Oil and Natural Gas Supply
The Arctic Energy Office
- Average South-Central natural gas consumption in 2005 was:
- 13.9% gas utility
- 20.0% power generation
- 54.3% industrial-LNG sales, oil refining, and fertilizer manufacturing
- 7.2% field operations
- 4.6% other
- Due to a lack of natural gas deliverability, the Cook Inlet fertilizer plant terminated operations in May 2008.
- LNG sales are increasingly curtailed during cold weather due to peak demand shortages. The LNG export license is up for renewal in 2011.
- Exploration must find new reserves on the order of 500 Bcf, and that will only solve the natural gas shortage until approximately 2019.
Natural gas in the Arctic, until recently, has been largely
overlooked. Little is known about the possible breadth of
the Arctic storehouse of natural gas apart from the resource
associated with the currently producing oil fields In the
Alaskan North Slope area, about 36 trillion cubic feet (Tcf) of natural gas awaits construction of a pipeline to the Lower 48
states, and it is estimated that another 137 Tcf of technically
recoverable natural gas will be discovered. While this
amounts to a little less than 10 percent of the Nation’s supply,
it is significant in that much of the Arctic is still unexplored. This number does not include methane produced from
hydrates which may add an estimated 85 Tcf.
Alaska’s identified coal resource is an estimated 187 billion
tons, roughly half of the U.S. total. However, this resource is
undeveloped as a result of the challenges imposed by the
Arctic’s protected status, remoteness, higher exploration and development cost. The USGS estimates that as much
as 5 trillion metric tons of coal could remain undiscovered in Alaska, 70 percent of which lies in Alaska’s North Slope Region. Alaskan coal has a low sulfur content compared to coal in the contiguous United States.
On a more regional level, over forty communities are sited
near potential coal resources, yet they do not make use of the
coal for electrical power generation and space heating. Given
that Alaskans use 1112 Mmbtu/capita versus the United States
average of 333 Mmbtu/capita, producing the Arctic’s energy
resources is a challenge and a priority. Additional research
is required to meet the existing and future challenges of
finding, producing, and transporting these Arctic resources
Anchorage and the rest of South-Central Alaska have been
blessed with a relatively inexpensive and abundant source of
natural gas from Cook Inlet. Since the 1960s, natural gas from
the Cook Inlet Basin has supplied most of South-Central’s
heating and electricity generation. Until recent years, natural
gas finds were merely a byproduct of the search for oil. With
no pipeline to transport it, the natural gas was stranded from
Lower 48 or Canadian markets and their supply-and-demand
based prices. This resulted in low prices for ratepayers and
the localized industry on the Kenai Peninsula being built to
take advantage of the then-abundant stranded gas.
The era of inexpensive natural gas is nearing an end. Gas
production from the major Cook Inlet fields is in decline
and known reserves are not sufficient to meet current
demand—residential, commercial, and industrial—beyond
2012, at best. Natural gas prices have already risen, and
even in the best scenario, this upward trend will continue.
The more critical question is where future energy supplies will come from and at what price. No easy answers are
available. NETL’s AEO office has been working closely with the utilities and state agencies to better understand and
address the issues.
Alaska’s remote population has many different energy issues
from the Lower 48. Many residents live in remote villages, beyond the end of the road, and off the grid. Therefore, diesel
electric generators provide electrical power for virtually
all of Alaska’s rural residents. Furthermore, as a result of
having to ship diesel by barge or plane long distances and
store the fuel on site, fuel costs are very high. Alaska’s rural
residents pay the highest prices in the nation for electricity.
In 2009, the EIA reports the national average for electricity
was 9.83 cents/kW. The Regulatory Commission of Alaska
reports average urban Alaska’s rate at 14.64 cents/kW and the
average rate in rural Alaska is 61.46 cents/kW (and as high as
$1.16/kW in some villages).
Alaska is just beginning to explore for coal bed methane
and shallow gas for local use except for the North Slope
and Cook Inlet Regions. A small amount of seismic data
and a few exploration wells have been drilled in interior
Alaska over the years but no major discoveries have been
found. Fossil energy resources, particularly the huge coal deposits, are well documented around Alaska. However, few local markets are large enough to justify the necessary capital cost to develop these resources, and the lack of
infrastructure and remoteness from larger markets makes
market-driven development unlikely. For example, coal bed methane is likely to exist under some villages, but
current costs for drilling make this resource too expensive.
