NERA was retained by Locke Lord LLP to conduct an analysis of the market and macroeconomic impacts of a proposed Alaska Liquefied Natural Gas (AKLNG) project. The AKLNG project is proposed as a single integrated and interdependent project for the export and sale of liquefied natural gas (LNG) in foreign commerce. The proposed project would include the construction of a natural gas liquefaction and export terminal on the south central coast of Alaska, a natural gas pipeline from the liquefaction plant to the North Slope region of Alaska (NS) and a gas treatment plant and associated pipelines connecting to upstream fields. The study thoroughly analyzes the natural gas market and macroeconomic impacts that the AKLNG project could potentially have on both Alaska and the U.S. as a whole.


For this analysis we use our state-of-the-art integrated energy and economic model, the NewERA model, and NERA's Global Natural Gas Model (GNGM) to estimate the various macroeconomic and market impacts. The GNGM is used to assess impacts of Alaska LNG exports on global LNG demand and prices. Estimates of LNG export levels from the GNGM were then used as inputs into the NewERA model to estimate macroeconomic impacts of the AKLNG project on the Alaska and U.S. economies. We developed various modeling assumptions through cooperation with ISER as well as various publicly available literatures.


To understand the possible range of impacts of the AKLNG project, we developed three scenarios. First a Baseline with no AKLNG project was needed against which to measure the economic impacts of the AKLNG project. Having defined the Baseline, we constructed two scenarios that include the development of the AKLNG project, associated LNG export volumes, and different in-state natural gas demand forecasts: an Expected scenario and a High scenario.

To capture the range of potential impacts of the AKLNG project, the two scenarios differ significantly in that the High case assumes:

  • 50% greater economic growth rate in Alaska;
  • Increased supply of natural gas available to the market; and
  • 40 year period of LNG exports for Alaska, as opposed to only a 30 year export period in the Expected scenario.

Most economic assumptions shared amongst the three cases were developed from public sources and with the assistance of consultations with ISER.

Gas Market Impacts

Proceeding with the AKLNG project and exporting LNG would lead to lower natural gas prices in Alaska and the U.S. as a whole. Figure 1 and Figure 2 show the amounts by which the AKLNG project could reduce natural gas prices in the U.S. as a whole and in Alaska as compared to the Baseline. The price reduction is seen to be greatest in Alaska where the 2048 average market price is $5.02/MMBtu lower than the Baseline in the Expected scenario and $4.78/MMBtu lower in the High scenario. The impact on the wellhead natural gas price in the U.S. as a whole is smaller in magnitude but still a reduction in price with the 2048 price being $0.17/MMBtu and $0.23/MMBtu lower than the Baseline in the Expected and High scenarios respectively.

In addition to the reductions in natural gas prices, the benefits of the increased supplies of natural gas brought to market by the AKLNG project include eliminating reliance on imported natural gas to make up for ultimate declines in Cook Inlet production, additional revenues from LNG exports, and increased availability of natural gas for expansion of natural gas intensive industries. Even with the increased levels of natural gas demand in Alaska driven by LNG exports, lower prices, and greater economic growth, we find that our assumed levels of natural gas reserves and resources are sufficient to meet and exceed additional consumption needs in both scenarios. Figure 3 and Figure 4 show the cumulative natural gas demand projections in both the Expected and High scenarios.

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