Welcome to the first edition of our Energy Update Newsletter!
This is for those who are interested in learning more about energy happenings in the state, but are having a hard time keeping track of all the players and moving pieces! Luckily, we’ve got people for that, and we want to make sure you’re in the loop.
In this issue, we’ll break down all the big things that are happening with oil and gas deals in the state of Alaska - from Biden’s recent approval of LNG exports, to the Interior Gas Utility deal for north slope gas, to AIDEA’s continued pouring of money into extractive industries without adequate public process. In addition, the biggest oil deal of our generation (the Hilcorp buy-up of BP’s Alaskan assets) is being challenged in court due to a shocking lack of transparency and oversight.
There are also some good things going on! GVEA, our local energy utility, has taken some strides toward renewable energy. We’ll share updates on how you can applaud those efforts, while asking for more, at a rally this Thursday!
Statewide, there are some great pushes for renewable energy happening. Keep reading to get involved with the Alaska Climate Alliance.
And finally, hear about the current happenings in the AK state legislature as our lawmakers try to hammer out a workable budget!
We’ll give you the background for each of these issues and provide some opportunities to take action.
Read on, energy nerds and aspiring energy nerds!
What is the AK LNG Project the Biden Administration just approved?
On April 13th the Department of Energy approved Liquid Natural Gas (LNG) exports from the Alaska Gasline Development Corporation’s (AGDC) proposed AK LNG Project. AGDC is a state-owned corporation tasked with bringing North Slope gas to the global market via an 807 mile pipeline to an export terminal on the Kenai Peninsula.
This project - the AK LNG project - would expand the Point Thomson field on the North Slope and require a new gas treatment plant at Prudhoe Bay. From there a pipeline would bisect the state to Coldfoot, then Livengood and across the Minto area, following the railroad and Parks Highway and running near Nenana, Healy and down under the Cook Inlet to Nikiski, where a new liquefaction plant would turn North Slope natural gas into LNG for the international market. Any lateral line to Fairbanks or interconnection points with communities along the route for in-state demand would be independent from the main project, with their own additional costs and environmental impacts. A past estimate for the Fairbanks lateral line was about $139 million, including a $1 million interconnection.
Will the world have any use for this massive $39 billion piece of hydrocarbon infrastructure in 20 years?
Based on 2014 numbers, that hefty price tag has not been adjusted for inflation or today’s higher interest rates and experts are warning of an international gas market with a hazy future by 2030. This means that by the time the project is projected to come online, it would likely take investors much longer to recoup their investments, locking in use of the pipeline for over 30 years, past the point that we need to transition off of fossil fuels. Importantly though, export to Outside markets is not AGDC's only purpose – AGDC is also meant to focus on the Alaska Stand Alone Pipeline or "ASAP" project, an in-state natural gas pipeline to deliver North Slope gas to Fairbanks and the Southcentral region in the state. Fears of scarcity for the Interior and Southcentral and high gas prices have been plaguing Alaskans for years and the most recent situation is only ratcheting up concerns and questions.
AGDC’s last board meeting was on March 23rd. AGDC reported that they have engaged Goldman Sachs for advisory services and is allegedly in talks with various parties for 125% of the AK LNG Project’s LNG capacity, while offering gas supply to Railbelt utility coops and eyeing Ft. Wainwright, which the Army is planning to heat and power with natural gas. Though all conversations remain “in progress” and are under confidentiality agreements, there are still no gas supply contracts currently in place with ConocoPhillips, ExxonMobil, or Hilcorp. Having just received reapproval of a critical export license from the Biden’s Department of Energy on April 13th, AGDC appears poised to stir up more LNG hype than at any other point in its history at a moment when we cannot afford the distraction from the transition to renewables and more money wasted.
You can sign and share our petition to Biden and the Department of Energy demanding they revoke approval for the AK LNG Project exports here.