Reducing the cost of exploiting nearby coal and natural
gas resources is a necessary step in making these projects
cost effective, and NETL’s Arctic Energy Office has
been sponsoring research to discover how such energy
resources might be economically utilized. Completed
Rural Alaska Coalbed Methane—Local Energy Supply in Rural Alaska.
A light weight drill rig was used for the first time to drill a slimhole well through the coals, gravels, and permafrost
necessary to produce natural gas from coal bed seams
in a remote area. The research was used to develop an
economic model to establish if coalbed methane can be
used as replacement for diesel fuel in the generation of
electricity, thus lowering the costs of producing electricity
for Alaskan villages such as Fort Yukon where the well was drilled.
Alaska Coalbed Methane Water Disposal Methods—A Review of Available Coalbed Methane Information and Disposal and Treatment Options for Alaska.
An important issue to resolve for coalbed methane
production is water disposal or treatment methods. In
the frozen Arctic, water problems are magnified both in quantity and quality. The research produced data about coalbed methane formations, available water-quality, community systems which could be used for water
treatment systems, and other water use and general
information for each community needed for evaluating coalbed methane water management issues.
Galena Electric Power—A Situational Analysis.
Remote villages need power for basic survival. The power
system in Galena was studied as a model case. Options
included enhancement of the current diesel generation
system, opening a small nearby coal seam and installing a
coal-fired power plant, and installing a modular small-scale
nuclear reactor (Toshiba 4S – 10 MW). Of these three options,
the installation of the 10-MW nuclear reactor was the most
Solid Oxide Fuel Cell (SOFC) System for Remote Power Generation.
Large scale SOFC (200 kW) has been demonstrated to
be the most efficient and reliable of the current fuel
cell technologies. However, many applications in Alaska
require smaller loads. This unit, the first 5-kW SOFC to
operate in the United States, was demonstrated in a
year-long test run. The year of trouble free operation
demonstrated that this technology can be competitive
with diesel generators.
Diesel-fueled Solid Oxide Fuel Cell System for Remote Power Generation.
Solid oxide fuel cells have been demonstrated to generate
electrical power at high efficiency at the 5kW range when
operated on natural gas. However, natural gas is not a
readily available fuel in
remote locations where the
value of electrical power is
very high, making operation
of these fuel cells on liquid
fuels, preferably diesel fuel,
critical to the use of fuel
cells in remote locations.
This program tested a SOFC
on hydrogen from reformed
Nome Region Energy Assessment
Many remote Alaskan communities have installed diesel-
powered plants for electrical generation in an era when the fuel was at a lower cost. Not only has fuel increased in cost
but transportation of fuel has supplied a multiplier effect.
The study provided planning and decision-making capability
about coal as compared to alternatives including wind,
geothermal, and gas.
University of Alaska – Fairbanks—Power Plant Upgrade In Progress
The University of Alaska at Fairbanks is a research institution
housing the Arctic Energy Technology Development Laboratory.
The need for the coal-fired power plant expansion allowed for the opportunity to explore a conceptual design to incorporate research platforms for education and research and development
regarding coal gasification, biomass gasification, solid fuel to
liquid, CO2 capture, and other energy related issues.
Alaska Coal Regional Assessment—In Progress
Despite the large coal resources in the Arctic, Alaska’s coal
is largely categorized as hypothetical. Research is being
conducted to provide a technical basis that would support characterizing more of Alaska’s estimated coal resources
from hypothetical to demonstrated reserves. Once the data
is collected, it will be made available in the hydrocarbon GIS
system used by State, Federal, and local sources.
Beluga Coal Gasification Feasibility Study — Phase I Final Report.
The Beluga Field coal is part of a 1.4 billion short ton measured
reserve in the South Central region of Alaska. The study
investigated the feasibility of gasification for power generation
or export. The study concluded that a sufficient coal existed to
supply the needs of a plant, markets existed for product, and
local plants could be retrofitted from a technical and economic stand point.
Alaska Coal Gasification Feasibility Studies—Healy Coal-to-Liquids Plant
The Usibelli Coal Mine in the interior region of Alaska has
accounted for most of the 1,500,000 short tons produced
on average per year in the Arctic. Combined with a shortage
of natural gas to feed a manufacturing plant, gasification was investigated as a means to supply the raw materials.
The study concluded that a 14,640 barrel-per-day Fischer-Tropsch liquid using 4 million tons of coal per year was
technically and economically feasible.