The Kenai LNG Export Facility on Alaska’s Cook Inlet began supplying liquefied natural gas (LNG) to Japan in 1969, becoming the first US LNG export terminal to deliver to foreign markets. Over forty-five years later, Japan, the world’s leading LNG importer, and Alaska, the second-largest US exporter of LNG, are exploring new opportunities for energy cooperation. Alaska Governor Bill Walker and his counterpart from Japan’s Kyoto Prefecture, Keiji Yamada, inked a Memorandum of Understanding (MOU) in mid-September 2015 to evaluate the feasibility of exporting LNG from Point MacKenzie at Cook Inlet, Alaska, to Maizuru, a port city facing the Sea of Japan (most of Japan’s existing LNG facilities are situated along the country’s Pacific coast). The Japanese company leading the project hopes to begin a multi-year process of estimating investment costs and assessing potential technical issues within the next few months, eyeing 2020 or 2021 as the earliest that the first shipments of gas could begin leaving the Alaska facility.
The proposed export project foresees construction of a small-scale facility in Cook Inlet that would produce 160 million cubic feet of LNG daily (1 million tons annually), creating between two and three-hundred temporary jobs and twenty permanent positions in Alaska. The plan would also entail construction of an import terminal in Maizuru and a 15-mile pipeline for receiving tanker shipments and distributing to Japanese markets.
Juneau has reason to favor the agreement. Alaskan state legislators are struggling to restore health to a local energy industry distorted by generous tax incentives and weakened by the sharp drop in global oil prices, as the state’s economic growth, employment figures, and basic operations heavily depend on oil and gas revenues. The resultant multi-billion-dollar deficit has refocused Governor Walker’s attention on key overseas partners, particularly those in the Asia-Pacific.
Though China overtook Japan as the leading destination for Alaskan exports in 2011, Japan remains a force in the state’s economy, directly supporting over 3,100 Alaskan jobs in 2013 and accounting for 20.6% of total Alaskan exports (valued in excess of $1 billion) in 2015. And the country’s appetite for Alaskan goods and services extends well beyond oil and gas to sectors such as tourism, seafood—sockeye salmon and king crab are especially popular—and forest products. In this context, Juneau considers Japan a crucial partner in the state’s economic future, particularly given the slackening pace of economic growth in China.
Local-government officials in Japan attach similar value to ties with Alaska, underscoring the “major significance” of the MOU for Kyoto and the entire Kansai region. Governor Yamada has spoken of energy insecurity concerns in western Japan, noting that communities located opposite the island’s Pacific coast have faced power-supply deficits since the Fukushima disaster and are disadvantaged by Japan’s fragmented electricity grid, which hampers electricity transfers between the country's east and west. Yamada views the agreement with Alaska as a potential means of securing an affordable supply of clean energy that both originates from outside the Middle East, and would enable the Kyoto Prefectural Government to pursue its official goal of ending prefectural dependence on nuclear power by 2040.
Longstanding energy cooperation between Alaska and Japan attests to the mutually beneficial and complementary nature of the US-Japan relationship and may offer lessons for other states as the United States ramps up LNG exports to Asia and beyond.
Linnea Logie is a Research Intern at the East-West Center in Washington and holds a bachelor’s degree in Political Science and History from the University of Connecticut.