If you would like to get more involved please email arleigh@fbxclimateaction.org
First commercialization of Natural Gas from the North Slope
Despite AGDC's mandate and roughly $630 million of state dollars over the years, the Interior Gas Utility (IGU), Hilcorp (a massive private oil company from Texas), and Harvest Midstream (a Hilcorp affiliate) have reached a deal that will commercialize North Slope gas first, essentially undercutting AGDC, with a target date of October 2024 – years ahead of AGDC but at a steep cost for consumers (between ~$21.8-26/mcf compared to a prevailing price hovering near $8 today). With AGDC being undercut by the IGU-Hilcorp deal, Alaskans might rethink all those years of handouts to AGDC and its president Frank Richards–the state’s highest paid employee at nearly $450k annually.
This new LNG deal involves two new contracts - One is with Harvest Midstream, a subsidiary of Hilcorp, who will liquify Natural Gas on the North Slope by building and operating a new 150,000 gallon-per-day Liquified Natural Gas (LNG) facility near Deadhorse as early as October 2024. LNG will then be trucked 500 miles down the Dalton Highway to Fairbanks and used by IGU. The other deal makes a 20+ year gas supply contract for this LNG manufacture with another Hilcorp subsidiary, Hilcorp North Slope LLC – shifting IGU’s gas supplies sources from the Cook Inlet to the North Slope. This is the first commercialization of Natural Gas from the North Slope, which is a scary prospect, as these contracts lock the Interior into using LNG far past when we need to have transitioned off of fossil fuels entirely. Winter-time pollution in the Interior is being continuously cited as a reason to use LNG, but new fossil fuel infrastructure and gas contracts do not actually solve this problem and instead play into Hilcorp's increasing monopoly in Alaska.
For more information or to volunteer with our Keep It iN the Ground Working Group on this and similar issues, email arleigh@fbxclimateaction.org
AIDEA Doubles Down on Extraction Again
On March 1st, the Alaska Industrial Development and Export Authority (AIDEA) met, approving budget changes to the 2023 field season for the Ambler Access Project and yet another lifeline loan modification for BlueCrest Energy in the Cook Inlet due to field development delays. The Ambler budget includes reallocation of over $600k more to “stakeholder outreach” -- or PR – and a $2.4 million increase in “logistics'' and $2.2 million for “costs associated with the Supplemental EIS” among other items. AIDEA seems to be looking for every pot of money available, since dealing with Ambler backlash and litigation has been costly.
But there is no indication that AIDEA will stop pouring dollars into the Ambler money pit. The AIDEA board met again on April 11, 2023, approving AIDEA to spend up to $4.5 million on evaluating unnamed, future mining districts and industrial access roads. AIDEA’s spending priorities are largely unchecked and getting bolder, with AIDEA’s new executive director Randy Ruaro explaining to the legislature last month that instead of paying its typical annual dividend to the state in cold hard cash, AIDEA wants to credit through trade with the state for its defunct 4.5 mile Mustang Road valued at $14 million so it can use its cash for boondoggles and goose chases. AIDEA’s next board meeting is May 19th. Check in with the badAIDEA watchdog group biweekly, with the next meeting Wednesday 4/26 @ 1pm or visit our website badaidea.org. Reach out to arleigh@fbxclimateaction to get connected!
Fighting Secrecy in the Biggest Oil Deal of our Generation
In 2020, Hilcorp acquired BP’s Alaskan oil and gas assets in a $5.6 billion deal that was approved by the Regulatory Commission of Alaska (RCA) on a secret record.
The City of Valdez has been fighting at the AK Supreme Court to appeal the approval process because of a lack of transparency and lack of accountability in the largest oil deal of our generation. The Alaska Supreme Court is the highest level of state court in Alaska – its decisions are binding on all other Alaskan courts and may only be appealed to the federal Supreme Court of the United States. At this stage, the parties’ arguments will center procedural hurdles and the public interest.
