CIRI says rising gas prices will justify Fire Island wind farm

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During a Nov. 8 talk to the Anchorage Chamber of Commerce Make it Monday Forum about Cook Inlet Region Inc’s Fire Island wind farm project, Suzanne Gibson, CIRI’s senior director for energy development, said that although the projected price of power from the wind farm exceeds the current price of electricity in Southcentral Alaska, the rising price of natural gas in Southcentral will before long make power from the region’s predominantly gas-fired power stations more expensive than wind power.

The Southcentral gas and power utilities anticipate having to import liquefied natural gas at some time in the next few years, to cover an anticipated shortfall in locally produced gas, Gibson said. But the current LNG price in Japan, the world’s largest LNG importer, is $13 per million Btu, she said. And a recent study commissioned by the utilities has indicated that, as an alternative to LNG imports, the drilling of sufficient gas wells to maintain local gas supplies would cost something in excess of $2 billion, a cost that would surely push up gas prices.

A new gas supply agreement, signed earlier this year between Southcentral power utility Chugach Electric Association and Cook Inlet gas producer Marathon Oil Co., has gas prices set in an inflation-indexed range from $5.90 to $8.90 per million Btu. Southcentral Alaska utility gas consumers currently pay around $7 per million Btu for gas, plus utility gas distribution and service fees.

—Alan Bailey