The era of cheap and plentiful gas in Southcentral Alaska is over. There is more gas in Cook Inlet, as Petrochemical Resources of Alaska noted in their March 2010 report, but it will cost an estimated $1.9 billion to $2.8 billion to recover it. The report also states what should be obvious to us consumers in the region: "In the future, Cook Inlet utility customers should expect to pay more for the gas used by Cook Inlet Utilities to generate heat and electricity."
Enstar's parent company SEMCO is proposing a gas storage facility in Kenai at a cost of nearly $200 million. That's just to store gas for a rainy day, or, more accurately, a freezing day of peak demand.
There's also natural gas from the North Slope that may be available in as few as 10 years. With project costs for that pipeline estimated to be as high as $41 billion, North Slope gas may be plentiful but it isn't likely to be cheap. According to a state report to the Legislature, the bullet line would have to charge between $7 and $14-plus per thousand cubic feet of gas to recover its costs -- just for shipping the gas. That's double what Southcentral customers currently pay for delivered gas.
Ninety percent of the Railbelt's electricity comes from natural gas. That's a lot of eggs in one basket and any way you slice it, those eggs are sure to get more expensive.
The most stably priced and cheapest power currently on the grid comes from the Bradley Lake hydro facility near Homer. But what is now praised as a great idea and a sound investment was derided back in 1990 when it was being built. Bradley Lake was too expensive, critics claimed: Cheap natural gas is all we need. Power from Bradley Lake has remained constant over the years, while the price of natural gas continues to rise.
In January 2009, former Gov. Sarah Palin announced her intention to get Alaska to 50 percent renewable energy by 2025. The Legislature followed up on that recommendation by passing HB 306 in the last legislative session. With half of that goal met by hydro power, Alaska needs to continue to diversify its electricity mix to reap the many rewards of renewable energy production.
Fire Island is poised to produce more than 50 megawatts of power right off Anchorage's shores. That's enough to power 18,000 Alaska homes. In fact, it will save nearly 1.5 billion cubic feet (BCF) of natural gas annually.
With no fuel costs, the price for the power is stable over the long term. In addition, Fire Island can qualify for nearly $50 million in federal stimulus money. Alaska has not taken advantage of this program. Nearly $5 billion has been awarded to both create jobs and put our nation on a more sustainable energy footing. Alaska can and should have a share of those jobs and benefits.
There are significant technical issues for the Southcentral utilities to overcome, but they are not insurmountable. The rest of the country is embracing wind and other renewables. We need to learn from their example and take advantage of the technical knowledge that is continuing to be honed.
The state of Alaska has appropriated $25 million to connect Fire Island to the existing grid. The stars are aligning for Fire Island to become the first large-scale wind development in Alaska. With successful wind generation from Kodiak to Kotzebue, Alaska is poised to take this next exciting step.
The Cook Inlet gas shortage is quickly becoming like the weather -- everyone is talking about it, but no one is doing anything about it. It's time to start doing something and Fire Island is a great start. Fire Island alone won't solve Southcentral's energy problems, but as the biggest commercial wind development in Alaska, it is a first step toward a more balanced energy future.
Steve Cleary is the renewable energy advocate for AkPIRG, the Alaska Public Interest Research Group.
By STEVE CLEARY