CIRI's Clean Energy Getaway
Projects with renewable emphasis shaping future of regional power
by Tim Bradner
Cook Inlet Region Inc. has fashioned a new business strategy centered on clean energy technologies and CIRI hopes this will transform the way Alaskans in Southcentral communities heat and power their homes.
The corporation is developing the state's largest wind power project on Fire Island, in Cook Inlet, and is in the early stages of developing what may become North America's first commercial-scale underground coal gasification project, on CIRI-owned lands near Beluga, west of Anchorage.
Both projects could play a vital role in easing the looming energy crisis facing the region, CIRI president Margie Brown says. Natural gas fields in Southcentral Alaska are being depleted and gas and electric utilities could face supply shortfalls as soon as 2013 according to recent studies commissioned by Chugach Electric Association, Enstar and Municipal Light & Power.
The Fire Island project could be up and running by then, supplying enough electricity into the Southcentral-Interior Railbelt grid to power 17,000 homes. Since this power is generated by wind it leaves the gas not burned still available, in effect stretching out the region's gas reserves.
"Fire Island wind will offset an estimated 1.7 billion cubic feet of natural gas consumption in the region and delay or avoid having to import liquefied natural gas to meet our gas supply gap, and imported LNG would be very expensive," says Jim Jager, CIRI's director of corporate communications.
If Fire Island wind buys time for Southcentral communities, CIRI's coal gasification project could be a long-term solution making Southcentral Alaska self-reliant on local energy. Coal gasification, done underground, makes a combustible gas from coal that can fuel a power plant making electricity. Alternatively, it can be upgraded to make synthetic natural gas, which can substitute for conventional natural gas in space heating for homes and businesses.
There are large coal resources on CIRI-owned lands in the Beluga area. Revenues earned from the coal would benefit not only CIRI but other Native regional and village corporations because of the 7i revenue sharing requirements of the Alaska Native Claims Settlement Act.
It's a clean process because it allows CIRI to capture the value of coal without building a coal mine, and because harmful pollutants typically associated with coal, like mercury and ash, remain underground.
Clean energy is CIRI's new game plan. "The direction of our board and its strategic plan is to look for opportunities where there are significant market trends and potential for growth, and we see clean energy and clean energy technologies as meeting both of those goals," Brown says.
It also allows CIRI to play a significant role in bringing new energy to Southcentral Alaska, benefitting Alaskans and CIRI shareholders who live in the region. "We see this as transforming our corporation and our state," she says.
The clean energy strategy has guided CIRI in its business acquisitions, too. Last year the corporation acquired North Wind Inc., a firm specializing in environmental cleanup and restoration, project management, engineering and construction services.
Outside Alaska, CIRI has invested in Westly Capital Partners Fund, which helps fund clean-tech companies such as Tesla Motors — a maker of high-performance electric cars — as well as Codexis — a California bio-tech company that develops improvements for the energy and environmental industries.
Underground experiment
However, it is in underground coal gasification and wind power that CIRI is really stepping out. Brown believes coal gasification will not only transform Southcentral Alaska's energy sources but has national implications, too. The technology could help free Americans from the yoke of imported crude oil by the tapping the potential of vast coal resources with a clean technology, she says.
CIRI is teaming up with Laurus Energy Inc., of Houston, Texas, on coal gasification. Laurus is a company that has developed special expertise in underground coal gasification with projects in several countries.
The controlled combustion at the heart of the coal gasification process occurs in a coal seam at least 600 feet underground and possibly deeper, according to Ethan Schutt, CIRI's vice-president for lands, who is directing the project.
Basically, air or oxygen is injected down one well to allow the combustion to occur, and the resulting chemical reaction produces a "synthethis" gas, which comes to the surface through a second well. The combustion is controlled by regulating the injection of air or oxygen into the coal seam
Synthethis gas has a low energy content compared with conventional natural gas but it can be used to fuel a power plant, and CIRI is considering a 100-megwatt power plant as the initial customer. Alternatively, the "syngas" can be upgraded into methane, or synthetic natural gas. This could be supplied to Southcentral residential and commercial customers through the Enstar Natural Gas Co. distribution system, Schutt says.
