Alaska North Slope gas going up in smoke at Prudhoe Bay/Gary Hoefs, UMD
Conventional thinking strands AK North Slope gas
The second election of Donald J. Trump as president of the United States offers Alaska an opportunity to use its stranded, North Slope natural gas that might not come again.
The question now is whether the 49th state’s political leaders are wise enough to seize the moment.
And no this is not about wasting more time and money pushing the same, old, gas pipedream. This is about recognizing that we live in a rapidly electrifying world where power can be transported as efficiently by wires as by pipes.
Alaska needs to face the reality the pipe project is cost handicapped and likely to remain so forever. A heightened, global interest in gas that started before the end of the last century led to major gas discoveries of new gas in Iran, Saudi Arabia, Namibia, Bolivia, Australia, the U.S., the Indrus Basin off Pakistan, the South China Sea, the Black Sea off Turkey, the Mediterranean Sea off Israel and Eygpt, and more.
Meanwhile, China – once considered a prime market for Alaska gas – is now firmly aligned with Russia, which has a bounty of natural gas and is in a position of needing to sell it cheap because its markets are politically limited.
Japan, once considered another prime market for Alaska gas, is instead shifting its focus to renewable energy and turning back to nuclear power in the name of national security despite the scare caused by the Fukushima disaster of 2011.
The country’s Ministry of Economy, Trade and Industry in December released a draft energy plan that reversed earlier opposition to nuclear power.
“Nuclear power has an overwhelmingly large energy output relative to the amount of fuel input, and excellent stability of supply as a quasi-domestic energy source that can sustain power generation using only domestic fuel.
“It is a highly autonomous power source with technological self-sufficiency and fluctuates at a cost level comparable to other power sources. It is a highly autonomous power source with technological self-sufficiency and fluctuates at a cost level comparable to other power sources.”
These two big shifts on the global front are coming at a time when both Canada and the Lower 48 have significantly expanded their capabilities to export liquified natural gas (LNG) and increased their gas production.
The Alaska gasline is today no more than the dream it has always been, and most of us understand that when we wake up to reality, dreams aren’t real.
Wasted dreams
“No version of the North Slope gasline project is economically feasible,” it adds.
One might be tempted to dismiss this report as biased given that it was financed by a collection of environmental groups inside and outside of the state, but the author of the document, Stan Jones, is a competent former news reporter, and facts are facts.
For more than a decade, Alaska has thrown millions and millions of dollars at a pipe dream, and the odds of success have only grown worse.
The closest the state came to seeming victory was 14 years ago when then-Gov. Frank Murkowski formed a partnership with 10 major owners of gas pipeline systems in the Lower 48, and a couple of years later convinced the three major oil companies working on the North Slope – BP, Exxon Mobil and ConocoPhillips – to join in the construction of a $25 billion, 2,100-mile long pipeline from Prudhoe Bay to Alberta, Canada, where it could connect to other pipelines already supply the Lower 48 with gas.
That pipeline was expected to carry about 4 billion cubic feet of natural gas south each day and supply about 10 percent of future U.S. natural gas demand, but it never got started despite the 2008 claim of former Gov. Sarah Palin’s, then a candidate for the U.S. vice presidency, that Alaska had begun “a nearly $40 billion natural gas pipeline to help lead America to energy independence.”
Palin torpedoed Murkowki’s plan, which some, maybe many, argued was a sweetheart deal for the major oil companies and came up with her own plan, the Alaska Gasline Inducement Act (AGIA). It cut the oil companies out of the picture in favor of TransCanada, a Canadian energy company to which the state in 2009 promised $500 million in seed money.
That plan went nowhere, and six years later under Gov. Bill Walker, the state agreed to pay TransCanada approximately $157 million to get out of that deal and acquire TransCanada’s interest in any pipeline that might get built.
