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There is nothing shameful about importing liquified natural gas.
Imported LNG makes total sense for Alaska’s Railbelt. It won’t cost much more than new gas exploration and development in Cook Inlet, with less investment and less risk. It will keep the lights on and the furnaces warm near-term, when it is needed. And it will flexibly ease the transition to renewable energy.
But Alaska’s political leadership will have to overcome the embarrassment of their big gas line dream going flat. You don’t have to be ashamed, guys. It can happen to anyone.
There’s a role for the media, too. The public needs the truth. Alaska being a major LNG exporter is a cargo-cult myth with no authentic hope of becoming reality.
Tribal heads in the South Pacific created cargo cults after World War II, with the promise that prayer and ceremony could bring back the modern technology and wealth that military forces had briefly landed on their islands. They even cleared airfields and made airplanes of bamboo.
In Alaska, we perform our cargo cult ceremonies by giving bales of dollars to consultants applying for permits to build a gas line — like setting money on fire to make smoke signals — while ignoring that the line is too big, too expensive and too late to ever be built.
We have licenses, loan guarantees and designs; we’ve won court cases and held so many meetings. We just don’t have customers or investors.
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In July, Wall Street Journal reporters studied this phenomenon like anthropologists investigating strange beliefs. The paper’s Asia bureau talked to executives of companies who would supposedly pay for the gas line. They said they would not buy or invest. Speaking to an Alaska Public Media interviewer, a Journal reporter wondered, with confusion, why Alaskans don’t know this.
The answer is, we don’t want to know it.
After five decades of promises and close to $1 billion up in smoke, politicians are still boosting the gas line project and still spending public money on it. To admit the truth would be a major embarrassment. The day the first tanker arrives, delivering LNG to Alaska for our own needs, that embarrassment becomes hard to avoid.
Please let them off the hook. It is really no one’s fault. And this can get very expensive — and we could run out of gas — if we don’t accept reality soon.
Cheap local gas, mostly from Cook Inlet, has heated and lit Anchorage since the 1960s. Those fields are largely depleted and developing new gas there requires more money and increasing chances of unsuccessful wells, as drillers seek smaller and less accessible pockets of gas.
Gov. Mike Dunleavy held a lease sale to motivate more drilling, a giveaway in which the producers would pay no royalty to the state for the gas. He didn’t get much interest. We’re near the end, and squeezing out a tiny bit more gas isn’t an economically appealing investment.
Meanwhile, the utilities’ long-term gas contracts are ending, beginning with Homer Electric Association (coming right up) and then Matanuska Electric Association. Other utilities have more time left, but all must rely on the success of Hilcorp to find the gas they need to fulfill those contracts — or to import it.
An LNG plant that long exported gas from Nikiski is in mothballs, ready to be retrofitted for imports. Empty gas fields can be used to store imported gas.
Globally, LNG has been a lifesaver. When the war in Ukraine cut off Europe’s gas supplies from Russia, LNG shipments from the global market prevented a disaster. Now European countries have planned LNG into their energy mix, providing a cushion as they transition to renewable energy.
When Germany signed a long-term LNG contract recently, it would do so for no more than 15 years — because, after that, Germans expect natural gas to go out of style. Less of the transition fuel will be needed then because the transition will be nearing completion.
I still hear Alaskans talk about how we need more petroleum development so we can extend the life of our oil industry for another generation. But the market, not our supplies, will determine when that industry dies.
The world has 47 years of proven crude oil reserves. Most of that oil will never be produced. Instead, demand for oil will fall as countries transition to renewable sources of energy. Producers will complete to sell into that shrinking market, at ever-falling prices. Saudi Arabia will win the competition. It can produce oil for $2 per barrel; Alaska’s costs closer to $40.
The International Energy Agency predicts world oil demand peaking and beginning to decline during this decade. The U.S. Energy Information Agency says Americans’ per capita gasoline use will hit a 20-year low in 2024.
The good news is that Alaska can excel in this transition. Alaska is rich in renewable energy potential and is a place people want to live and visit. Investments in that potential — in renewable energy and people — are investments in the future.
To get there, however, we should use LNG much as the Europeans are doing. Buy it from whoever is selling it cheapest in the world. That market is growing rapidly and prices will fall. This way, Alaska avoids big investments and can buy just as much as it needs, shrinking those purchases as new renewables come online.
But first, Alaska’s leaders need a reality-based decision-making process.
Step 1 is to accept that North Slope natural gas will never cross Alaska in a giant pipeline. After many years, that project has failed not only to find customers, it has even failed to find an owner willing to invest in it. It is nothing but a pile of consultant studies.
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Step 2, which needs to happen quickly: Work must be done to prepare the Nikiski plant and the utilities for LNG imports.
Step 3 is to imagine Alaska positively, as it could be, without impossible pipe dreams.
The views expressed here are the writer’s and are not necessarily endorsed by the Anchorage Daily News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)adn.com. Send submissions shorter than 200 words to letters@adn.com or click here to submit via any web browser. Read our full guidelines for letters and commentaries here.
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OPINION: Have no fear of imported LNG. It's Alaska's future. - Anchorage Daily News
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