There are a lot of other things that can be done with syngas. It can be the feedstock for new gas-based industry, for example in the manufacture of fertilizer, ultra-clean diesel, gasoline and jet fuels, or even petrochemicals, Schutt says.
If additional customers are developed the amount of syngas being made can be increased by expanding the coal gasification project in increments. There are huge reserves of coal in Southcentral Alaska, including on CIRI-owned land. The potential is great, but the current project must get up and running first. Schutt thinks this could happen by 2015.
CIRI is now drilling test cores to locate the best coal seams. Besides the coal the local geology must be right for the project, Schutt says. An impervious rock layer, like a shale, must overlay the coal to stop any movement of coal contaminants from that are left underground, he says.
Underground coal gasification isn't a new technology but work on its commercial development is recent. It was first done by the Soviets in the 1930s but was not used outside the Soviet Union because conventional energy from oil, gas and coal, was so inexpensive. Times have changed and all energy is more costly, however, and companies in several nations are now working on the process. South Africa and Australia are leaders, but there are projects being developed in New Zealand, China and other countries. Only experimental projects have been done in the U.S. CIRI's would be the first at a commercial scale.
It takes time and determination to develop leading-edge projects, however, and CIRI's Fire Island wind project is a textbook example. The project has been in the works for 10 years now, but it now looks like construction could finally begin next year.
Wind is free and there's lots of it, but at Fire Island it isn't easy. The island is three miles offshore and the cost of installing the turbines and laying power lines is substantial. Natural gas has been cheap in Southcentral Alaska for decades, which made the economics of a wind as an energy alternative problematic.
However, gas reserves in Southcentral are being depleted and gas prices are now rising. Electric utilities in the region, and CIRI, now see Fire Island wind project as viable.
It has been a long haul, though. For the first five years CIRI teamed up with Chugach Electric Association, the state's largest electric utility. Chugach eventually decided it would prefer to be just a customer rather than a partner, and CIRI continued to work on the project. Summit Power Group, a Washington state energy company, is now developing the project under CIRI's direction.
Power for 17,000 homes
The latest plan is for a 33 wind turbines that can generate about 53 megawatts, enough power for 17,000 homes in Anchorage. An investment of $167 million will be required for the wind farm itself. The state has appropriated $25 million to help pay for a 15-mile power transmission line connecting the project to the onshore power grid, that includes a three mile submarine section from shore to the island.
Last year CIRI started work on clearing and geotechnical investigations, which will continue this year, according to Suzanne Gibson, CIRI's director for energy development. Construction can proceed after power sales agreements with electric utilities are signed, and negotiations are underway now, Gibson says. Fire Island could be providing power to the Southcentral grid by 2012.
The timing of that seems perfect because 2012 is one year before state agencies and oil and gas companies have said that natural gas production could fall short of demand. If there isn't enough gas to meet total demand gas will have to be imported from somewhere else, possibly in the form of liquefied natural gas, or LNG.
Alternatively, electricity could be made from renewable sources, like wind. "Fire Island could be up and running by then," Schutt says. "It would provide enough power that we wouldn't have to import gas for several years," buying time until other gas supplies become available.
Gas could come from the North Slope via a "bullet line" pipeline that is being discussed, which could be built by 2016 or later. Alternatively, it could be gas provided from CIRI's coal gasification project near Beluga. Coal gasification could eliminate the need to build a $4 billion to $5 billion bullet line.
"With wind projects like Fire Island and additional gas exploration in Cook Inlet, the region could remain self-sufficient in energy," Schutt says.
"That has significance in another way," Brown says. "Since the power will be supplied locally its price won't be influenced by national or international markets. It will be more stable, and that will help encourage industrial development and a robust local economy."
Tim Bradner is a natural resources writer with the Alaska Journal of Commerce.