Alaska's economic past and future has and will continue to be intertwined with responsible resource development. Beyond forestry, fishing and mineral development, today it appears that there are two resources that will fuel Alaska's economy for future generations: untapped Arctic offshore oil and gas reserves, and existing North Slope gas reserves. A lot of well-deserved attention has been on efforts and plans for offshore development and Alaskans look forward to continued progress. Gas resources from the North Slope offer a very different value proposition for Alaska as Prudhoe Bay oil continues to age.
Already, the state is further along in developing its gas resources than at any point in the past 40 years. The state has signed onto a project with the major oil producers in Alaska as well as TransCanada to build a new, $45-65 billion or more project to develop and commercialize North Slope gas: the Alaska LNG project. It's been widely reported that the North Slope has been largely untapped and contains 35 trillion cubic feet of known gas reserves. Further, the North Slope is somewhat unique in that producers there largely understand the resource; Prudhoe Bay cycles and reinjects 8 billion cubic feet of gas per day. Operations at Point Thomson that are set to begin in 2016 will help develop our understanding of the approximately 25 percent of known North Slope gas reserves that exist there. Together, Prudhoe Bay and Point Thomson will anchor a future project.
Establishing and building upon knowledge of the resource will be critical to the long-term success of North Slope gas commercialization. At the same time, Alaska can leverage a skilled and experienced support sector, access to Asian markets via direct shipping routes, private sector support and political will to move this project forward. Alaska faces competition not at home but abroad in the global market. Demand, and price, will prove the biggest challenge to the Alaska project. In order to be successful, the state and its industry partners will need to work together to keep costs down and move the project along on schedule. The project will need a competent operator that has delivered megaprojects successfully in the past, which is why it's critical that the state has partnered with global players that have delivered projects on a similar scale before.
The export of gas resources is actually the straightforward part, however, as the state has ultimate responsibility to deliver maximum benefit of that resource to Alaskans. This should be understood in this case to include jobs and a needed economic stimulus, as well as a reasonable return on investment to the state. Beyond that, though, Alaskans -- who pay some of the highest costs for energy in the nation -- have an opportunity to translate access to (or revenue from) these gas resources into affordable power generation in Alaska communities.
In looking at jurisdictions across the Arctic, there is a clear difference between those who have identified an affordable energy resource and delivered stable economic and community development, and those who still struggle with myriad solutions, most of which depend on expensive, isolated diesel systems. In Iceland, which has capitalized on hydro and geothermal, the secret is not renewable, but affordable. In Norway, extensive hydropower resources have meant that all nonrenewable resources are exported. Successful economies in the North have been able to either develop grids (affordably because of economies of scale), or provide postage stamp rates to consumers (affordably because of redistribution of resource wealth).
Alaska's renewable resources are vast and many, but a single answer nearly impossible for all communities. Natural gas, on the other hand, is a huge resource, which over time could change the way Alaskans think about power consumption. Here, Alaska could develop a competitive advantage, delivering affordable natural gas combined with local renewable resources for maximum benefit of Alaskans. This new energy horizon and its revenues to the state would result in -- with the lifting of an energy burden that has been unsustainable for too long -- individual and community prosperity.
The export of natural gas provides the stimulating and stabilizing factor for this to happen, an economic anchor that delivers jobs to Alaskans, a return on state investment, and the possibility for more affordable energy for Alaskan families and businesses.
Nils Andreassen is the executive director of the Institute of the North, an independent nonprofit organization that works to engage the public on Arctic infrastructure priorities and policies that serve to strengthen and connect northern communities.
The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)alaskadispatch.com.