By ROBERT SEITZ
As we get started with the year 2025, we have a new federal administration, which has a different perspective on climate and energy than we’ve had for the past four years. We have a new Alaska State Legislature, which may or may not be in harmony with the federal entities.
Gov. Mike Dunleavy has been and is a supporter of President Donald Trump’s energy and environmental policies, and President Trump is a supporter of Gov. Dunleavy’s policies.
It is my hope that our state and our federal partners will find a way to work together for our common good. With state Sen. Cathy Giessel’s attack on President Trump’s executive orders aimed at opening up Alaska, it is not a good indication of this cooperation from the Alaska State Senate.
While I see some common support for Cook Inlet gas, I see a lot of growing pessimism. Even though there is a good assurance of abundance for many years to come for Cook Inlet gas, the fact that there are no binding agreements for supply of gas to any of the utilities, the confidence remains eroded.
It looks like there is some agreement between various factions that reducing the State royalties on Cook Inlet gas to provide less expensive fuel for heat and electricity is a good way to go, but no action has yet been taken to make this royalty reduction possible, even though it has been in the works for more than a year.
This lack of action is very disturbing to me. It is as if everyone is waiting for a non-Cook Inlet gas solution, such as the Dixon Diversion Project, the Alaska LNG project, geothermal or various renewable energy sources. From my studies and investigation the least expensive and fastest solution to increase available energy to the Railbelt is to enable Furie to move forward with drilling and production.
The Dixon Diversion project will take until 2030 and is estimated at $350 million and is estimated to produce an additional 60 Megawatt of power. I assume the water flowrate drops of in the winter so this is not a year-round value.
Each simple well that Furie drills will produce 5 million cubic feet per day of natural gas at a cost of $10 to 15 million. My calculations show that the Megawatt equivalent for 5 MMcf/day is over 60 megawatts (using 1020 Btu/cu ft.) Furie completed a new gas well at the end of last year that flowed 5MMcf/day. Furie intends to drill two more wells this year which should add another 10 MMcf/day.
By 2030 Furie could be producing 10 new wells which would add 50 MMcf/day or an equivalent 600 Mw of power production capability. Furie is planning for six additional wells from the Julius R Platform, two this year and four more after that. Six additional wells would provide equivalent to 360 megawatt much quicker than five years.
One LNG time line forecast I looked at shows first gas is expected in 2029 for the AKLNG project. The project estimated cost is $44billion, for gas line and LNG production. This natural gas shipped in will compete with Cook Inlet gas, but the big benefits would be a natural gas supply to Fairbanks and LNG to export to produce new revenue for the state. With a natural gas supply in Fairbanks, natural gas as a heating fuel would reduce pollution currently experience in that area, and natural gas fuel supply for electrical generation at the northern end of the Railbelt would reduce the demand on the Cook Inlet gas.
It may be a good thing to break this into three projects: 1) North Slope to Fairbanks compressed gas pipeline; 2) Fairbanks to Nikiski compressed gas pipeline; 3) LNG Plant.
The full gas pipeline is estimated to be $11 million. So the gas line from the North Slope to Fairbanks could be $5 to $6 million, would be easier to quickly finance and provide a more immediate benefit. This gas line could provide energy to projects between the North Slope and Fairbanks to provide some definite benefit.
If all it takes to enable Furie to move forward rapidly is to grant the gas royalty reduction or waiver as the assurance of a gas supply, that is a greater benefit to the citizens of Alaska than the royalty payments would be. I understand from various articles printed recently that Alaska DNR has the authority and ability to grant the royalty reductions. I think that only natural gas need be granted the royalty exemption or reduction and all crude oil produced in Cook Inlet would continue to be subject to the royalty payment. If all it takes is someone to say “make it happen,” they need to do that now.
The other action needed is some form of loan guarantee help for Furie and other Cook Inlet producers (i.e. BlueCrest Energy) to obtain financing for well drilling, which, as stated earlier, is $10 to $15 million per well. Now that the federal government seems to be a good partner with Alaska and wants to help Alaska expand energy and resource development, there should be a means to help an oil and gas producer to continue to pull a gas field from bankruptcy and improve our local economy, and ensure local energy.
Hopefully the Environmental-Social-Governance (ESG) push against oil and gas financing from banks, investment houses, and lending institutions will come to an end.
I understand from a recent article that loans through AIDEA have been applied for. I say “make it happen.” Cook Inlet gas is still the cheapest way to move forward to have assured gas for the Railbelt.
Battles over the storage of natural gas need to be settled now, to halt any further degradation of the residents’ confidence in the energy supply. The electrical utilities seem to be avoiding any direct involvement with the natural gas controversies and are looking for other energy sources.
Again, Cook Inlet gas is still the cheapest and fastest route to energy security for the immediate future.
Geothermal energy still seems a long way off as we have not had any lease offerings lately. I believe tidal energy will be realizable for smaller coastal communities in the near future, but utility scale for use on the Railbelt electrical system, may take a while.
Wind and solar sources can continue to be added as roof top installation, or where the utilities and IPP’s deem them affordable and realizable, with an attractive price per kWh. I continue to advocate against a Renewable Portfolio Standard, where mandates for a faster rate of incorporation of wind and solar are enforced.
There are two major problems with a high penetration of renewables on the Railbelt system.
One is that the communications and controls for the inverter base renewables will be very complex and the utilities must to have equipment and systems in place and properly configured to accept a lot of inverters on the system, or the Railbelt will be subject to frequent outages. I want to see evidence that the utilites have what is needed in place, with proper criteria and instructions for the utility-scale IBR to be connected and operated with the existing system.
The second is that proper long duration energy storage needs to be available for storage time much longer than a lithium ion battery energy storage system can accommodate.
I have been stating that storage from July to January is necessary to storage summer solar energy for use during our winter cold. No one seems very excited about pumped hydro so other storage means need to be investigated. Storage systems with a month or two of storage can be beneficial to release energy when we have cloudy periods which can extend for weeks.
I have also mentioned in earlier pieces that DC motor driven electric generators would be a good way to connect the renewable energy into the existing grid as the rotating machines would help keep a high inertia in the system, and would be easier to interface with than would the inverter base renewables.
So the solution for Cook Inlet gas is easy. Just get Furie and BlueCrest so they can start drilling wells. Furie already has infrastructure in place to flow 60 MMcf/day from the Julius R platform to their facility ashore in Nikiski.
Then next get a gas pipeline from the North Slope to Fairbanks. Then we can get back to finding ways to generator revenue for the state by increasing our crude oil flow through the TransAlaska pipeline.
In order to pursue these activities we need to work hard to show all the environmentally concerned that hydrocarbon fuels are not the cause of climate change.
Robert Seitz is a professional electrical engineer and lifelong Alaskan.