Ultimately, if Valdez wins, the victory isn’t just for this one case, but it will affirmatively declare that Alaskans have a right to know: that we, too, are invested and impacted by the actions of our oil and gas industry. And it will give us a fair shot at making informed decisions about stewardship of our natural resources. If we lose this case, it will remove one big way we can hold oil and gas corporations accountable for our foreseeable future. Public interest decision making can't be made without public information and we must set the standard for transparency in Alaska’s energy future. Alaskans deserve more than secret oil deals. #Spillsecretsnotoil
Final oral arguments are open to the public and are scheduled for June 28th. Show up and demonstrate the public interest to the court. FCAC KING! Working Group is currently phonebanking and event planning in anticipation of the court date. Reach out to arleigh@fbxclimateaction.org to get connected!
Exercising our Power as Electric Utility Member Owners
In recent years, our local electric cooperative, GVEA, has taken many steps towards our envisioned renewable energy future such as development of the Eva Creek Wind Farm, commitment to transition away from one of their largest coal plants, and planning for a community solar project as well as on-bill financing to fund clean energy.
We are thankful to GVEA for the steps they have already taken!
We’re also excited to see GVEA take further strides towards more renewable generation and energy justice by adopting an increased carbon reduction goal, advocating for a statewide Renewable Portfolio Standard (RPS), and updating their Strategic Generation Plan. With improving technology for renewables, availability of federal funding, and urgency to fight the climate crisis, there has never been a better time to accelerate the transition to renewable energy. We believe that together, this transition is possible and that it will benefit every Alaskan!
Join FCAC to gather with our community for a Rally for Renewables on Thursday April 27th at 5:30pm outside the Hering Auditorium! Learn more and invite your friends here!
Please join us to express gratitude for the steps GVEA has taken and voice the next steps needed to achieve a future of renewable energy and climate justice. Reach out to kenzley@fbxclimateaction.org with questions or to further discuss utility work.
If you’re looking for more updates on GVEA, and utility co-ops along the railbelt (from Fairbanks, through MatSu and Anchorage and down to Homer,) check out the Alaska Energy Transparency Project for news on Board of Directors elections and more!
Statewide Policy Pushes for Renewable Energy
The Alaska Climate Alliance, a group of organizations and individuals from across the state, have been collaborating to push for 4 pieces of statewide legislation to advance renewable energy. We’re calling on our elected leaders to extend the Renewable Energy Fund, establish a Green Bank, enact a Renewable Portfolio Standard, and pass community solar legislation. Each of these bills would be a positive step towards a fully renewable future! You can learn more and support the ACA’s renewable policy platforms here.
You’re also invited to join FCAC and the ACA on Thursday, May 4th from 5:30-7pm for Powering Up! Alaska’s Just Energy Future! At this event, you’ll hear from a panel of speakers sharing different perspectives on what renewable energy legislation will mean for our communities’ futures, meet others from around the state, and have a chance to take local action. Learn more and RSVP here to let us know whether you plan to attend in-person or remotely.
Leg Happenings: Revenue Generating Ideas
Though we are coming close to the end of this half of the legislative session, the budget process has not yet yielded a workable draft – with the most current version threatening a $600 million deficit thanks to dependence “upon a single, unstable source of tax revenue” (fossil fuels), global turmoil, and state economic disagreements. An excellent history lesson with continued relevance on the matter worth revisiting is Terrence Cole’s 2004 insights in Blind By Riches. In the present-day, our legislators have proposed a number of options to address revenue shortfalls, like HB 156 which would reanimate a state income tax; HB 153 would raise oil and gas property taxes; and SB 114 would change the oil and gas production tax structure to close the Hilcorp corporate income tax loophole, lower the scale per barrel credit, and limit the tax write-offs from different fields against a company’s overall tax liability due to the state (“ringfencing”). To learn more and potentially provide a public comment, HB 153 will be heard again in the House Community & Regional Affairs committee this Thursday, April 27th at 8am and SB 114 is scheduled for a hearing with Senate Finance on May 1st.
SB 114 comes the closest to our KING! Petition but is already facing dilution in committee, with ringfencing deleted by Senate Finance in their current draft. For more information or to volunteer with our Keep It iN the Ground Working Group, email: arleigh@fbxclimateaction.org
