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 $44 billion, 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 billion. So the gas line from the North Slope to Fairbanks could be $5 to $6 billion, 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.
Great article!
The impediments to common sense energy policy are everyday Americans and Alaskans who buy into the myth of anthropogenic climate change. These lost souls believe in fairytales. Impending doom awaits around the corner if we don’t stop consuming hydrocarbons. Climate change is real. However, it does not occur because of hydrocarbons. Life on Earth is impossible without the magnetic field surrounding it. The field protects the planet from radiation that would otherwise end life on Earth as we know it. And a child with a compass obtained from a box of Cracker Jacks can tell you. The magnetic field changes over time. Pilots are aware of this fact, as are many who can read and navigate a map. When the core moves, the climate changes. And why does this make sense? Because the core has been moving, and coinciding with climate change for thousands of years. Why the hoax? It is about greed, wealth, power, control, and mockery. Yes, mockery because there are elements within our society who enjoy a sense of moral superiority through fooling, deception, and hoaxes.
Amen
Would new, surplus, NG from the north slope facilitate a reopening of Agrium!
You’re not going to convince the cultists here in Juneau about climate change. Many think they’re going to die in two years if we don’t shut down the state.
We should hold them to that.
Dear Mr. Seitz: While I don’t disagree w/more drilling by other companies, can we not find a way to get past the EPA blockade on Hilcorp’s Cook Inlet drilling or was that order by Judge Sharon Gleason really necessary? It seems to me that if the order wasn’t necessary, simply starting that back up would be our fastest solution to the immediate problem.
I also agree with having more storage, but I would also like to see more refineries, like we had in ye olden days. 😉
Isn’t something wrong with the “full gas pipeline” numbers?? Misprint?? Fix this before the enviro-deceivers make hay with it.
I corrected the value from millions to billions.
Everybody needs to think and look at the cost estimates because every government project topically costs way more and once started the cost just keeps going up.
Look at the rail system in California and the costs.
Don’t be fooled with the estimated cost because the people involved will be rich with increased costs.
I believe those figures for the pipelines are in billions, not millions. The trans Alaska pipeline cost $8 billion in 1977 dollars.
I cringe now every time I hear the phrase “TRANS-Alaska Pipeline”.
You know that in the nightmare scenario of Kamala having been elected instead, they would already be renaming it the “Non-Cis-Binary-Other-Gendered Alaska Pipeline”.
Yes Correction has been made.
The estimated costs for the pipeline are of by 1000. I think you meant billion, not million.
How long till we put in a reactor?
Sorry, but this piece is not coherent. What is the author talking about, here, for example:
“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.”
5 to 6 million for a pipeline??????
Alaska doesn’t need more corporate welfare for Cook Inlet development. We already wasted over $1 billion dollars on that madness- with the last Cook Inlet crisis. No more.
Norway, Finland, and Sweden are doing remarkable work getting homes on to ground source heat pumps. These use heat from the ground to heat a home. Even air to air heat pumps could be of some use here- esp. if the technology continues to improve. In the future about the only gas we’d need is to run power generating turbines.
The madness of spending $44 billion on a gas line from the North Slope is just that, madness. LNG could be taken from the North Slope with ice breaking LNG tankers like the Russians have been doing for more than ten years. No expensive pipeline needed.
You need power to run heat pumps. Solar won’t provide enough power during the cold months to power heat pumps, wind is unreliable, tidal isn’t going to help any time soon. Natural Gas powers most of Southcentral Alaska and will for years to come. It’s not financially feasible to pipe gas from the North Slope.
There’s gas in Cook Inlet, if suspending the royalties on it for a few years or for the lifetime of the gas field is the cost to bring it to market that is cheaper than any other alternative, including doing nothing and shutting down all of Southcentral Alaska.
Suspending gas royalties in Cook Inlet should not just be considered, it should happen given all other options are far more costly.
Steve, maybe you missed my sentence where I said that we’d continue to use Cook Inlet gas for power generation?
“In the future about the only gas we’d need is to run power generating turbines.”
As you would need significnatly less gas for home heating, with less demand there isn’t the need for corporate welfare.
Again, we’ve already given over one billion dollars to subsidize Cook Inlet. And government subsidies have gotten us to this point.
My apologies, I did not get my correction for the pipeline cost before the article was posted to MRAK. the value should be in billions not millions. The estimate for the gas pipeline project portion of the AKLNG is $11billion. The correction has been made so if you go back and read it the values will make more sense.
Nice. But rather inconveniently, it has been proven beyond the shadow of a doubt that the combustion of hydrocarbons does indeed cause global warming. I think you know that, but you just don’t want to admit it in much the same way as so many Republicans nowadays can’t say that Trump lost the last election even though they know it’s the truth. We live in a time quite similar to that predicted by Orwell, where truth is malleable and people deny their own perceptions of reality. What a sad state of affairs.
And by the way, I find it particularly repulsive that a trained engineer would look well-proven facts straight in the eye and deny them. That is not what engineering is about, and you know that.
No it simply has not been proven.
Whidbey, you are making an assertion of religious faith and not fact here. NOTHING has been “proven” in terms of anthropogenic climate warming, and probably never will be or can be proven, given the enormous complexity of the earth’s environment and all its various inputs and factors.
