80% of Southcentral Alaska’s electricity is generated by natural gas turbines, and about a third of our electric bills go to fueling them. All this gas is extracted from beneath or around Cook Inlet, and for decades this local market has grown increasingly precarious. This April, the near-monopoly supplier of gas to our utilities, Hilcorp, announced it won’t presently commit to gas contracts beyond its standing obligations. For our Kenai Peninsula utility, HEA, this means an uncertain situation beyond the end of its Hilcorp contract in spring 2024. 

Despite its shaky future, we depend on gas. So why should we say no to any potential gas extraction, whatever it may cost to other aspects of Cook Inlet? 

Lease Sale 258, resurrected with a congressional mandate to occur this year, would offer a million offshore acres to bid for oil and gas development. In 2026, the Bureau of Ocean Energy Management (BOEM) plans to hold another lease sale offering an additional million acres under their proposed 5 year plan. Development of these leases could bring up to 80 miles of new underwater oil pipelines and up to 120 miles of gas pipelines to these presently untouched waters, according to the LS258 Draft Environmental Impact Statement. 

If we were to jeopardize local livelihoods in fishing, tourism, and mariculture for another decade of affordable gas, we’d be sacrificing in vain. The gas BOEM expects companies could profitably extract from the Lease Sale 258 area is not enough to meaningfully contribute to local energy security. And to extract a significant amount from all the Federal waters of Lower Cook Inlet, today’s already high gas prices would need to more than triple. 

Two numbers are useful for measuring our natural gas future: how much we use and how much we pay for it. 

• All of southcentral Alaska consumes about 75 billion cubic feet of gas per year for electricity and heat. This annual consumption is a good yardstick for measuring how significant a quantity of gas is for local energy.    

• In 2022, Alaskan utilities have paid a prevailing price of around $7.80 per thousand cubic feet of gas, according to the Alaskan Department of Revenue. This price has been steadily rising over the past decade due to the heavy investment needed to produce gas from the Inlet’s aging fields and the small number of consumers to share that cost. Lower 48 prices in this same period have been around $2 to $4 per thousand cubic feet, though recently the pandemic and the Ukraine war have spiked them above Cook Inlet prices to $8.81.  

BOEM calculates that Lease Sale 258 has, at most, four years’ worth of gas at current consumption rates. Their estimates range from 72.4 to 301.9 billion cubic feet. This isn’t to say it would be pumped and sent to market in four years – BOEM models a 40-year scenario, with peak production happening 10-20 years after the sale. The peak would be 5-30 billion cubic feet per year for two to four years, with a long, steep decline following. This timing means Lease Sale 258 would have even less impact on our energy security.

The high estimates for Lease Sale 258 are comparable to the 255 billion cubic feet of gas extracted from the existing Ninilchik field since 2003, but aren’t enough to bring long-term stability to our gas-reliant system. The historic foundations of Cook Inlet gas have been four large fields that have each produced over a trillion cubic feet of gas since their discovery in the 1960s. At least one of these old giants, the Beluga River field, is expected to be depleted in 2034. The future of local gas depends on how much more can be squeezed from the giants, and whether enough gas can be extracted from numerous smaller fields at prices we, the energy consumers, can afford to cover through our utility bills. 

BOEM estimates that the entire Lower Cook Inlet planning area has over 1 trillion cubic feet of gas — comparable to one of the existing four giants. This is the “undiscovered economically recoverable resource,” but the meaning of “economic” is relative. For companies to meet the expense of finding, drilling, and delivering this gas — plus make enough profit to incentivize those investments — our utilities and therefore their ratepayers would need to pay more. How much more? BOEM has an estimate for that, too. 

To profitably extract 10 years of gas from Lower Cook Inlet, it would need to sell for at least $10.68 per thousand cubic feet. This assumes oil is also selling for $100 per barrel. Since gas comes up as a byproduct of oil, higher oil prices lead to more gas extracted incidentally. Depending on how oil and gas prices correlate, one or the other may need to be even higher. $10.68 is more than local gas prices have ever been — the current peak was $8.12 in mid-2020. To extract a trillion cubic feet – allowing Lower Cook Inlet to replace one of the four giants we’ve relied on since the ’60s –  gas would need to sell for $17.79 per thousand cubic feet, with oil at $100 to $160 per barrel. To get 14 years of gas from Lower Cook Inlet, BOEM calculates prices would need to reach $28.47 per thousand cubic feet, in the range of those currently causing economic crisis in Europe. 

Drilling for more gas in Lower Cook Inlet is not a real solution to our energy problems. “More gas” in general is not a long-term solution. The solution is needing less gas, and it is possible while still maintaining our energy production.   

For decades, the final argument for drilling Cook Inlet has been that gas keeps the lights on — that it’s the only viable way to keep local homes and businesses electrified and warm. If this was true in the past, it’s not true now. Solar, wind, and small hydropower are mature, economical technologies that can make a significant dent in our gas reliance if we deploy them at scale and give our grid the storage and transmission capacity to use them. Future gas prices are a strong incentive to do so. Longer term, the Cook Inlet region is rich in the resources that the next generation of renewable technologies will seek to tap – namely tidal and geothermal energy.

With the options we have now and those likely in the future, drilling lower Cook Inlet is a lousy investment. There would be little to gain in terms of affordable energy and much to lose in habitat, tourism, fisheries, and beauty. Lower Cook Inlet is worth far more — both in economic and non-economic senses of value — intact and protected than with oil platforms and pipelines.

Tell the Biden administration that you value the Lower Inlet as a bountiful ecosystem, not an extraction site. Sign our petition for permanent protection of Lower Cook Inlet.