Donlin Gold’s gas pipeline will impact hundreds of wild salmon streams along its 315-mile path from Cook Inlet, over the Alaska Range, to the mine site in the Kuskokwim basin. This corridor – pocked with airstrips, gravel pits and access roads – would open up motorized access to a vast acreage of untrammeled wildlands and create vulnerable pathways that will accelerate the spread of wildfires, invasive species and spruce bark beetle infestations in the Susitna Valley and beyond. Together, the mine complex and the gas pipeline create a broad array of threats to wild salmon never before seen in Alaska. Represented by Earthjustice, Inletkeeper and four tribes from the Kuskokwim Delta region: Orutsararmiut Native Council, Chevak Native Village, Native Village of Eek, and Native Village of Kwigillingok – are legally challenging the state’s right-of-way permit for the proposed Donlin Mine gas pipeline

Oral arguments were heard before the Alaska Supreme Court on November 12th. The Court combined the hearing for both the state pipeline right-of-way case and the state water rights permit case into a single afternoon

You can watch each hearing here: Right-of-Way Oral Argument; Water Rights Oral Argument

DONLIN’S ENERGY DEMANDS ON DWINDLING COOK INLET GAS SUPPLIES

In addition to the pipeline’s impact on fish & wildlife habitat, Inletkeeper has growing concern about the economic implications of Donlin’s gas demand. In late March 2024, Cook Inletkeeper released the economic report Cook Inlet Natural Gas Market Outlook with Incremental Demand from Donlin Mine, authored by long-time Alaska energy sector consultant Mark Foster. The report outlines how much NOVAGOLD and Donlin Gold LLC’s energy needs could cost Southcentral Alaska residents and businesses. Foster analyzes in detail how Donlin’s plans to purchase diminishing reserves of affordable Cook Inlet gas to fuel its proposed gold mine could force local utilities to buy more expensive gas, paying a premium even above the cost of imported LNG.

The report’s conclusion: Donlin’s consumption of Cook Inlet gas could increase local utility bills by approximately $265 per year for the average household.

Alaska Department of Natural Resources (DNR) Commissioner John Boyle dismissed the concern as “fanciful, or I guess illogical,” offering instead a simplistic and mistaken story about supply and demand: that increased demand from Donlin will lead to more gas production and therefore lower prices. “The more demand they [gas extractors] have from industrial, as well as residential consumers, it enables them to defray those costs, to spread the cost out,” Boyle said. “So the more cost these industrial consumers bear, the lower the cost, then, for each individual consumer.” (Pipeline proposed to power Donlin mine could have impacts from Y-K Delta to Cook Inlet – Alaska Public Media)

This, however, mistakes the current situation in Cook Inlet for places where local mines paid their fair share of costs of local regulated electric utilities. In cases cited by DNR, regulated electric utilities such as those in Juneau and Fairbanks were able to demonstrate that power sales agreements with local mines benefited customers by lowering electricity costs. But Donlin isn’t planning to buy power from a local regulated utility that has an obligation to present a power sales agreement ensuring a net economic benefit to its customers. Instead, Donlin plans to buy natural gas at tidewater in Cook Inlet—a distinctly different scenario.

Today, we see no commitment on the public record from Donlin or Hilcorp to submit any agreements related to Cook Inlet gas supplies to the Regulatory Commission of Alaska. Without this, there’s no transparent, open process to demonstrate that Donlin’s procurement of natural gas will provide any net benefit to local gas and electric ratepayers or their communities.

If Donlin purchases what’s left of the affordable Cook Inlet gas, local utilities will either have to pay more for the remaining supply or turn to expensive LNG imports – which won’t be an option until LNG import infrastructure is built, several years down the road.

This is a case where the facts on the ground – or rather, in the ground – matter. After decades, the easily accessible gas has already been extracted from Cook Inlet, and future gas development will require much more investment in exploration, drilling, and infrastructure. DNR’s own research shows a very limited amount of gas that can be extracted from Cook Inlet at current per-unit prices, and utility-commissioned research shows the limited volumes of gas petroleum geologists and engineers expect to be developed at even up to triple current prices. These are break-even price estimates based on detailed assessments of local geology that additional demand will not alter. Historically, the exit of large industrial customers, like ConocoPhillips LNG and the Agrium fertilizer plant, slowed local gas price increases. But Donlin’s demand would reverse this trend, accelerating price hikes as gas becomes harder to find and produce.

Large industrial customers have a history of power grabs that continues to the present day.  As reported in the Washington Post (Power Grab, 11/1/2024), as data centers for AI across the country strain the power grid, bills rise for everyday customers.  The huge demand for electricity from data centers driving the AI boom has fallout for everyday ratepayers. Mark Foster warns: “Local residents, small businesses, local elected officials need to remain vigilant in their efforts to require large industrial customers to demonstrate that they will pay their fair share of the costs of local energy resource development and local electric utility costs. Otherwise, the locals will get fleeced into paying the energy bills that should be paid by outside investors.”