Trump and Japan: AKLNG Deal in Sight?

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Today’s Key Takeaways:  Japan considering support for AKLNG. Oil prices rise, then ease after US/Mexico announce delay in tariffs. “Painful and Temporary” steps to address Cook Inlet gas issue. Dunleavy touts Graphite One in State of the State.

NEWS OF THE DAY:

Exclusive: Japan weighs Alaska LNG pipeline pledge to win Trump’s favour
Tim Kelly, Yukiko Toyoda and John Geddie, Reuters, January 31, 2025

  • Japan considers support for Alaska gas project to forestall trade tensions with US, sources say
  • Japan doubts pipeline viability but may explore deal if asked by Trump, sources say
  • Trump and Japan PM Ishiba expected to meet as soon as next week, sources say

Japan is considering offering support for a $44 billion gas pipeline in Alaska as it seeks to court U.S. President Donald Trump and forestall potential trade friction, according to three officials familiar with the matter.

Officials in Tokyo expect Trump may raise the project, which he has said is key for U.S. prosperity and security, when he meets Japanese Prime Minister Shigeru Ishiba for the first time in Washington as soon as next week, the sources said.

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OIL:

Oil prices ease as US tariffs on Mexico paused for a month
Arathy Somasekhar, Reuters, February 3, 2025

Oil prices edged lower on Monday after rising more than $1 earlier in the session after the United States and Mexico announced a month-long pause on tariffs the U.S. had slapped on its southern neighbour.

U.S. President Donald Trump had imposed tariffs on Canada, Mexico and China to take effect from Tuesday, raising fears of supply disruption.

Brent crude futures were down 14 cents, or 0.2%, at $75.49 a barrel by 10:57 a.m. ET (1557 GMT), having earlier touched a peak of $77.34.

GAS:

Gov. Dunleavy points to ‘temporary’ and ‘painful’ measures to address Cook Inlet gas crunch, as legislators say their role may be limited
Sean Macguire, Anchorage Daily News, February 1, 2025

In his annual address to the Alaska Legislature, Gov. Mike Dunleavy said the state may have to take “painful” short-term measures to bridge a gas supply gap from Cook Inlet.

“We’ll address the short-term shortage of natural gas for Southcentral, and we recognize that some of those solutions may be painful and certainly won’t be popular, but they will be temporary,” he told lawmakers in his address Tuesday evening.

At a Friday news conference, Dunleavy said imported gas could possibly be needed as a “backup” to Cook Inlet gas, though that is the solution utilities are now pursuing.

As utilities warn of the possibility of rising costs and rolling blackouts, Dunleavy and key lawmakers say they are instead focused on longer-term energy solutions, and returning to Alaska-based fuels for the region.

However, power and heating costs for Railbelt residents are expected to rise. Chugach Electric Association — Alaska’s largest electric utility — warned last year that imported gas could see power bills increase by 10%.

That comes after Hilcorp, by far the dominant producer of Cook Inlet gas, said in 2022 that it did not have enough gas reserves to sign new contracts in coming years. That set off a panic among the five electric utilities in the Railbelt, and Enstar, Southcentral Alaska’s natural gas utility. They rely on Cook Inlet gas for more than 80% of their fuel needs.

Since then, the utilities have discussed importing gas as the best available alternative.

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MINING:

Alaska governor touts Graphite One progress
Shane Lasley, North of 60 Mining News, January 30, 2025

Graphite One Inc. on Jan. 30 said the inclusion of Graphite Creek in Alaska Gov. Mike Dunleavy’s 2025 State of the State Address underscores the importance of its efforts to establish an all-American graphite supply chain. This network includes links in Alaska, Ohio, and Arizona, ultimately leading to electric vehicles with Alaska-mined graphite in their batteries parked in garages across the nation.

“All of us at Graphite One are gratified by the support Governor Dunleavy continues to show for our project,” said Graphite One CEO Anthony Huston. “He sees the strategy we are pursuing to break the U.S.’s 100% dependency on foreign-sourced graphite as key to the kind of Critical Mineral projects that will demonstrate Alaska’s role as an essential U.S. source of the metals and minerals transforming the 21st Century.”

During his Jan. 28 address to Alaska legislators, Gov. Dunleavy pointed to Graphite One as a leading example of the next generation of mining projects in Alaska.

“The Graphite One deposit, the largest in North America, north of Nome, continues to move ahead with support from a Defense Department grant,” he said. “Construction could begin in that project by 2027 and the mine could be producing as early as 2029.”

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