A longtime supporter of an all-Alaska gasline rather than one through Canada to the Lower 48, Walker had his own plan for a pipeline running across the state to tidewater at Cook Inlet where a liquified natural gas (LNG) plant would allow Alaska gas to be prepared for shipment to Asia.
That plan died as well, and an estimated 35 trillion cubic feet of gas remains trapped on the North Slope.
Outside the box
The Changji-Guquan,1100KV UHVDC transmission line in China/YOFC
There is, however, more than one way to skin a cat, as it has been said, and there is more than one way to transport energy.
Just ask the Chinese, who these days have a more than 3,000 kilometer long (nearly 1,900 mile), ultrahigh-voltage direct current (HVDC) powerline moving energy from coal-fired power plants, along with an increasing number of wind and solar farms, in Northwest China to heavily populated regions of East China, where China is trying to reduce the use of coal to clean up its filthy air.
“The Changji-Guquan UHVDC transmission project also promotes the development of Xinjiang Uygur region in northwest China.” Xinjiang is China’s largest coal-producing region, but is seen as a major hub for growing renewable energy in the Asian nation as well.
In June, Reuters reported that the world’s largest solar plant had been completed in the region and connected to the Chinese electrical grid. The Xinhua news website boasts that “cutting-edge technology is accelerating the energy transformation in China’s Xinjiang, paving the way for a sustainable future and reshaping the resource-rich region into a symbol of green development.”
The Chinese have also been accused of using the massive solar facility to greenwash
“China’s Uyghur Genocide” with the website Atmos claiming that “to this day, Xinjiang is one of China’s main coal- and oil-producing regions. In fact, coal is what fuels China’s solar industry, which produces panels using subsidized Xinjiang coal.
The Chinese have pretty well proven themselves ruthless in the pursuit of energy independence, but that doesn’t mean Alaska should ignore their technological achievements.
“Construction on the $5.9 billion (Changji-Guquan UHVDC) transmission project” took two years to complete, according to the NS Energy report, and now provides enough power to “meet the demand of 50 million households in east China.”
The latest estimate on the Alaska gas pipeline is that it would cost $40 billion to go 800 miles – less than half the distance of Changi-Guquan – from the North Slope to Cook Inlet. For a tiny fraction of that the state could build several gas-fired powerplants on the North Slope, send the power down a UHVDC powerline to Fairbanks, and then use cheap electricity to electrify the entire state for decades.
The state is legally entitled to a “royalty share” of about 3.5 trillion cubic feet of North Slope gas for which it would have to pay little more than the costs of paying a contractor to drill the wells to get the gas out of the ground.
The U.S. Energy Information Administration today estimates the costs of UHVDC in this country at $1.17 million to $8.62 million per mile. Because everything just costs more in Alaska, let’s figure a nice, round $10 million per mile in the 49th state.
The distance from Prudhoe Bay to Fairbanks is roughly 500 miles. So figure $5 billion for a UHVDC line to Fairbanks to connect those North Slope powerplants to the Alaska Railbelt electric grid that provides power for an estimated 75 percent of the Alaska population now predicted to be facing an electricity shortfall by 2027 due to declines in the natural gas reserves of Cook Inlet gas.
Inlet gas is now used to provide power for much of Alaska, and the supply of gas is rapidly dwindling.
The situation is such that the Arctic Energy Office in the U.S. Department of Energy has actually raised the idea of a nuclear power plant for Alaska while some utilities around Cook Inlet, the heart of Alaska’s urban core, are expressing fears of the need for “rolling blackouts” to save gas if more gas isn’t found in the Inlet to power the electric-generating facilities in the region.
The idea of building gas-fired powerplants on the North Slope and a UHVDC line to Fairbanks, something that has been talked about since the early 2010s, has largely been ignored because of fears environmental groups and the Environmental Protection Agency would try to block the North Slope power plant construction for environmental reasons, as happened with Alaska’s Pebble Mine.
