The era of low-cost, easily developed natural gas in Cook Inlet is over. While production will continue in Cook Inlet for the foreseeable future, any new gas discoveries or production will come at a higher cost than what Alaskans have historically paid. This shift in price structure, compounded by the unpredictability of supply, means that Alaskans can expect higher energy costs moving forward.

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While renewable energy will likely have a growing role in electric power generation, it cannot replace all of Alaska’s high-energy demand — reliably and affordably. The state’s cold climate requires a dependable and consistent source of energy for space heating, and much of the Railbelt’s housing and commercial infrastructure is built to be heated with natural gas. In the short– and long-term, renewables cannot replace gas in a reliable or cost-competitive way.

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To ensure a reliable energy supply for Alaskans, utilities must plan for the infrastructure needed to import and store natural gas at scale. With Cook Inlet’s gas supplies expected to fall short of demand, we cannot rely solely on potential new discoveries or on the hope that a gas pipeline will be constructed in time to fill the gap. Ongoing work to develop LNG import infrastructure reflects a growing consensus among utilities and policymakers that imports, at least for the short term, are required as a critical bridge solution to ensure long-term energy reliability.

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We are not going to run out of gas and electricity, but the longer we delay investment and strategic planning, the more we will pay for energy security and the greater the risk of experiencing gas and power interruptions.

Alaska’s utilities, developers, producers and regulators are collectively addressing the challenge of energy reliability – on imports, infrastructure, renewables and long-term supply contracts – now and for the future. Difficult decisions are being made now to reduce the risk of Alaskans experiencing serious interruptions in the delivery of gas and power.

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The Alaska LNG Project has gained new momentum with Glenfarne’s role as a competent and committed lead developer. The project represents more than an export opportunity – it provides access to reliable and secure gas resources on the North Slope and the best hope for low energy prices for Alaskans for generations to come. Multiple factors will play a role in determining the final cost of gas from the pipeline. However, the pipeline is projected to bring additional demand and economies of scale via economic development and growth opportunities across Alaska, ultimately lowering the cost of gas. 

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The energy futures of rural and Railbelt residential consumers are closely linked through the Power Cost Equalization (PCE) program, which is a long-term policy that ties rural energy costs to those in select urban areas. PCE works by providing subsidies from the PCE endowment to rural communities based on the difference in energy prices between select rural and urban communities. As Railbelt energy costs rise closer to the costs experienced in Rural Alaska, the difference between the two regions narrows, resulting in reduced PCE contributions toward rural energy bills. Conversely, when Railbelt customers pay less for energy, customers in Rural Alaska do as well in the form of increased PCE contributions to offset energy costs. 

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