Many understand leaving the fate of state-owned Cook Inlet natural gas to the whims of private industry has put Southcentral Alaskans in jeopardy.
For the past several years, Southcentral has been scraping the bottom of the Cook Inlet natural gas "barrel." Recently, the Department of Natural Resources assured us we won't freeze in the dark any time soon, as there is enough proven Cook Inlet gas for another 10 years.
The "freeze-in-the dark" scenario is plausible because nobody has the statutory responsibility to prevent it. By law, the utilities are obligated to serve their customers, but utilities are not legally obligated to serve their customers if they run out of fuel. Nor does the law require natural gas producers provide a supply of gas to the utilities in perpetuity.
It is not as if the 10-year supply of natural gas is the last bit of gas in Cook Inlet -- far from it. One assessment suggests a total Cook Inlet gas resource of 25 to 30 trillion cubic feet (tcf).
Gas and electric utilities in Southcentral use about 60 billion cubic feet (bcf) of natural gas annually. If the Cook Inlet gas resource is even half of that estimated, then there is enough gas for electricity and space-heating for at least 200 years at the current level of consumption.
Discovering and developing new gas fields require major investment, but industry is not making the investment because Southcentral Alaska is too small a market to make the return industry expects on its investment. Thus, relying on private companies to discover and produce new gas in Cook Inlet is exceedingly problematic.
Adding to the uncertainty, the State of Alaska has declined to take responsibility to ensure a natural gas supply for Southcentral. Instead, it seeks to "incentivize" private ventures, but without much success.
The state's approach to natural-gas supply contrasts starkly with its approach to developing large hydro projects. In the 1980s, the state financed, built and operated four major dams, and spent more than $130 million preparing to license Susitna hydro. The recent Regional Integrated Resource Plan promotes resurrecting Susitna with state financing and construction, because private industry is unlikely to do so.
The reason hydroelectric power pencils out: the energy source -- the water -- is free.
Since industry is reluctant to develop new Cook Inlet natural gas fields, the state should evaluate the benefit of its doing so. Cook Inlet natural gas like Susitna River water is a public-trust resource.
In the state financing and delivery of natural-gas scenario, just as in the hydro scenario, the energy source -- the gas -- would be priced at $0.00.
So, the cost of energy from Cook Inlet, just like the cost of energy from a Susitna dam, would include the costs of development, fuel-delivery infrastructure, generating infrastructure, transmission, and cost of operation and maintenance.
Unlike Susitna, Cook Inlet gas will also meet space-heating needs. New gas fields will provide a reliable supply to the gas utility at a stable price over the long-term. Minimizing the cost of natural gas during the next 50 years would garner substantial benefits to Southcentral's economy in particular and Alaska's in general.
If the state is willing to spend several million dollars more to further evaluate the Susitna project for future electric-power supply, a commensurate effort is surely warranted to evaluate a state-financed Cook Inlet gas project for future electric and heating end-uses.
In fact, the state has the responsibility to do so.
It is the state's duty to ensure that its natural resources are developed to provide maximum benefit to the people of Alaska:
Does the state-backed Susitna hydro project or the yet-to-be analyzed state-backed Cook Inlet natural gas supply provide the maximum benefit?
Odds are that this would be cheaper energy with less environmental damage than the big Susitna dam.
Time to find out before too much water goes through any more dams.
Jan Konigsberg is as conservationist who has worked on energy policy and planning for both government and non-governmental agencies in Montana and Alaska.
By JAN KONIGSBERG