Veterans of Alaska’s oil industry look to blaze a renewable energy pathway in the state

This story is being co-published with Inside Climate News, a nonprofit, non-partisan news organization that covers climate, energy and the environment. First of two stories.

NIKISKI — Engineer David Clarke spent more than three decades at BP, starting on a production platform in the North Sea and ending his career with the company in Alaska, where he helped wring more oil out of the aging Prudhoe Bay oil fields.

In 2020, BP pulled out of the state, selling off its Alaska assets and vacating a 14-story headquarters office building in midtown Anchorage. But Clarke has made his home here, shifting his focus from oil and gas to another world-class energy prospect — the strong offshore gusts that blow across Southcentral Alaska’s Cook Inlet, where he proposes to erect offshore wind turbines.

Clarke is part of a cadre of Alaska oil industry veterans who have joined an ambitious effort by clean energy advocates to try to rewire the state’s fossil fuel mindset by tapping Alaska’s massive potential for renewable power.

They are developing solar projects, prospecting for geothermal energy on the flanks of a volcano and designing a test of tidal power technology in Cook Inlet. The electricity produced from such projects could play an increasingly important role in the state’s economy as climate change spurs a global shift away from fossil fuels.

Clarke proposes — by the mid 2030s — a new energy complex emerging in the town of Nikiski, a base for the oil and gas industry on the Kenai Peninsula. There, he envisions harnessing electricity from the offshore wind project to make hydrogen that could be converted into ammonia, a potential maritime fuel, or combined with carbon dioxide to produce a sustainable aviation fuel for the cargo aircraft that stop to gas up in Anchorage on trips between Asia and the Lower 48 states.

“We saw this as a step forward for the climate, and really, really good for Alaska,” said Clarke, who has partnered with another retired BP petroleum engineer, Simon Harrison, to promote the project. “Alaska has got phenomenal — absolutely phenomenal — renewable resources.”

Many Alaskans embrace energy development and that could make it easier to gain public support for large-scale renewable projects, which in other parts of the country, such as the Pacific Northwest, often have been embroiled in siting conflicts.

Still, for some, this still seems like the stuff of pipe dreams, if not heresy.

Since 1977, when crude began flowing from the state-owned Prudhoe Bay fields on Alaska’s North Slope, oil has spun off royalties and tax that today either directly, or through contributions from the Alaska Permanent Fund, the state’s oil wealth investment fund, finance more than 80% of the state’s general fund budget. The Permanent Fund, now valued at more than $80 billion, this year will spin off a $1,702 dividend and energy relief payment to every Alaska resident, who pay no state sales or income taxes.

These huge financial benefits secure fierce political support for more oil production to boost flows through the Trans-Alaska Pipeline, even as the state has been buffeted by the impacts of climate change driven by the combustion of fossil fuels and other human activities.

Alaska is warming at more than twice the rate of the Lower 48 states, with reductions in sea ice putting walrus and polar bears at risk. Some western Alaska villages are threatened by thawing permafrost as well as intensified erosion amid rising sea levels.

In drainages that flow south from Brooks Range, more than 70 once-pristine waterways have turned orange from iron and toxic metals likely flushed out in the runoff from thawing permafrost, according to a study by U.S. Geological Survey and National Park researchers that found “dramatic declines” in fish abundance.

[Related: Could naturally occurring hydrogen underground be a gusher of clean energy in Alaska?]

In the Bering Sea, a marine heat wave set the stage for the collapse of snow crab populations that once sustained a major harvest.

Yet, in Alaska, climate change skeptics abound. And there is scant political gain to be had by citing the need to cut greenhouse gas emissions as a reason for reducing Alaska’s dependence on the fossil fuels that currently generate more than 70% of the state’s electricity.

“It’s frustrating. This is an existential threat. But if you say the word ‘climate’ in a conversation over what is the best choice for (power) generating portfolios going forward, it’s a non-starter. You get shut down,” said Sam Cason, an Anchorage attorney who served on the board of the Chugach Electric Association, the state’s largest utility, until he lost his seat in a May election.

In rural Alaska, where more than 200 communities are not connected to Alaska’s transmission grid, there has long been a potent economic argument for using renewables. Increasingly, wind and solar projects in innovative microgrids are helping to ease the need for high-priced power generation from diesel fuels that are shipped in at considerable expense. In Kotzebue, for example, experiments with wind power date back to 1997, and turbines currently generate enough electricity to satisfy about 20% of annual power needs.

Most Alaskans live in the Railbelt, a swath of Southcentral Alaska and the Interior that includes the state’s two largest cities, Anchorage and Fairbanks. And in recent years, renewable energy advocates also have been able to make a financial case for the Railbelt utilities to diversify their power supplies.