Enter the new president with new views on energy development and a strong desire to bend federal agencies like the EPA to his will in a second term. This presents a huge Alaska opportunity to power up.
Cheap energy
Gas-fired power plants remain one of the cheapest ways to generate electricity and in Alaska’s case “the” cheapest way given that the state could build the generating plants on state land on the North Slope and burn the state-owned royalty gas now trapped beneath the ground there.
Alaska building costs might raise the price, so let’s figure $2 billion to provide 1,000MW or 1 gigawatt (GW) of power. That’s as much power as the U.S. Department of Energy says is produced by “a typical nuclear reactor.”
Carbon Collective, an alternative-energy investment fund, estimates that 1GW of power “could power approximately 876,000 households for one year.” Other estimates are in a similar range, but let’s round down to 850,000 households.
The U.S. Census reports there are fewer than 268,000 households in all of Alaska. Now do the math: $2 billion for power plants plus $5 billion for a UHVDC line to Fairbanks equals $7 billion.
So for about a fifth the cost of a gas pipeline, the state could supply every home in the Railbelt – which is home to about 75 percent of the state’s population – cheap energy with a whole lot of power to spare.
Granted, there wouldn’t be any natural gas available for the state to sell outside of Alaska to produce income for the state or gas for private companies to sell to generate revenue the state could tax, but there would be a bounty of cheap, excess power available in-state.
And here’s the thing about cheap power. It attracts industry.
Alaska basically has no industries now. History records that cheap power from hydroelectric dams attracted the industry now centered in the heavily industrialized Pacific Northwest. There are some industries there – such as the refineries – that Alaska probably doesn’t want. Refineries bring with them all sorts of pollution problems, not only in the air but in the water and soil as well.
Fortunately or not (depending on what you think of computers increasingly taking over our world) nice, clean data centers are a hot, new industry and they need lots of power. The Site Selection Group, a company focused on finding homes for industries, now ranks Washington state the number one site for data centers followed by Montana, Oklahoma, Texas and Kentucky.
Why? Because they have cheap energy, starting with Washington at 4.68 cents per kilowatt hour (kWh) and ending with Kentucky at 5.73 cents per kWh, according to the Site’s website. The only thing that keeps Alaska from coming in last on the Site’s list with Alaska power at 16.94 cents per kWh, more than five times the cost of Washington state power, is Hawaii with a staggering cost of 22.63 cents per kWh.
With power three times to five times as costly in cold, dark, faraway Alaska, than in some Lower 48 sates, no businessman in her or his right mind is going to think about building data centers in the north, but push the costs under those of Washington state and the picture changes.
There are also other, new-age industries looking for cheap power, one of them being carbon fiber. Carbon fiber is the steel, or maybe better the aluminum, of the future. But it requires a lot of energy to create.
The U.S. was once the world leader in carbon-fiber production but has now fallen significantly behind China. In 2010, according to Macropolo.org, the website of the Paulson Institute think tank founded by former U.S. Secretary of the Treasury Henry Paulson Jr., China accounted for less than 1 percent of global carbon fiber production.
Among the subsidies there are those for Chinese coal and coal-fired powerplants considered the biggest producers of greenhouse gases. The International Institute for Sustainable Development reports that the Chinese government supports the coal industry with tens of billions of U.S. dollars per year – at least.
“By country, China contributes by far the most to total (energy) subsidies, $2.2 trillion in 2022,
followed by the United States, $760 billion; Russia, $420 billion; India, $350 billion; and the European Union (EU), $310 billion,” the International Monetary Fund reported in 2023.
China has been working to replace coal with renewable sources of energy production, and some sources expect it to reach its coal use peak this year. But it’s a long way from cleaning up how it produces electricity or how it does business. And its subsidization of the Chinese electric-vehicle (EV) industry to produce cheaper cars with which China can grab more market share has now caught the attention of the EU.
