“I want to talk about the future,” former Governor Bill Sheffield said as he began his lecture to the Chamber of Commerce Business Roundtable Thursday. And without affordable energy, the future he painted for Alaska’s present and future citizens was bleak.
“We are on the edge, and many communities are already over the edge, of an energy crisis in Alaska — we have an energy crisis in Alaska,” Sheffield said. “Too many of our residents are struggling with how to deal these days with bills to heat their homes and cook their meals and that add up to the price of a monthly mortgage.”
Gov. Sheffield then gave a rundown of Alaska’s energy troubles.
“We all know what bush communities pay for basic comforts,” Sheffield said. And in Fairbanks “people have to burn so much firewood that their air quality is in the sewer.”
Cook Inlet gas supplies are expected to be depleted by 2015, Sheffield said. He said Alaska already lost over a hundred high-paying jobs on the Kenai Peninsula when the Agrium fertilizer plant closed its doors in 2007 due to a lack of Cook Inlet natural gas supplies.
The “$80,000-a-year jobs disappeared,” Sheffield said.
The Fairbanks-based Flint Hills refinery is running at reduced capacity. The facility used to send 130 rail cars a day with jet fuel, gasoline and Naptha, Sheffield said.
“Now there are 20 cars five days a week,” Sheffield said, the cost of energy being a huge factor in the decline.
All this and more “and it is only going to get worse,” Sheffield said.
However, the former governor didn’t leave the audience without hope.
“We have the solution before us,” Sheffield said. “It is an in-state natural gas pipeline.”
Specifically a smaller-diameter “bullet line” as opposed to a proposed 48-inch diameter pipeline from the North Slope through Canada or down to Valdez, Sheffield said. The state can and should finance the bullet line itself to reduce tariffs on the gas it would carry to Alaskan customers, he said. The line could cost between $5 billion and $7 billion.
“This is something we can do,” Sheffield said. “We must have the political will to do it.”
Gas to Fairbanks and Cook Inlet would eventually spawn industries to supply natural gas liquids to rural villages, Sheffield said. An entire petrochemical industry could grow up around a bullet line. Depending on the contents of the gas in the pipeline Alaska could be home to plastics manufacturers.
The gas from the bullet line could cut heating and cooking energy prices in Fairbanks by more than half, Sheffield said.
And why should Southeast Alaska care about cheap energy in South central Alaska and the interior? Sheffield said that as the infrastructure and industry in Alaska adapts to the new gas supply shipments could be delivered to the region by way of compressed natural gas or natural gas liquids.
The bullet line could be finished as early as 2019, Sheffield said. However, that is still four years short for Cook Inlet. Sheffield said industry is already looking at ways to ship natural gas to Cook Inlet.
“Here we are sitting on a mountain of gas and we are buying it from Canada and shipping it here,” Sheffield said. Alaska has 35 trillion cubic feet of natural gas reserves with experts expecting more to be found, he said.
“Gas is for Alaskans and oil is for the state budget,” Sheffield said. “Let’s get on with it.”