That’s because the production from the Southcentral Alaska gas wells that provide most of the fuel for Railbelt power generation has fallen sharply. The North Slope still has huge proven reserves of gas — but no pipeline to get it to the utilities that serve Railbelt communities, an area of the state that includes Anchorage, Fairbanks and the Mat-Su region.

So, as early as 2027, utilities expect to begin importing liquified natural gas from Canada. This is a startling development in a state that for decades has been a powerhouse energy exporter. It also would be an expensive proposition, pushing up electricity rates that already rank among the highest in the nation and making renewables an increasingly affordable option.

“Renewables are cheaper now than natural gas, and they’re certainly going to be cheaper than the natural gas prices that we are going to see in the future,” said Chris Rose, executive director of the Renewable Energy Alaska Project, in 2023 testimony to the state Senate’s Labor and Commerce Committee.

The looming gas shortage has forced utilities to rethink future power supplies.

Chugach Electric Association, which serves the Anchorage area, relies on natural gas to generate more than 80% of its power. Currently, Chugach is negotiating with an independent wind power producer — Alaska Renewables — that proposes to build a wind farm, Little Mount Susitna, 35 miles northwest of Anchorage. And a “preferred plan” released earlier this year by Chugach called for acquiring more wind power, as well as solar, to help cut carbon emissions by at least 50% by 2040.

“Our doors are always open to alternative energy technology, and we are pursuing renewable energy projects that don’t have a negative material impact on rates or reliability, " said Arthur Miller, Chugach’s chief executive officer.

A study by the National Renewable Energy Laboratory suggests that Chugach and other Railbelt utilities should set more challenging targets, and during the next 16 years, bring on enough renewables to meet 76% of their power demands. The researchers forecast that would result in $1.3 billion in ratepayer savings compared to a continued reliance on natural gas, coal and petroleum for most of the power generation.

But so far, the state Legislature has repeatedly balked at passing a renewable portfolio standard similar to those in 29 other states, which would require utilities to reduce their dependence on fossil fuel generation . Such legislation would restrict the ability of Railbelt utilities to contract for long-term imports of natural gas.

In 2022, Gov. Mike Dunleavy introduced one of those bills. And, even as he pushes for more Alaska oil, gas and coal development, the governor has continued to advocate building out the state’s renewable energy resources.

“We have tremendous opportunities … in wind, onshore and offshore,” Dunleavy said in opening remarks at a sustainable energy conference his administration organized in May. “We’re talking gigawatts of power here in Alaska. So we’re just scratching the surface, and with the technology, the innovation and where the world is going, we see Alaska as being an energy giant across the board.”

Republican Dunleavy is a close political ally of Donald Trump. In a July interview with Bloomberg News during the Republican convention, he blasted the Biden Administration for restricting North Slope oil development and called Trump “the best president in the history of Alaska.”

But Dunleavy’s embrace of renewables appears to put him at odds with some of Trump’s agenda. The former president and current Republican presidential candidate once attacked green energy as a scam, and at a New Jersey campaign rally in May, called for an executive order to halt offshore wind development.

“You’ll see these things all over the place. They destroy everything. They’re horrible … They ruin the environment,” Trump declared. “We are going to make sure that ends on day one.”

Turning wind into hydrogen

Lower Cook Inlet is bordered by a rugged coastline that helps to funnel some of the planet’s most persistent winds, which could keep turbines operating at peak capacity for 64% of the year, according to a federal Bureau of Ocean Energy Management study released in December of last year.

“Cook Inlet is in the global top tier for offshore wind sites — remarkable, for sure,” said Levi Kilcher, a federal Department of Energy researcher who contributed to the study.

This formidable wind potential drew the interest of Harrison, the former BP engineer who, during a career helping to develop oil and gas projects became increasingly concerned about the climate impacts of fossil fuel combustion. For several years in the late 1980s, Harrison joined Greenpeace, stirring up “a great deal of fuss,” he said, by wearing the organization’s logo on his suit at work.

Harrison spent the final 16 years of his BP career in Alaska. After his retirement, he decided it was time to pivot from oil to renewable energy.

“I am very concerned,” Harrison said. “Politically, socially — is the climate emergency going to get more extreme? Are people going to buckle down and get rid of hydrocarbons, or are they going to stick their heads in the sand and pretend it’s not happening? God only knows.”

Harrison went to work hanging photovoltaic panels for another BP engineer who, in his off hours, was building a pilot solar farm.

In 2021, he teamed up with Clarke to try to find a way to produce power from Cook Inlet wind, a long term, high-risk venture that they hope can eventually attract investors to their firm — Alaska Marine Power. They propose a large project that would be expanded in phases to produce 10,000 megawatts of electricity.

