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Vol. 15, No. 49 Week of December 05, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Study favors Susitna hydro

Dam, considered but cancelled in 1980s, would create 39-mile reservoir, achieve renewable power goal, Alaska Energy Authority says of project

Wesley Loy

For Petroleum News

The Susitna hydroelectric project, an ambitious Alaska energy idea that collapsed in the 1980s amid controversy and the state’s falling finances, now appears to have regained serious momentum.

On Nov. 24, the Alaska Energy Authority announced it was recommending a dam on the Susitna River in the state’s Interior as the preferred hydroelectric project for supplying power to Alaska’s main population corridor, known as the Railbelt.

The agency said the Susitna dam graded higher than an alternative hydro project known as Chakachamna, across Cook Inlet from Anchorage.

The Susitna project, which would involve building a dam 700 feet high to form a reservoir 39 miles long, is the project that “has the best chance of being built,” said Mike Harper, AEA’s acting executive director.

The AEA estimated its cost at $4.5 billion in 2008 dollars, with the state itself likely to foot half the bill.

Gov. Sean Parnell immediately endorsed the agency’s preliminary decision.

“In order to provide low-cost electricity for the Interior and the Railbelt and to meet the state’s goal of having half of Alaska’s electricity generated by renewable resources by 2025, we must invest in a large-scale hydro project,” Parnell said.

Thinking big again

The Alaska Legislature in its 2010 session passed House Bill 306, which declared a state energy policy and set a goal of achieving 50 percent of the state’s electric generation from renewable and alternative energy sources by 2025.

Alaska is under some pressure to think big about its energy security, as the Cook Inlet natural gas reserves that for decades have powered and heated the state’s population center are depleting.

Using a $10 million state appropriation, the AEA has started planning and designing a large hydroelectric project.

Both the Susitna and Chakachamna projects are ideas originally conceived decades ago. To achieve either of them would require state financial backing, the AEA said.

A 1970s design for the Susitna project involved a two-dam scheme, with the first dam to be built at a remote site called Watana. The AEA’s predecessor, the Alaska Power Authority, filed a license application with the Federal Energy Regulatory Commission.

“Extensive site work including surveying, deep rock drilling as well as soil drilling and sampling was conducted at the Watana site,” says the AEA’s preliminary decision document announced Nov. 24.

During these years, the state was flush with cash from the massive Prudhoe Bay oil discovery.

But the Susitna project stirred controversy over its potential impact on fish and wildlife habitat. Perhaps more significantly, oil prices crashed in 1986. With revenue plummeting, the state’s financial position was weakened and the dam project was cancelled that year.

Two projects compared

The AEA compared the Susitna and Chakachamna projects and determined that, though more expensive, the Susitna dam is preferable.

The Chakachamna project, located about 85 miles west of Anchorage, was the subject of a detailed Bechtel study in the early 1980s. It would involve diverting water from Chakachamna Lake, which drains into the Chakachamna River, through an 11-mile tunnel to an underground power plant. Transmission lines would carry power to the existing Beluga gas-fired power plant to the east.

The price tag for the 300-megawatt project would be $2.9 billion in 2008 dollars, the AEA says. Unlike the Susitna project, it has a private sponsor in Anchorage-based TDX Power Inc., which has approached the FERC about licensing.

But the AEA said its comparison of Susitna and Chakachamna favors the former.

“The results of this comparison show that the Susitna Project should be Alaska’s primary hydroelectric project; the Chakachamna Project should be considered as an alternative,” the AEA’s decision document says. “Although the design, permitting and construction of the Susitna Project would cost approximately 50 percent more than it would for the Chakachamna Project the Susitna Project would produce more than twice the annual amount of energy as the Chakachamna Project. In addition, risk of cost overruns with the Chakachamna Project would be much greater than with the Susitna Project because of the extensive underground work required and its location in steep terrain.”

“It was also determined that Chakachamna energy production would be substantially reduced to allow enough water flow to protect the lake’s significant salmon runs,” the AEA said in a Nov. 24 press release.

The AEA further said Chakachamna poses greater geologic risk due to its proximity to the volcanic Mount Spurr, the Castle Mountain fault and Barrier Glacier, which partially dams the lake.

Building, financing challenges

The Susitna dam would feature installed capacity of 600 megawatts, and could offer a cost of power of 6.3 cents per kilowatt hour, considerably better than Chakachamna’s 9 to 12 cents.

The AEA decision document provides this basic description of Susitna:

“The Susitna Project would be located approximately half-way between Anchorage and Fairbanks. It would create a dam on the Susitna River at river mile 184 above the mouth of the Susitna River. The dam would be located within a steep sided river valley approximately 15 miles upstream of Devils Canyon. The 700 foot high dam would have a 557 foot difference between tail water and maximum pond elevation, with a maximum pond level of 2,014 feet. The reservoir would be 39 miles long and a maximum of 2 miles wide.”

The type of dam hasn’t been determined, but the original project design called for an earthfill embankment.

Compared to Chakachamna, the Susitna project would pose a relatively low threat to salmon, upstream migration of which is essentially blocked by the Devils Canyon whitewater rapids, the AEA says.

Accessing either site, Susitna or Chakachamna, with heavy equipment would be a challenge, requiring road and possibly rail construction, the agency says. The Susitna site is east of the Parks Highway and the Alaska Railroad.

The “Bradley model” might provide a blueprint for financing the Susitna dam, the AEA says. The Bradley Lake hydroelectric project, located southeast of Homer, is the state’s largest hydro installation with a 125-foot-high dam and 126 megawatts of installed capacity. It was licensed and built in the 1980s and early 1990s with the state paying half the cost. Railbelt utilities buy the power and pay all the costs of the project including bond financing, operations and maintenance. Once the debt service is retired, the utilities will continue to pay the state the same amount as the debt service.

Bradley Lake cost $328 million including capital improvements through mid-2009, AEA says.

In terms of timeline, the AEA estimates the Susitna dam would take 11 years to complete.

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Alaska Energy Authority seeks hydro engineer

The Alaska Energy Authority is looking to hire a lead engineering firm to help evaluate and develop potential large hydro projects to supply the state’s Railbelt electrical grid.

In a request for proposals published on Nov. 24, the AEA said the contractor will assist with various phases of work necessary for submitting a project application to the Federal Energy Regulatory Commission.

The contract is for the period January 2011 through January 2017, and is worth $1 million or more, the AEA solicitation says.

The deadline to submit a proposal is 4 p.m. Dec. 15.

—Wesley Loy