The EU in October imposed import duties ranging from 17 percent to 35.3 percent on EVs built in China. The Associated Press reported the duties include a 20.7 percent tariff on the EVs of two, high profile and established European brands – Volkswagen and BMW – now building EVs in China to take advantage of China’s state-subsidized production costs.
That Volkswagen and BMW would do this is not surprising. Business flows toward where operating costs are lower. And energy costs play a big role in shaping these decisions.
This helps explain why Alaska has little industry – save a fading fishing industry and a highly seasonal tourist industry – and is losing population.
Alaska’s population has been in a general decline for a decade, and the Alaska Department of Labor is now saying it expects a further decline of 2 percent between 2023 and 2050. Cheaper energy could theoretically help change that, and the state has access to cheaper energy with minimal pollution.
Clean versus cleaner
Natural gas is the cleanest hydrocarbon one can use to generate electricity even if it it’s not perfect.
“Natural gas has many qualities that make it an efficient, relatively clean burning, and economical energy source,” according to the EIA. “However, natural gas production and use have some environmental and safety considerations.
“Burning natural gas for energy results in fewer emissions of nearly all types of air pollutants and carbon dioxide (CO2) emissions than burning coal or petroleum products to produce an equal amount of energy. For comparison, for every 1 million Btu consumed (burned), more than 200 pounds of CO2 are produced from coal and more than 160 pounds of CO2 are produced from fuel oil.”
Natural gas produces about 117 pounds per 1 million Btu, but some unburned natural gas also leaks into the air at power plants. And natural gas is methane, another greenhouse gas.
As with all hydrocarbons used to produce power in any form, natural gas is not perfect. Wind and solar are generally considered to be environmentally friendly, though they are not perfectly benign either.
Still wind and solar appear, generally, to have an edge in producing clean power, and environmental groups are all on board for a shift te renewables. They don’t like the industrial activity now taking place on Alaska’s North Slope, and they won’t like the idea of expanding it by adding more power production.
“Each year, oil operations on Alaska’s North Slope emit more than 70,000 tons of nitrogen oxides, which contribute to smog and acid rain,” the group charges. “‘That’s three times more than Washington, D.C.’s annual NOx emissions,’ according to the Environmental Protection
Agency.
“Plumes of pollution from Prudhoe Bay have been detected in Barrow, Alaska, nearly 200 miles away. And pollutants from drilling operations, natural gas facilities and incinerators also have been detected in snow in the Prudhoe Bay area.”
The NRDC and other environmental groups now opposed to a gas line are almost certain to oppose any plan to build more power plants to produce electric energy on the Slope no matter how much more environmentally friendly a powerline to Fairbanks than a gasline to Cook Inlet.
But the politics have now changed, at least temporarily because of Trump’s election. Alaska should take advantage while it has the chance, but to do that it has to accept what the Alaska gasline is and always has been: A dream.
A dream that just never seems to die….
Categories: Commentary, Politics
If the idea is just to power Southcentral spending billions of dollars in government money to build powerplants and HVDC lines over hundreds of miles is a nonstarter.
Government could just simply get out of the way, allow private industry find a solution like drilling for more gas or importing gas. If we really wanted to spend government money to subsidize electrical generation we could buy a lot of LNG for a couple billion dollars and I’m sure private industry will be happy to use the LNG plant in Nikiski to offload it and then transport it, free gas using other peoples money is almost as good as free power plants and power lines using other people’s gas.
You appear to have missed the point that the state of Alaska is sitting on a shit-ton of free “royalty” gas on the North Slope. It need pay nothing for that gas. Once a system was bulit to take advantage of that gas, the state could charge low fees for the electricity – as is the case now with hydro – and put that money back into a new permanent fund.
A UHVDC and powerlines wouldn’t be a “subsidy;” they would be an investment. It’s sort of the difference between renting a house and buying a house, although in this case the state is just sort of overlooking free money in that unless it finds a way to use NS gas it will likely never get used. Cheaper to exploit pools of gas are being discovered all around the planet and renewables are becoming a real altnernative in many places.