An undersea line would bring the power onshore, where the electricity would be used to separate hydrogen from water molecules. So far, in the United States and elsewhere, efforts to develop this green hydrogen have struggled, dogged by the expenses that still far exceed those of making the element from fossil fuels. But proponents of green hydrogen say that in a warming world, it will be an essential feedstock for fuels and industrial uses, and anticipate that production costs will decline substantially.

Nikiski, where Clarke and Harrison would produce green hydrogen, was once a community of homesteaders. In the mid-20th century, it was transformed, by discoveries of crude and natural gas onshore and in Cook Inlet, into a hub of the Southcentral Alaska oil industry. The gas was found in such abundance that a Nikiski plant opened in 1968 to process it into ammonia and urea fertilizer. One year later, an export terminal began liquefying gas for shipment to Asian energy markets.

Today, with Southcentral Alaska gas supplies greatly diminished, these two Nikiski plants have been mothballed, their facilities staffed by skeletal security crews.

But the fading gas industry could offer important assets to help launch hydrogen production.

The ammonia plant could be repurposed to use hydrogen rather than natural gas.

Geologic formations emptied of their hydrocarbons could also be part of the project. Some parts of these structures are currently used by utilities to store Cook Inlet natural gas — mostly made up of methane — for peak periods of demand. Some of these underground cavities, capped by impermeable layers of shale, might be able to hold the much smaller molecules of hydrogen.

This would be a big deal because storage has emerged as a major challenge for any large-scale U.S. hydrogen project.

Above-ground tanks are too expensive. Some states have underground salt domes that have been mined and could hold hydrogen. But depleted oil and gas fields scattered across a broad area of the country could be the most cost effective option. So far, they have not been used to hold any hydrogen, but initial research indicates some could be an affordable storage option while others hold microbes and minerals that would degrade the hydrogen.

“If you inject it, you want to get 99 percent back, and do it efficiently so you don’t have huge costs,” said Joshua White, a Lawrence Livermore National Laboratory scientist who was a co-author of a Cook Inlet hydrogen storage assessment released earlier this year. That study analyzed 92 hydrocarbon formations, and ranked the top prospects that would appear to have a low risk of losing the hydrogen.

Harrison and Clarke want a pilot effort that would inject hydrogen in a reservoir near Nikiski and prove — by 2030 — that the storage method will work. Only then could a large wind project move forward. By 2040, it could encompass more than 600 turbines spread across a 37-mile-long stretch of the lower inlet.

“We’re working on developing the concept, and then bigger players can come in and take over,” Clarke said.

Headwinds for offshore turbines

Elsewhere in the United States, even without Trump in the White House, offshore wind development has been buffeted by a series of setbacks. Orsted, a Denmark-based company, abandoned plans to build two wind farms off New Jersey as surging equipment costs eroded the projects’ profit potential. Earlier this year, a New York state authority, citing “technical and commercial complexities,” opted not to finalize agreements for three offshore projects. On July 13, a turbine in the Vineyard Wind project off Massachusetts suffered a major failure, with a blade dropping into the ocean and some debris washing ashore on area beaches.

Offshore wind development also has often faced powerful pushback. Opposition has included East, West and Gulf coast fishermen who are concerned about being displaced from some of their traditional fishing grounds. In Oregon, two federal offshore auctions drew strong opposition and concerns from Gov. Tina Kotek. Initially scheduled for Oct. 15, they were canceled in late September as most eligible bidders opted not to participate.

In Lower Cook Inlet, the zone proposed for wind turbines does not appear to be in a major harvest area. But Alaska’s fishing industry is a powerful political force that would scrutinize any such development.

Birds are another concern.

Studies of European offshore wind farm projects have found they can displace some bird populations, and that turbines, as they do on land, can kill birds that collide with their blades.

The southeast edge of lower Cook Inlet, the prime area for wind, reaches almost to the Barren Islands, which is a major summer breeding colony for hundreds of thousands of seabirds, including fork-tailed storm-petrels, common murres, tufted puffins and black-legged kittiwakes. These birds feed on plankton and fish in waters surrounding the islands, and some seabirds also find nourishment in Cook Inlet during the winter months.

“There are hot spots where birds tend to forage a lot, but we really don’t know where they are,” said Arthur Kettle, a U.S. Fish and Wildlife biologist who does research on the Barren Islands.

Clarke says that the Lower Cook Inlet wind project could be developed in phases, starting with a small number of turbines more than 30 miles west of the Barren Islands, and gradually expanding into areas where they would pose the fewest risks to birds. Despite the setbacks in the Lower 48, he remains bullish about the future of U.S. offshore wind. He is convinced that technology will keep improving, costs will decline and researchers will find new ways to reduce impacts to marine life.

“There is no shortage of seabed for turbines,” Clarke said.

Underground heat for power on the surface

The island volcano of Augustine rises more than 4,000 feet above lower Cook Inlet. It is active, erupting most recently in 2006, 1986 and 1976.

