Alaska LNG project and unions sign preliminary agreement to maximize Alaska hires

The developer of the Alaska LNG megaproject on Thursday signed a preliminary agreement with labor unions outlining plans to maximize employment for Alaska workers if and when the project is built.

The project, expected to cost between $45 billion and $55 billion but maybe much more, will need thousands of hands to build the 800-mile pipeline and major facilities such as the gas treatment plant on the North Slope and a plant in Nikiski to make liquefied natural gas, or LNG.

The memorandum of understanding was signed between a subsidiary of Glenfarne, the project developer, and building trades councils that consist of 18 unions that work with construction companies statewide.

It’s not the first framework agreement with unions for the project, but it’s the first since Glenfarne took the project over last year.

The Alaska Gasline Development Corp. had signed a framework agreement with labor groups eight years ago, under former Gov. Bill Walker, who’s running again for the office. The state gas corporation owned the project then, but it’s now a minority partner to Glenfarne.

The memorandum of understanding is not a final deal, but it creates a framework that leads to project labor agreements that would spell out specific terms for major construction jobs on the project.

Glenfarne and union leaders signed the agreement Thursday at a ceremony in Chugiak, at the Alaska Laborers Training School.

They were flanked by dozens of workers wearing hard hats and safety vests.

Joey Merrick, president of the Alaska Petroleum Joint Crafts Council, said the memorandum of understanding is “a huge milestone.”

The anticipated 12,000 workers for the project will not all come from Alaska, he said.

“But what this ensures is that Alaskans will get the first opportunity to go to work, and every Alaskan that wants to work on this pipeline” and project can do so, he said.

The deal comes as Alaska LNG has made rapid progress over the last year. But it’s still far from becoming reality, and big questions remain about whether it can be built at all.

The project has not signed critical final agreements with gas suppliers or gas buyers.

A final investment decision, which typically gives projects a green light once financing is secured, is not expected to come until later this year. Glenfarne had originally said that decision would be made last December.

Iterations of the project have failed for generations in part due to the project’s massive costs.

But the Alaska Legislature is currently in a special session called by Gov. Mike Dunleavy to weigh a major property tax break for Alaska LNG. That could give this project a better chance of reaching construction than past efforts.

A bill expected to be voted on by the full House on Friday includes a requirement for labor agreements for construction. The Senate would take up the bill if it passes the House.

Rex Canon, co-president of 8 Star Alaska, the Glenfarne subsidiary that signed the agreement, said that gas line construction involving trenching and building 700,000 tons of pipe would start next year. Glenfarne had originally said it would start laying pipe in the ground by the end of this year.

The memorandum of understanding addresses labor stability, workforce availability, and collaboration between the building trades and project contractors during development and construction, a statement from the parties said Thursday.

The memorandum of understanding will ensure that workers are properly trained, work rules are standardized and labor costs are predictable, said Lake Williams, president of the Fairbanks Building and Construction Trades Council. It will also help ensure the project is delivered on time, he said, in the statement.

The memorandum of understanding will support future project labor agreements associated with work such as camp construction for the pipe building in the project’s first phase, when gas is expected to flow down the gas line to Alaskans starting in 2029, according to Glenfarne’s schedule.

It also supports construction of major facilities in the second phase, such as the gas treatment plant, when gas exports to Asian countries are expected to start in 2031.

A separate project labor agreement is currently under development with the pipeline construction trades for pipeline installation and construction, the statement said.

The unions represented under the memorandum of understanding are Bricklayers Local 1; Boilermakers Local 502; Cement Masons Local 528; Heat & Frost Insulators Local 7; IBEW Local 1547; Ironworkers Local 751; IUEC Local 19; IUOE Local 302; Alaska District Council of Laborers; Western States Regional Council of Carpenters; Painters (IUPAT) Local 1959; Plumbers & Steamfitters UA Local 375; Plumbers & Steamfitters UA Local 367; Roofers Local 189; Sheet Metal Workers Local 23; Sprinkler Fitters Local 669; Teamster Local 959; Unite Here Local 878.