial officer of Mitsui, a corporate giant, said it would be natural to study Alaska LNG as an option because of its proximity to Japan.

“Japan has doubts about the viability of the proposed 800-mile pipeline – intended to link fields in Alaska's north to a port in the south, where gas would be liquefied and shipped to Asian customers – because of the overall costs of the gas relative to other sources. But it is prepared to offer to explore a deal if asked, the officials said,” Reuters reported.

Meanwhile, Rebecca Schulz, minister of environment in Alberta, told a Tokyo conference that Canada wants to send a lot more LNG to Japan. Mitsubishi is part owner of the LNG Canada project that plans to start exports this year, a Canada news service reported.

“Just the shipping time, half of the time coming from the U.S. Gulf Coast, it makes us a perfect partner (for Japan),” she said, using the argument that Alaska officials have repeated for decades.

In a speech Wednesday to the Center for Strategic and International Studies, Sen. Dan Sullivan complained that Japan and other allies in the Pacific have failed to recognize the advantages of an LNG supply from Alaska.

He is now calling it “America’s Gasline.”

He claimed that Alaska has “unlimited resources,” which is not true. He claimed that Alaska’s North Slope gas could supply Japan, Taiwan and Korea for 100 years. Proven reserves would not last that long, but estimated reserves might.

Unaddressed by Sullivan was what climate change and the world’s shift toward renewables will mean to fossil fuel development in Alaska, an unknown that unleashes economic uncertainty on the entire project.

“We’re looking at an export facility, a pipeline, an Arctic carbon capture plant and a gas treatment plant. A lot of this infrastructure is in place already. What we don’t have is the pipeline, but we’re making progress,” Sullivan claimed.

I have no idea why Sullivan claimed “a lot of this infrastructure is in place already.” None of the major elements are in place.

The export facility, the gas treatment plant, the carbon capture plant and the pipeline will cost tens of billions. The total could be $50 billion or more.

“Our Asian allies, Japan, Korea, Taiwan. No offense, they’re doubling down on Qatari gas. I think that’s a huge mistake. The Middle East is a very dangerous place. Qatar is you know, sometimes they’re an ally, sometimes they’re not. They sponsor terrorist regimes like Hamas. It’s unreliable,” Sullivan said.

“And it’s also unreliable because the Chinese kind of have them under their thumb. And if the Chinese ever got into some kind of conflict in the region and they told the Qataris, ‘hey, you shouldn’t ship that LNG to Japan or Korea or Taiwan,’ you know Qatar would probably listen,” he said.

“I’ll guarantee you this. If Japan, Korea and Taiwan are getting Alaskan LNG maybe you know escorted by U.S. Navy ships, and China says, ‘don’t send it.’ We’re gonna say to them, say to them, tough luck, we’re not listening to you China,” said Sullivan.

As he continued he repeated his complaint that Japan is “doubling down” on Qatari gas and not investing in Alaska.

“This opportunity I think is something that we all need to seize. You know the president is meeting with the prime minister Friday,” said Sullivan.

“I’ve never seen the stakeholder alignment stronger on this big Alaskan project, in Japan, in Korea. But I will also say this, there is private sector leaders in the United States who think that hey the Chinese are really interested in this, in being an anchor tenant for a project like this.

“That certainly wouldn’t be my first preference. But I will tell you this. If Japan, Korea and Taiwan aren’t interested and China is, maybe that’s the route that this project goes. I hope not, but you know competition creates momentum.”

“We need our Asian allies to be ready to not miss this opportunity,” he said.

“Like I said, you know, no one’s gonna turn. If there’s a blockade of Taiwan and Alaska LNG shipment is coming through that blockage, I don’t think anyone’s gonna mess with that shipment. Qatar gas. Heck, they’ll send, they’ll turn that around in a minute.”

He repeated his statement that if Asian allies don’t get on board with money, “Who knows? Maybe this gas will be going to Beijing in a couple years. Not my preference, but we’re gonna get this done one way or another.”

It is contradictory to claim in one sentence that the pipeline should be built as a defense against Chinese aggression, before claiming that China could provide the money to build it.

Sullivan did not mention that China put a 15 percent tariff this week on LNG imports from the United States.

"The tariffs may impact long-term contracting and offtake agreements . . . and make it more difficult for new US LNG projects to progress toward Final Investment Decisions," analysts at energy consulting firm EBW Analytics said, according to Reuters.

But Japan is not about to refuse to talk.

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