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Commission looks at future state energy policy idea

Posted: Thursday, February 15, 2007

Though Alaska’s growth and economic health will depend on meeting current and future energy needs, no long-range, coherent statewide energy policy currently exists.

That’s something that has to change and soon, the Tri-Borough Commission mayors said in Soldotna last week. The Feb. 8 meeting included Kenai Peninsula Borough Mayor John Williams, Anchorage Mayor Mark Begich and Matanuska-Susitna Borough Mayor Lynne Woods, and other municipal officials from Southcentral Alaska.

Bill Popp, energy industry liaison to Williams, presented what he said was a very rough draft of a possible approach to a comprehensive energy policy he has been working on.

Popp said he tried researching what policy exists in the state, turning up only one document appearing to offer any guidance or hold “any quasi-authority” within state government — an executive order by Gov. Frank Murkowski establishing the position of energy policy advisor.

“That particular individual has just been given his walking papers and that position is now being abolished under the current state government, on the premise that current state agencies can address the activities that person was supposedly going to go forward with,” Popp said.

In explaining just how preliminary his working draft was, Popp called it “a first swipe at trying to come up with a preamble and a set of guiding principals” for what might one day become a state adopted policy guiding all state agencies, reaching down even to local governments and private industry to encourage a unified effort to achieve energy goals.

“I’ll tell you there’s been a fair amount of research, but it is barely scratching the surface,” Popp said.

The preamble makes the case for a comprehensive energy policy, he said. For instance, it notes Alaska faces a fast-changing energy future that is influenced by global forces, including rising consumer demand for and costs of energy, growing concern for the safety and security of the energy supply, the growing influence of market forces, increased global competition, and a growing awareness of global environmental impacts of fossil fuel use.

“Crazy as it sounds,” Popp said, despite the quantities of oil and gas it produces and exports, Alaska is today a net importer of energy, including jet fuel, distillate fuels, propane, and crude oil for refineries.

“We produce hundreds of millions of barrels of oil each year, yet we import 24,000 barrels of oil a day from foreign sources,” he said. “That’s very strange.”

Alaska’s Railbelt electricity generation infrastructure is aging and needs significant investment for upgrades, he added.

Beyond that, Popp said, Alaska is operating in a stranded, small-population energy market that constrains needed private investments in new infrastructure and energy, and rising costs for Cook Inlet natural gas and declining Alaska oil production are creating “a growing cycle” of dropping industrial demand and erosion of Alaska’s value-added hydrocarbon industries.

The draft outline of an energy policy — not yet approved by the mayors — is based, Popp said, on energy policy work done by the state of Utah. It suggests that an Alaska Energy Policy should include guidelines for promoting the rational development of resources and infrastructure to meet state and national needs. It should also let market forces largely drive prudent use of resources, while allowing for incentives to ensure optimal development and use in the short-, mid-, and long-term, Popp said.

The draft also suggests including policies for pursuing energy conservation, efficiency and environmental quality; a streamlined regulatory process; expedited federal reviews; and an environment of stable and low consumer prices that still provide producers and suppliers with a fair return on investments.

Popp called the one-page set of statements the basic principals.

“It’s not the meat. It’s the bone that we are going go flesh out with the meat if this meets with approval in terms of direction, because this is still a document in process. It is by no means done,” Popp said.

In his comments, Popp referred to data available on the U.S. Department of Energy Web site showing energy consumption and costs in Alaska, Wyoming, Utah and Montana, which he included because of their similarities to Alaska in terms of population, their general backgrounds in oil and gas, general environmental conditions.

The DOE figures are frequently updated and may have changed, but the figures used by Popp were revealing for their comparisons.

For instance, per-capita annual incomes were fairly matched, ranging from $28,061 (Utah) to $36,778 (Wyoming) with Alaska at $35,612.

Alaskans, however, are paying significantly more at the pump for gasoline — about $2.34 a gallon DOE said, compared to prices ranging from $1.91 to $1.97 a gallon in the other three states. Residential electricity is much more expensive per kilowatt-hour here than Outside, but we generate far less of it than each of the other three states.

On the other hand, Alaska residential consumers are doing pretty well buying natural gas, paying about $6.37 per thousand cubic feet compared to the other states where residential consumers are paying around $10 per thousand cubic feet.

But still other data show just how little gas production occurs here. Alaska has just 227 producing wells, while Utah has some 4,092, Montana 5,751, and Wyoming boasts 23,734.

“We’re pathetic,” Popp said. “For as heavily reliant as we are on natural gas, we have a very small base to produce from. We see this now in the deliverability issues we are fighting. Right now, the battle has started in terms of being able to deliver enough gas to light lights, heat homes and then also run the industries.”

Lighting and heating are still safe, he said, but “it is giving me a bit of a pause about how this deliverability issue is starting to ramp up (for industry),” he said.

For a closer look at the energy data, visit the Department of Energy’s Web site at http://www.eia.doe.gov, and click on New State Energy Profiles.

Popp asked the mayors to review the draft and provide comments on the initial framework.

“This thing may start out like a duck, but it may end up like a goose by the time we get down to the end of it,” Popp said.

Hal Spence can be reached at harold.spence@peninsulaclarion.com.



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