Throw in nuclear, on whichs views are now changing, and there’s no other conclusion than that NS gas is doomed to stay in the ground unless some new ways is found to use it.
Now, you have a valid argument in the idea of allowing “private industry to find a solution like drilling more gas or importing gas” for Southcentral. But have you looked at what the region is paying for that gas now? The Anchorage Metro market is small in the big picture, making it hard for private industry to recover the high costs of gas exploration and production without charging high prices for the gas.
And the problem of scale also enters the picture for LNG, which is now pretty cheap, but there are issues related to scale: https://thundersaidenergy.com/downloads/how-do-lng-costs-vary-with-plant-size/
I understand the royalty gas is “free” to the state, the getting the royalty gas to market either as gas or as electricity is where the actual cost comes from. If it costs more to get it to market than what it’s worth, well then by definition it’s not worth it. Spending billions upon billions to get something that you can get for millions does not make financial sense. If government spending billions to fund something that wouldn’t otherwise be cost effective in an effort to make that thing cost effective that’s a subsidy.
You can argue it is a subsidy. You can also argue it is an investment. But what you can’t argue is millions versus billions. Ain’t nobody gettin’ nothin’ here for millions.
The REGULATORY COMMISSION OF ALASKA (Commission) gives notice that ENSTAR Natural Gas Company (ENSTAR) filed TA350-4, seeking Commission approval to recover all costs associated with studying and securing long-term gas supplies through its gas cost adjustment (GCA) surcharge. These costs include all accumulated and carrying costs related to the regulatory asset approved in Order No. U-22-090(2), as well as all on-going future costs incurred in developing and securing natural gas…working towards the development of a liquefied natural gas receiving terminal on the Kenai Peninsula. ENSTAR anticipates spending approximately $10 million for the Glenfarne project development expenditures…ENSTAR estimates the total costs to advance the Glenfarne project could range between $53 million to $58 million.
https://aws.state.ak.us/OnlinePublicNotices/notices/View.aspx?id=218316
This project likely won’t be in the billions. Harvest Alaska has reached an agreement with Marathon and CEA to acquire and redevelop Kenai LNG Terminal to address Southcentral Alaska’s energy needs.
“We believe the Kenai LNG terminal offers the quickest and lowest-cost solution to bring additional natural gas to Southcentral Alaska,” said Bruce Jackman, vice president of MPC’s Kenai Refinery http://admin.pgjonline.com/news/2025/february/harvest-alaska-to-redevelop-kenai-lng-terminal-to-boost-southcentral-gas-supply
Short term, I have to agree with them. But if you’re thinking “investment,” the whole picture changes long term. It’s that vision thing. Where’s Wally when the state needs him.
As far as I am aware the state does not now charge anyone for hydro power, they’ve previously spent money on the Four Dams Pool and Bradley Lake. Bradley Lake is owned Alaska Electric Authority that is a quasi-governmental organization and has a fee associated with it that is then returned to projects to enhance Bradley Lake, Terror Lake and Solomon Gulch hydro were sold to the utilities that they now serve, the Swan Lake and Tyee Lake hydro were sold to Southeast Power Authority that is a quasi-governmental organization. There are numerous small hydro projects throughout the state, but they are funded by the Power Cost Equalization Program through Alaska Electric Authority.
Your second sentence ends in either a typo or cow related pun.
Cow related comment. Glad you caught it. Cows are famous for their methane prodution.
This is a well researched article. I find no reason why our State shouldn’t embrace this idea and move forward with it. The fact that the electrical costs for 75% of the state residents would be lowered from the second most expensive in the nation to a reasonable cost is reason enough to do it. I think big business who needs cheap power would take advantage of the economics of Alaska and the cheap power to invest here. We need to invest in our future as the oil wealth is depleting and we have nothing to sustain our overgenerous welfare state that’s eating our permanent fund checks. This is one way to share the wealth with the people that the politicians can’t use for their reelections to buy votes like they do now.
