Vol. 17, No. 34 Week of August 19, 2012
Providing coverage of Alaska and northern Canada's oil and gas industry

Modern technology drives old plan

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Utilities behind proposal to use North Slope natural gas for electricity, move power through HVDC, with ‘light’ HVDC spur lines

Kristen Nelson

Petroleum News

An idea pursued by ARCO in the 1980s and early 1990s has been revived due to a combination of modern technology and the current surplus of natural gas.

It would use North Slope natural gas to produce electricity and then use that electricity to power the state — not just the Railbelt but also rural Alaska.

Meera Kohler, president and CEO of Alaska Village Electric Cooperative and Robert Jacobsen, Ph.D., vice president, science and technology for Marsh Creek LLC, rolled out a proposal in July to the Commonwealth North energy task force.

Since then, the two have given several presentations, including one to legislators Aug. 14 and one to the Regulatory Commission of Alaska Aug. 15.

Jacobsen has a long history with high voltage direct current, or HVDC.

He told legislators and later the RCA commissioners that ARCO was run by engineers in the 1980s and they didn’t believe it would be economic to move natural gas off the North Slope via pipeline. ARCO established ARCO Power Technologies to look at high-voltage direct current as a way to use natural gas on the North Slope and move energy to market.

ARCO Power Technologies did the studies and determined you could take some 8 gigawatts of power to California and put it into the U.S. power grid at competitive prices.

What happened?

The political climate in Alaska favored a natural gas pipeline and ARCO didn’t want to get at cross purposes with Alaska’s government, so “they just canned” the idea, Jacobsen said.

What’s different?

Kohler, who’s been in the electric industry in Alaska since 1979, and is also a member of the Commonwealth North board of directors, co-chaired a Commonwealth North taskforce looking for energy answers for Alaska.

Their report, “Energy for a sustainable Alaska: The rural conundrum,” came out in February.

The challenge, Kohler told legislators, was what it cost Alaskans, particularly rural Alaskans, to heat their homes. And that cost has been steadily rising, she said, noting that 10 years ago AVEC’s average delivered fuel cost was $1.29 per gallon. The 2011 average, $4.27 a gallon, was an increase of $2.98, or 331 percent.

Findings of the Commonwealth North study included a need to reduce rural dependence on diesel fuel and to interconnect rural communities into regional electrical transmission grids to develop economies of scale.

In mid-July, Kohler and Jacobsen rolled out a proposal at Commonwealth North to generate electricity on the North Slope and send it by high-voltage direct current, HVDC, to Railbelt communities and by what Jacobsen called “HVDC light” to rural communities.

Stranded gas

A premise of Jacobsen’s presentation is that Alaska has vast supplies of cheap energy — natural gas which is stranded on the North Slope by plentiful Lower 48 supplies of gas currently being developed, and available to be developed worldwide.

Conventional HVDC is used to “take massive amounts of power long ways,” he said.

The transmission lines are much cheaper than AC, or alternating current, lines.

“The expensive part is the beginning and the ending, the converter stations which take the AC generation, put it onto the line and then take it off and put it into the grid,” Jacobsen said.

Because of those costs, HVDC isn’t economic for distances under 300 miles “if you just look at the economics.” But, Jacobsen said, considering the environmental and right-of-way issues that come up today, “it actually becomes economic well under 300 miles.”

In the late 1990s a focus developed on pulling power off HVDC lines for communities along the lines, and by the late 1990s and early 2000s, Jacobsen said, technology for tapping off “small blocks of power into various areas” was becoming a reality.

Another important technology is combined cycle gas turbine generation, enabling electrical generation from natural gas with just over 60 percent efficiency, he said.

Costs and benefits

Jacobsen presented rough costs for two projects — energizing the Railbelt and taking power to the Lower 48 — and described a third proposal, energizing rural Alaska.

He said a Railbelt HVDC system would cost some $3.71 billion (a 1 gigawatt power plant, HVDC power line and converter stations) and with operating costs would deliver power at about 9.3 cents per kilowatt hour.

A larger system to take power to market in the Lower 48 would have capital costs of almost $20 billion, including a 6.4 gigawatt power plant, and with operating costs produce power at about 7.4 cents a kilowatt hour.

Jacobsen did not have costs for a plan which would energize Alaska, because of unknown costs for spur lines, but said it would involve a 5 gigawatt power plant. “HVDC light is on the cusp of becoming economic for providing heat and power to these remote communities,” he said.

Asked about the efficiency of electricity, Jacobsen said that while with diesel 80 percent goes to heat while 20 percent is lost, with electricity generated at 60 percent efficiency and a 4.5 percent transmission loss to Fairbanks, “you actually are getting 55 percent of the available energy ... in the house vs. the 80 percent which ends up in the house from burning the oil. But since the gas is so much cheaper than the oil, you are way ahead in the cost of providing heat.”

What we’re advocating, Jacobsen said, is using stranded gas to power Alaska’s energy infrastructure and to benefit all Alaskans with electrical power providing heat and cheap power fueling economic growth, “and we ship ‘made in Alaska,’ not pieces of Alaska in barrels or in cargo ships. ... And the most important thing is it provides lots of good jobs,” he said.

State’s role

Jacobsen said the state would need to play a role in negotiating long-term gas contract pricing, but he said the next step would be a more detailed study that addresses not only the line south from the North Slope to Anchorage “but the spurs running out to the various villages and remote communities, establishing the most concrete and cost-effective technologies, and at which point you break down into AC distribution grids.”

Kohler said that they’ve been taking the presentation to various entities and said she thinks some of the larger regional Native corporations would have an interest. She said one question was how to keep the project public, based on the concept of a generation and transmission co-op, the model used in the Lower 48.

The challenge for the utilities, she said, is that “all of us rolled together do not have the credit capacity to take on a project of this size.”

Kohler said the plan was to ask the Legislature for $2-to-$3 million to further studies on the proposal.

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