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Alaska spends big to move ahead future energy projects

Patti Epler
State of Alaska illustration

The state of Alaska is spending tens of millions of dollars to move ahead with two giant energy projects predicted to help meet Alaska's gas and electric needs for the next century.

Gov. Sean Parnell, speaking to a room packed with lawmakers, reporters and other interested parties, announced Monday that the Susitna-Watana hydroelectric project, as it's now being officially called, has kicked into a higher gear, fueled by more than $65 million approved by the Legislature this year.

The Alaska Energy Authority, which is overseeing the project, has started to build a project team and is hiring a number of people including a project manager, Parnell said.

Additionally, field work is starting this summer to assess geologic and hydrological issues and fish surveys will be done as well. Lawyers have been engaged to help begin the licensing process with the Federal Energy regulatory Commission, he said.

Parnell likened the process to a round of golf, more specifically the long game. "You can't putt your way, you have to pick the right driver and when you go to hit the ball you have to commit," he said.

"It's time to smack the ball down the fairway," Parnell said. "We're done studying this project. We're committed to moving it forward."

The hydro project is estimated to cost $5.4 billion and producing electricity for the Railbelt by 2023. The 600-megawatt dam is expected to provide half the Railbelt's electric needs when fully operational.

The other half might come from another project touted on Monday. In fact, most of the lawmakers and others at Parnell's Anchorage press conference left there and went to a briefing for the legislative In-State Gas Caucus on the proposed bullet line, now called the Alaska Stand Alone Gas Pipeline. That project is being called ASAP, although the acronym ignores the G word in the title. Sen. Lesil McGuire told the gathering on Monday that she and her staff thought that up and decided it was an effective idea to copy former Gov. Sarah Palin's use of "trite terms" in naming things.

Monday's legislative briefing was pretty much the same as lawmakers received earlier this month when Dan Fauske, head of the Alaska Gasline Development Corp., unveiled a long-awaited study to the House Majority Caucus.

ASAP would involve a 737-mile pipeline from the North Slope south to the Anchorage area largely along the Parks Highway. A lateral line would carry gas into Fairbanks from somewhere near Livengood.

Fauske, in response to questions that have been raised about new reports of more natural gas in Cook Inlet than had been previously thought, said the small-diameter high-pressure line could send gas either way -- including from Cook Inlet to the Fairbanks area -- depending on how soon gas producers in Cook Inlet thought they could bring any new discoveries on line.

But the working scenario is a 500 million cubic feet a day line from the north to the south. That would cost about $7.2 billion to build, plus or minus 30 percent, Fauske said, so $5 billion to $10 billion depending.

Under that scenario, the cost of gas to consumers would be slightly higher in Anchorage than customers pay now and much less in Fairbanks than current rates.

The line would be finished in 2018 with full transmission bin 2019, Fauske said. A draft environmental impact statement is being worked up and is expected to be done in August, followed by a public comment period and a final EIS early next year.

Fauske's agency is recommending that the state finance and own the pipeline which he says would provide the state with an 8 percent return on its investment in 20 years. The state would hire a contractor to build it and pay someone to operate it as well.

Both Parnell at the press conference and Fauske at the legislative briefing insisted that both projects are compatible and one does not preclude the other. Fauske also said the smaller in-state gas pipeline can be done in conjunction with what he calls "the big pipeline" -- a 48-inch diameter line from the North Slope to Canada with a possible segment to Valdez. That proposal, part of the Alaska Gasline Inducement Act (AGIA), is still in the works as TransCanada and ExxonMobil continue to do field work while trying to finalize gas shipping agreements with potential purchasers.

The state is already committed to giving TransCanada up to $500 million to subsidize AGIA. Fauske said Monday ASAP will need $400 million to get it to a point where a final economic determination can be made on whether to proceed.

Contact Patti Epler at patti(at)alaskadispatch.com