The Alaska LNG Project

Overview

Preparation of Resource Report 5, Socioeconomics, for a project development application for the AK LNG project.

Project Lead: Leah Cuyno, Don Schug

This project began for a consortium of Applicants including ExxonMobil, BP Alaska, ConocoPhillips, and the State of Alaska. It later transitioned to a state project under the auspices of the Alaska Gasoline Development Corporation. The project proponents were working towards submitting an application to the Federal Energy Regulatory Commission (FERC) to construct one integrated liquefied natural gas (LNG) Project with interdependent facilities for the purpose of liquefying supplies of natural gas from Alaska, in particular from the Point Thomson Unit and Prudhoe Bay Unit production fields on the Alaska North Slope, for export in foreign commerce and for in-state deliveries of natural gas. The project facilities include an LNG plant and marine terminal, a gas treatment plant, and an 800-mile pipeline that would connect the LNG plant to the gas treatment plant. The FERC application requires an evaluation of the socioeconomic and fiscal impacts of the project on potentially affected areas. In particular, FERC requires an impact assessment on population, employment, housing, local government services, local tax revenues, transportation, and other relevant factors such as subsistence issues and health effects.

The socioeconomic impact analysis involved quantifying the long-term (30+ years) macroeconomic effects of the project starting with the development phase, the construction phase, and through the operations phase. The REMI PI+ model, a dynamic forecasting model developed specifically to analyze impacts on 12 regions in Alaska was used for the analysis. The REMI model contains nearly 200 policy variables that can be used to model various policy changes, economic events, or changes in demographic conditions. The model can address changes in population due to economic migration, substitution effects among inputs to production due to changes in wages, fuel costs, and other input prices, and the subsequent effects on regional trade flows in the estimates of future economic effects. The proposed project is anticipated to create long-term structural changes on the impacted local and regional economies in Alaska.

In addition to the economic impact model, Northern Economics also developed fiscal models for the various affected jurisdictions to quantify the potential impacts of the project on local tax revenues and public costs.