Alaska Governor Mike Dunleavy hosted a conference on Thursday, October 26th with a proposal to increase energy security for Alaska’s Railbelt through increased Cook Inlet gas production.
The announcement previews legislation that will be introduced in the upcoming legislative session to increase production of Cook Inlet natural gas resources. The proposal will make investment and development in new production more attractive to businesses and unlock the significant resources still in the Inlet while the Administration continues to work on long-term energy security solutions.
“So we really see this as a way of incentivizing this new activity that will not only increase economic activity, but of course, again, ultimately, the goal here is to increase that gap that is available for Alaskans. But the DNR isn’t solely resting on this legislation alone as the only solution. We have also announced an upcoming lease sale in which DNR is changing the terms of the leases, utilizing an approach that we haven’t used previously, and that is, instead of having any bonuses and a royalty component, we’re shifting over to where the state and federal have fixed bonuses to leases, but they also have a net profit share to these new leases that they are acquiring,” said DNR Commissioner John Boyle.
When asked about a shortage, the Governor described it as a “gap,” and would like to attempt to drill more in the Cook Inlet area as a way to gather more materials. By doing this, he hopes that it would prevent Alaska from resorting to receiving imported gas from other areas such as Mexico and Canada.
Biddings have begun for potential candidates, but Dunleavy made no direct comment as to who the bidders were. There was talk of Hilcorp being a potential bidder, but nothing was confirmed.
Kenai Peninsula Representative Justin Ruffridge says that two of the potential companies are HEX Furie and Blue Crest Energy.
“And those two companies are already operating in Cook Inlet, so, as far as companies that are not operating in Cook Inlet, that are planning to be here or will be attracted by the lease sales going on now, I haven’t heard additional ones, no,” says Ruffridge.
Ruffridge does foresee utility groups signing the LNG proposal in the next couple months. While he hasn’t seen the official documentation just yet, he does understand that the Peninsula does need to do something soon.
“I obviously support cook inlet natural gas production and have as a resident of this area for most of my life we certainly rely on natural gas for for everything here we really do have a need to increase the production or find access to new wells,” said Ruffridge.
Senator Jesse Bjorkman agrees with the idea, but does also understand that there are some other areas to look at to make this project successful.
“I look forward to working with the Governor and my fellow legislators on reducing energy costs for the Kenai Peninsula and the Rail Belt. I believe that we should look at three things. First, work with all energy producers to find ways to enhance the production of cheap reliable energy. Second, increase fuel reliability by improving competition in the natural gas marketplace and third, we need deconstrain the electrical grid by improving grid transmission and resilience,” said Bjorkman.
Likewise, Representative Ben Carpenter agrees with the governor’s proposal to incentivize natural gas production in Cook Inlet.
“If Alaskan’s are to prevent or lessen the duration of a dramatic increase in our household gas and electric bills in the next 12-24 months, more natural gas must be produced locally. Paying for imported liquid natural gas at a premium is not a reasonable solution when we have abundant reservoirs in our own backyard,” says Carpenter.
The bill will be introduced at the start of the next legislative session, which is set to begin on January of 2024.
The Dunleavy Administration will also be rolling out other energy related initiatives across the state that will lower the cost and increase the stability of energy for Alaskans for both the short term and for years to come.