RJR
Don’t disagree that the gasline is non competitive.
Transmission used to be about $1 million/linear mile to build. Continuing maintenance will be an issue. But the discussion ought to be joined.
Still a fan of Gas to Liquids (GTL) and batch shipping product down TAPS with crude. Use CO2 from the last stage of the Fischer – Tropsch process for gaslift and reservoir pressurization. Market for product (synthetic diesel) is the entire Pacific Rim. Cheers –
I’m a fan of GTL, too; but I don’t hear Exxon doing much bragging about their experiment with such on the slope. They are now talking about building powerlants: https://www.nytimes.com/2024/12/11/business/energy-environment/exxon-mobil-data-centers-power-plant.html#:~:text=Exxon%20is%20designing%20a%20massive,leading%20cause%20of%20climate%20change.
Maybe the state should, God-forbid, partner with them. The NS is a perfect place for data centers, but I’m not sure you could get techies to work there. But even if you put those data centers in more people-friendly FBX or the Mat-Su, it would be an economic boost for the state.
It doesn’t take many needs to run a server farm, most of it is managed remotely. Put a few people who can physically do stuff on the slope and you have a server farm. Of course they could follow the blueprint and work week on week off and make twice what they could elsewhere for picking stuff up and putting it down and then connecting a few wires.
Great article Craig. Someone once said, “No nation can be a globally relevant power without reliable access to cheap energy”. The same can be said of a state. Alaska has the resource base…….what it lacks are the thought leaders and the will to capitalize on that resource base. The current crop of mental midgets in Juneau are not going to get us to the promised land.
Fascinating. I have wondered about the potential you have described. Perhaps it would be a minor factor, but the operating temperatures for a high tension line from the slope should be factored into the cost. It’s safe to say that temperatures year round would be lower than anywhere in the lower 48. I remember many nights in the 70’s when the news noted that the lines into Anchorage were operating at way over the design load and could continue at that load due to the low temperatures. We lost power once. Recent developments in transmission lines have reduced the heat generated in transmission and made it more efficient. I suspect that construction cost estimates are based on projects using old technology and current design would be cheaper.
And then there’s carbon capture, the new darling of many of our Republicans, or injection of CO2 to pressurize oil fields to reduce the impact.
Yes, carbon capture and CO2 injection to get more oil only sweetens the deal.
I wrote a piece about North Slope gas electrifying elevated maglev high speed monorail and distribution across Alaska in 2008 after I had been introduced to HVDC….
Alaskans rarely make rational decisions so I have no expectations of anything good coming out of such discussions….
Combined cycle nat gas power plants are the most efficient way to convert BTUs into MW. They can push 60% efficiency vs. a coal plant (Rankine cycle) which might give 33% on a good day. Gas turbines also eek out more power when fired with cold combustion air. In 2012 TVA built the $880 MW John Sevier combined cycle for about $775MM. The project came in on time and below budget. So figure $1B for a gigawatt in 2012 is now $2B, times 2 for the Alaska Factor and that’s your baseline plant budget. I don’t know beans about a megavolt powerline but if you say $5B, so OK yer looking at $9B, so let’s say $10B because, well you know. Why not. Go for it, I’ve seen far worse project ideas get the green light, rip off tax payers and ultimately fail. Ten years ago some chuckleheads built a solar mirror project in California. In addition to thousands of birds it burned through a $1.6B federal loan and received $539MM federal grant. The wiki page does a good job of explaining the natural gas consumption of that solar boondoggle. It will shut down in 2026 “in the interest of saving money for California ratepayers”
Combined cycle nat gas power plants are the most efficient way to convert BTUs into MW. They can push 60% vs. a coal plant (Rankine cycle) which might give 33%. Gas turbines also eek out more power from cold combustion air