Gov. Mike Dunleavy outlined a variety of options to meet Alaska’s energy requirements with his proposal for a budget. Here’s a closer look some of them.
Initiatives are being made to address a growing gas shortage
There’s a primary issue: Southcentral Alaska is running out of natural gas. State officials warned in January that, by 2027 the existing field located in Cook Inlet likely won’t generate enough natural gas to meet the needs of Alaska’s most populous cities with enough. Cook Inlet gas provides 80 90 percent up to 90 percent of railbelt’s electricity and heat according to an report by the Governor’s Alaska Energy Security Task Force.
Gov. Mike Dunleavy says the state will offer incentives.
“We’re developing an initiative to address Cook Inlet gas. We believe there’s plenty of gas left present in Cook Inlet, and we’ve only got to lift it out from the ground and get it through the pipes,” Dunleavy said during the news conference that announced his budget plan on December. 14.
In a recent article published in The Anchorage Daily News Dunleavy declared that he was planning to present an act that would “improve economically” of the gas industry within Cook Inlet.
The bill’s text hasn’t been released to the public, however Dunleavy’s office stated it was in the fall that this plan will reduce the minimum royalty rates for new projects along with a reduction to the royalties for the initial 10 year of the project’s production. The governor made the announcement in his budget announcement and was able to tie it to efforts to cut costs of living by ensuring secure energy sources.
“We’ve to make this a welcoming area for children,” Dunleavy said. “We’ve to make this an attractive place for the young individuals to be able afford.”
However, it’s not clear if a reduction on royalties will stimulate enough drilling to alleviate supply worries. The sale of the lease, which was royalty-free which instead relied on profit-sharing produced just six bids which was similar to similar sales in the past as reported by The Alaska Beacon.
Dunleavy also referred to the long-awaited to Alaska LNG project which would deliver North Slope gas to Nikiski. In spite of reports of mixed feelings from potential gas buyers Dunleavy stated that he’s positive.
“That possibility is being discussed at the highest levels in boardrooms all over the world,” Dunleavy said. “I have returned to New York, and Washington about a month and half ago. I’ve had conversations with representatives from certain investment houses. There’s a strong need to get a project moving.”
Dunleavy isn’t the only one with ideas for dealing with the growing gas shortage. House Speaker Cathy Tilton, a Republican from Wasilla she says it’s a top priority in her caucus.
“I think you’ll see it being among the main goals of the Legislature and not only Cook Inlet gas but also energy in general and bringing down the cost in the long run for Alaskans,” Tilton said via telephone on Monday.
Tilton said House Energy Committee Chair George Rauscher intends to introduce two bills in the beginning of the next legislative session that will address the problem. A House Energy Committee spokesperson said Rauscher was who is a Sutton Republican was not available to talk with reporters, and Tilton refused to give specifics, claiming she had not been informed.
The group comprised consisting of Democratic as well as independent House lawmakers called for an energy transition to renewable sources within the Anchorage Daily News write up however, they also noted that it was necessary to continue the current gas production.
“There’s no magic bullet tax we can reduce or megaproject that we can develop to overcome this dilemma. Instead, we require an all-of-the above solution that places the demands of Alaskan business and consumers prior to all other needs,” the lawmakers have written.
Power line upgrades
Another aspect of the energy policy Dunleavy revealed during the budget rollout is a broad-based plan to improve the state’s electric grid.
“Our Transmission lines often along the Railbelt are outdated, old and we’re looking to do is to modernize those lines to be able to add more power to these lines to prepare for new energy sources that are coming to Alaska,” Dunleavy said.
In November The Biden administration announced an $206 million loan to the Alaska Energy Authority. The funds will go to the development of a range of grid upgrades which include an undersea cables that connects with the Kenai Peninsula to a power station located on the west side of Cook Inlet, plus two battery facilities that smooth the variations in solar and wind generation. The grant is contingent on a dollar-for-dollar state match that is spread out over several years. It isn’t yet part of the budget of the governor, according to the director of budget Lacey Sanders.
“We have just learned of the funding available and it’s going take a bit of time for us to develop an effective plan,” Sanders said at the conference on budgets.
House Minority Leader Calvin Schrage says power line improvements would have the potential to be “transformative” to the Railbelt grid of power. Schrage, the Anchorage independently elected and previous Energy Committee chair points to the Bradley Lake hydroelectric dam located on the Kenai Peninsula, which the Alaska Energy Authority says provides some of the most affordable electricity within the State of Alaska.
“We are unable to increase that capacity and bring the power required in the Interior all the way to the Interior due to transmission lines being insufficient – that electricity becomes bottlenecked,” Schrage said in an interview by phone on Tuesday. “By upgrading the transmission infrastructure, we are able to continue to develop renewable energy sources that we have tested and have a low price and transfer them to locations where they require electricity most.”
A “green bank” to encourage renewable development
Dunleavy also urged legislators to create the “green banking institution,” that would fund green energy and efficiency programs as well as renewable energy.
“We’re hoping that it will be passed next year” He said. “That’ll be able, according to estimates convert an amount of money into nine dollars using private sector funds and certain grants.”
The governor drafted bills during the during the session of last year which included House Bill 154 and Senate Bill 125 which would establish the Alaska Energy Independence Fund within the Alaska Housing Finance Corporation, however, the bills didn’t get through committee before that the House and Senate were done for the year.
As it reviewed the bill earlier in the year the department of Revenue in the state Department of Revenue recommended that the account be seeded with around $40 million divided between federal and state funds.
Schrage admitted that he’s a huge enthusiast of the concept and said it is working in other states.
“For instance when you are looking to install a solar rooftop project in your home this can often be very expensive up front,” Schrage said. “What does this mean is to generate new funding sources to assist people in deploying these renewable energy projects.”
The House and Senate meet on January. 16 to begin discussing the plans.
