Southcentral Alaska is facing the prospect of insufficient natural gas supplies.
Imagine the prospect of a mid-January night when the temperature in Anchorage is -20 or -25. The gas company cuts back on the supply due to shortages. No heat, and frozen, burst pipes. No heat or electricity = instant folksicles.
There have always been abundant supplies of natural gas in the Cook Inlet area. For years, gas wells have produced a steady supply of gas for heat, lights, and electricity. But that’s no longer true. The fields are aging, and the gas wells – many of which are about 30 years old – can no longer supply the amount necessary for consumers and local utility companies.
Local officials and gas company representatives are estimating that we could see shortfalls in the supply as soon as 2012. Alaska has LOTS of natural gas - but it's not economically feasible to go after it, now. Let me try to explain, as best I can, based on some research & asking the right questions.
The natural gas market in Alaska and the U.S. is complicated by a number of factors. The prices are currently depressed, which plays a direct role on the interest in drilling new wells. In our case, Cook Inlet is not attracting the amount of investment capital necessary to stimulate exploration and drilling. Further, the deposits which remain are likely to be smaller, as well as more expensive to drill and bring to market.
There’s another development on the horizon which further muddies the waters. Liquid natural gas (LNG) is expected to play a much larger role in the near term. While there is an LNG plant on the Kenai Peninsula, about a 150-mile drive south of Anchorage, it will need an infusion of cash to upgrade its storage facilities. Current storage there is insufficient to supply the shortfall after 2011.
Many of the international oil companies have invested BIG bucks in the natural gas/LNG infrastructure in the Persian Gulf. That supply has not been heavily marketed ... until recently.
Europe has been seeking an alternative to the natural gas it purchases from Russia. You may recall that Russia has been “punishing” its former satellites by intermittently cutting off their gas supplies. LNG from the Gulf could supply 25% of Europe’s needs.
Imagine the prospect of a mid-January night when the temperature in Anchorage is -20 or -25. The gas company cuts back on the supply due to shortages. No heat, and frozen, burst pipes. No heat or electricity = instant folksicles.
There have always been abundant supplies of natural gas in the Cook Inlet area. For years, gas wells have produced a steady supply of gas for heat, lights, and electricity. But that’s no longer true. The fields are aging, and the gas wells – many of which are about 30 years old – can no longer supply the amount necessary for consumers and local utility companies.
Local officials and gas company representatives are estimating that we could see shortfalls in the supply as soon as 2012. Alaska has LOTS of natural gas - but it's not economically feasible to go after it, now. Let me try to explain, as best I can, based on some research & asking the right questions.
The natural gas market in Alaska and the U.S. is complicated by a number of factors. The prices are currently depressed, which plays a direct role on the interest in drilling new wells. In our case, Cook Inlet is not attracting the amount of investment capital necessary to stimulate exploration and drilling. Further, the deposits which remain are likely to be smaller, as well as more expensive to drill and bring to market.
There’s another development on the horizon which further muddies the waters. Liquid natural gas (LNG) is expected to play a much larger role in the near term. While there is an LNG plant on the Kenai Peninsula, about a 150-mile drive south of Anchorage, it will need an infusion of cash to upgrade its storage facilities. Current storage there is insufficient to supply the shortfall after 2011.
Many of the international oil companies have invested BIG bucks in the natural gas/LNG infrastructure in the Persian Gulf. That supply has not been heavily marketed ... until recently.
Europe has been seeking an alternative to the natural gas it purchases from Russia. You may recall that Russia has been “punishing” its former satellites by intermittently cutting off their gas supplies. LNG from the Gulf could supply 25% of Europe’s needs.
But low natural gas pricing in the U.S. and Alaska are holding back the very exploration and drilling necessary to meet the coming need. Cook Inlet is no exception.
Even if we import the LNG, there will need to be an infrastructure of storage tanks and gasification processors to hold & then bring natural gas to the marketplace. And only one of the two electric companies serving Anchorage has the capacity to burn fuel other than natural gas.
I fear that Alaska may pay a different kind of price, very soon.
(Please see As The Fireweed Turns for much more on this topic. UpinAK, the author, works in the field, and has some really interesting stuff there. Tell Uppy I said hi!)
5 comments:
SOunds like you've done your research. This is one subject I am totally dumb on. Thx for keeping us informed.
Cassie
At one time...way back in the 80's there was a plan to build a gas line along the same right away as the oil line from the slope and pipe the gas out to where it was needed. Reckon that plan fell through. Better sharpen up your chain saw and start looking for a wood stove with a stack robber...
Guy, that's still the plan. Not much has changed in 25+ years. There will need to be a bullet line to Anchorage & parts south.
The original design of the pipeline in the 80's was to get it to valdez. It has routinely been scraped due to legislators who had their hands or friend who had their hands in the oil business.. even before the TransAlaska pipeline was built.
Pt Thompson was leased for years knowing of the potential for gas due to it's PSI testing. PSI is the pressure of pounds of gas in the formation per square inch. There is estimates everywhere in Alaska. But Pt Thompson was known to have up some of the highest PSI of gas as well BCF (Bill Cubic Foot) in the formations. per reports from Exxon. As these are speculations.. I am going to assume that it is higher.
Also.. the Spur line, the line off the major TCP won't be built (if at all) until the pipeline is totally finished to go into Canada.
I think it is time to start getting coalitions of people together to get 1. to have people open their eyes and 2. to buy our OWN gas for Alaskans own use, or have them (as in the State) to regulate areas that are Alaskans gas only.
It is going to come down to quite a fight.
Uppy, thanks for that add'l info. I agree with next-to-last paragraph, too.
Post a Comment