This summer, geothermal survey crews spent several weeks camped on a barren, rocky site on the uninhabited island. They were hired by GeoAlaska, an Anchorage-based firm that holds more than 10,000 acres in exploration leases, and is trying to determine if the island’s volcanic heat sources can sustain a power plant.

The results from an initial survey last year were promising, prompting GeoAlaska to triple the size of its exploration leases and undertake a larger, more detailed survey effort this year. Paul Craig, the company’s chief executive officer, expects the next step will be drilling a test well.

“I think we have found indicators of a commercially viable geothermal reservoir on the south side of Augustine,” he said. “The truth serum, in this business, is the drill bit.”

Craig is an Anchorage neuropsychologist who in the early 1990s invested in the Cook Inlet oil and gas industry, then decided to try to develop cleaner sources of energy. In 2020, he founded GeoAlaska, and acquired leases at both Augustine and Mount Spurr, another volcano on the west side of Cook Inlet.

So far, Craig says his company’s best prospect is Augustine. He hopes that the island’s geothermal energy will be large enough to generate steam for a 50- to 150-megawatt plant, which would produce enough electricity for as many as 50,000 homes. This plant could offer stable, steady output that could provide baseline power to accompany the rollercoaster outputs of solar and wind farms.

He estimates the total development costs, including construction of an undersea line to the mainland, at some $500 million. He is convinced this power would be a cheaper option than importing liquefied natural gas to run Railbelt power plants. And his company has a minority stakeholder, Ignis Energy — a renewable power developer based in Houston — that could help to raise capital for the project.

Building and operating a power plant on the side of an active volcano would pose challenges. Recent eruptions have been largely ash. But in centuries past, Augustine’s summit dome has periodically collapsed, sending debris crashing down to the sea. The volcano is well-monitored, so there would likely be plenty of warnings of any impending eruption to give plant operators time to evacuate. The company’s leases cover the southern half of the island, which offers the island’s most sheltered construction sites, and plants could be designed to withstand getting rained on by pumice.

“We would shut everything down before an eruption,” Craig said. “But there is a risk.”

Turning the tide on renewable electricity

The Cook Inlet tides may be able to provide another, potentially huge, renewable energy resource. They are some of the strongest on the planet, and ranked as the nation’s top tidal energy prospect in a 2021 study by the National Renewable Energy Laboratory.

Just as gusts can turn the propellers of a wind turbine, powerful tidal currents can drive an underwater turbine. The technology has been under development for decades with many setbacks, including repeated unsuccessful efforts to tap the tidal powers of Canada’s Bay of Fundy. Currently, the largest tidal project is MeyGen, off the coast of Scotland, which since 2018 has operated four turbines.

In the U.S., no commercial tidal power plants operate, and federal investments have been key funding for research.

Ocean Renewable Power Company, a Maine-based company with a branch office in Anchorage, used federal funds to install a small Kvichak River turbine that can provide, at peak production, half the power consumed by the southwest Alaska village of Igiugig.

The company earlier this year received funding from the Energy Department to design a pilot test of tidal turbines in Cook Inlet that would include monitoring for the impacts on endangered Beluga whales and other marine life. Company officials are competing for an additional $29 million grant, scheduled to be awarded next year. This money would enable the first turbines, up to five megawatts in size, to be put in the water and tested by 2028.

Cook Inlet would be a tough place for turbines to operate. Winter ice, silty waters and waves of sand that move along the bottom all could complicate the task of producing dependable power. The pilot project is planned to test three different turbines, one close to the bottom, another at midwater and the third at the surface.

“It’s a very harsh environment. There’s no doubt about it,” said Doug Johnson, the company’s Alaska director of project development.

Johnson is a geophysical scientist who spent much of his career contracting with major oil companies hunting for new prospects. As evidence of climate change intensified, he decided to shift to an energy source that would be sustainable in the 21st century. He worked on biomass gasification, then in 2006, shifted into tidal energy.

In the decades ahead, Johnson thinks Cook Inlet tidal energy, like offshore wind power, has the potential to generate thousands of megawatts. He hopes that tidal power can be part of a renewable trifecta, with offshore wind and geothermal power all put to the task of making hydrogen for green fuels or other products such as low-carbon cement.

But with his company’s current funding source tied to President Joe Biden’s push to develop renewable power, Johnson is keenly aware that fate can be fickle.

“If we see the administration change, this could go away in a heartbeat,” Johnson said.

Next: Alaska utilities turn to renewables as costs escalate for fossil fuel electricity generation

Clarification: The story has been updated to make clear that Alaska Permanent Fund contributions are included in revenue that accounts for more than 80% of the state’s general fund budget.

Independent journalist Hal Bernton was a longtime reporter for The Seattle Times, and previously reported for the Anchorage Daily News and The Oregonian. Reach him at hbernton@gmail.com.