Meanwhile, based on your gullible and naive faith in “disinterested experts”, you are asking us to destroy civilization for the sake of your radical leftist quasi-religious beliefs. Sorry, but I and others will fight you to the death to prevent that — because DEATH, both individual and societal, is the ultimate goal of your far-left suicide cult.
“Hatred corrodes the container it’s carried in…”
All the evidence I look at makes it clear that Hydrocarbon fuels combustion is not responsible for global warming.
So you want to hitch your wagon to little ole Furie, eh? All of Southcentral hanging by one slender, unproven thread.
Good luck to all.
At least he is trying and he is drilling wells. and you?
The article doesn’t clearly indicate why government hand outs to more companies, when the State can’t come up with a balanced budget are necessary.
The rough numbers above were $15m to drill a well that produces 5mmcf/day. At a rough price of $15/thousand cf, the well should gross $75k/day. That means they’d gross $15m (cost of drilling the well) in 200 days. I know there’s costs of production that would push out the break even point, but still, the rate of return is very high.
Elon would say no!
Government handouts? Suspending the royalties on gas is not a handout. If nothing is done and the gas stays in the ground the state makes ZERO dollars, Alaskans will flee the state costing untold financial damages to every Alaskan.
Put another way, if I offer you a slice of apple pie but then tell you that you have to make the pie and deliver it to me and I will take my percentage out of it before you can recoup your time and investment in making the pie, what incentive is there for you to make the pie? Now what if I say that you can keep my slice of the pie? If you don’t make the pie I never get the slice anyways, nothing lost on my part.
Steve, why are you cheerleading corporate welfare? The users of the gas should pay their way. Let the free markets work. Socialist much?
M,
Where did I cheerleader corporate welfare, I haven’t said anything about government giving anyone free handouts or money just the opposite actually. Exactly how is advocating for government to take less from the private sector Socialist? Take your time and think about your answer.
Steve, The gas and all the mineral resources are owned by ALL Alaskans. Why should we give away the royalty share to subsidize this at a cost to ALL Alaskans? The Alaska Constituion requires that Alaska earn maximum benefit from the sale of our resources.
Giving away our resources, free, is not an answer.
M,
Your continued misuse of the word subsidy does you no favors while discussing this issue, it shows a broad misunderstanding of what a subsidy actually is.
The Alaska Constitution actually says “The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people.” While you may think leaving gas in the ground is the maximum benefit to the people of Alaska the 2/3rds of the people who live in this state that rely upon gas to heat and power their homes and businesses, and that provide services for a large percentage of the remaining population, would likely disagree with you.
Steve, while I’m pleased you pay some attention to Art. VIII, I think you fail to understand that I’m not saying the gas should be left in the ground.
Your arguing that the gas should be given away is a political one, and a terrible way to run our state.
Nice. But rather inconveniently, it has been proven beyond the shadow of a doubt that the combustion of hydrocarbons does indeed cause global warming. I think you know that, but you just don’t want to admit it in much the same way as so many Republicans nowadays can’t say that Trump lost the last election even though they know it’s the truth. We live in a time quite similar to that predicted by Orwell, where truth is malleable and people deny their own perceptions of reality. What a sad state of affairs.
And by the way, I find it particularly repulsive that a trained engineer would look well-proven facts straight in the eye and deny them. That is not what engineering is about, and you know that.
The LNG Gasline project was a dead deal the minute it was suggested by Walker and the state continues to dump hundreds of millions into it and it will never happen until the oil is all gone in Prudhoe. Anyone that thinks otherwise needs to check with the producers and ask them how much natural gas they will well into this project and what would the price be. Idiocy in action is what this has become. I also disagree that we should be guaranteeing any loans for private companies. Remove the financial burden of royalty, and if that is not enough to make it financially viable, then that is indicative that the gas in the inlet is approaching market cost it for which it could be imported. All the renewables are decades from being even remotely economically viable and the Fire Island project is proof of that fact.
Imported LNG is the only way now at this late date. The absence of an LNG export project or additional production from Cook Inlet in and of itself illustrates that they are uneconomic. What you’re seeing now is the intended function of the Capitalist system – deploying capital where it is most effective, and that is not Cook Inlet, or North Slope gas export.
1- TAPS cost $8 billion. About $1 billion of that (per the Intertubes) was the Valdez terminal.
That was nearly fifty years ago.
Fifty. Years.
Most of MRAK readers weren’t alive then.
Anyone who thinks that a gasline today is going to cost only $6-11 billion is smoking some really good Matanuska product.
2- Golden Valley Electric, per their 2023 RCA report, had revenues of $300 million and profits of $25 million (after accounting).
How many times (years) does $25 million go into $11 billion? (440).
3- Please publicly identify the moron that is going to invest $11 billion to make their money back in 440 years.
Not a profit mind you, not interest, just the initial $11,000,000,000.
4- Oh, you say the real play is to export from South Central?
To where?
L48 is filthy with United States gas. Even Canadian gas with tariffs would be WAY cheaper.
Asia has gas from Asia, Russia, and The Middle East. All WAY cheaper.
5- Keep on smokin’!