Energy & Mining

Imagine, for a moment, that you’re the head of a publicly traded oil company.

In your corner office, a team of executives has come to pitch you on a new, possibly lucrative drilling opportunity. It’s in a relatively politically stable country; the local tax regime is reasonable, if not generous. Other companies have found huge deposits in the area, and your own geologists are telling you that there’s likely a whole lot of oil in the ground. You’ve already leased the area.

There’s one big problem, though: The project is in the Arctic, in an undeveloped region of Alaska’s North Slope — and while it’s not in deep water, it’s a slight distance offshore. Which means drilling risks provoking lawsuits and permitting challenges from conservation groups, protests from local whaling captains, maybe even disruptions from climate activists at your next shareholder meeting.

You call up the heads of other multinational oil companies that you sometimes work with to see if any of them want to buy a stake in the project and take the lead on drilling. But they all balk.

So, you take a pass, and hand back to the state what could ultimately be some highly valuable leases. You’ll take your chances drilling somewhere else — probably in a region where you expect to be able to get the oil to market sooner, before there’s too much of a risk of declining global oil demand amid adoption of renewable technologies.

Welcome to Alaska’s future. Or, really, its present.

The details are a bit fuzzy, but this story is not entirely hypothetical. Something like it just happened.

Earlier this month, Shell’s Houston-based U.S. arm said it would relinquish a set of oil leases in an area of the North Slope, West Harrison Bay, that some observers say the company’s own geologists were salivating over. The leases were Shell’s last majority-owned properties in the state, following its decision to give up a batch of federal offshore leases in 2016.

“As a former oil company guy for over 40 years, I have sympathy for those guys in Houston, because I knew it probably drove them crazy that their upper management was so against it — and so scared of the European climate cultists,” said Anchorage Republican Rep. Tom McKay, who convened a legislative hearing about the West Harrison Bay prospect earlier this year.

McKay, a petroleum engineer, said in an interview that he thinks other companies could still acquire the leases at a state auction and drill for oil themselves — including, potentially, an upstart player, Narwhal LLC, that has bought up surrounding acreage.

But Narwhal lacks Shell’s enormous financial wherewithal — a crucial asset when the cost of drilling wells in remote parts of the North Slope can top $100 million.

Other industry players say that Shell’s exit from the state is an important and unsettling symbol of the economic future for oil-dependent Alaska: As the world looks toward lower-carbon energy sources in response to global warming, some of the state’s hard-to-tap petroleum prospects are becoming less attractive.

The exit of Shell — one of the first major companies to operate in Alaska — follows the departure of other major companies from the state, including BP in 2020.

“A lot of stuff is coming together that suggests decreased investment in remote, Arctic areas for oil and gas. Alaska leadership has to understand this stuff is happening,” said Mark Myers, a former state natural resources commissioner who also once led the U.S. Geological Survey. “Worldwide events are overcoming us faster than we can manage it. Shell’s response should not be seen as a one-off.”

The end of oil and gas is still far off in Alaska, where taxes and royalties from the industry amount to slightly more than one-third of the state government’s unrestricted revenue.

Two huge new oil projects are currently under construction on the North Slope, and could collectively boost Alaska’s overall production by some 50%.

But the new Pikka development, now owned by Australian company Santos, was delayed for years amid concerns from investors about backing a project in the Arctic. And ConocoPhillips’ new Willow project has faced a slew of lawsuits and intense, broad opposition from conservation groups and climate advocates.

Shell acquired its West Harrison Bay leases in 2012 — the same year the company began a much higher-profile drilling quest in the Chukchi and Beaufort seas offshore of Alaska. That unsuccessful multiyear campaign, in federal waters, was marked by the wreck of one of Shell’s offshore drilling rigs.

The drilling ultimately cost the company $7 billion, but never produced a barrel of oil for sale.

In the wake of that failure, and amid fierce lobbying by activists against Arctic oil development, the company said a few years later that it would not pursue any new remote exploration leases in the region.

But it quietly held on to its 125 square miles in West Harrison Bay, in the state waters just offshore of the National Petroleum Reserve – Alaska.

The deposit is north of ConocoPhillips’ Willow project, and just to the west of Santos’ Pikka development. And Shell, in correspondence with the Alaska Department of Natural Resources in 2020, said it had identified several potential oil and gas accumulations and prospects.

But to confirm the presence of commercially viable oil deposits, Shell would have to drill wells. In 2020, the company took an initial step in that direction, merging its 18 leases into a single unit.

But Shell, in its correspondence with the state, indicated that it did not want to drill the wells itself. Instead, it was searching for another business to buy a stake in the leases, take on some of the “risk and cost” associated with the area’s development and begin an exploration campaign.

Shell said its efforts were hindered by the coronavirus pandemic. Through September 2023, it told the state that it was still having “ongoing discussions with its global contacts,” but finally, earlier this month, the company said it had been “unable to secure a suitable co-owner” and would surrender the West Harrison Bay leases.

“The Arctic is such a tough optic for a large international oil company. You can’t have an annual meeting without someone saying, ‘Increase your profits, but by God, don’t do it in the Arctic,’” said a person familiar with the decision, who requested anonymity due to the sensitivity of the deliberations. They added: “It’s not that there’s no oil there.”

In an emailed response to questions, a Shell spokeswoman, Cynthia Babski, did not directly identify the obstacles to finding a partner, saying only that the company had been “actively seeking a co-owner and operator” for several years but ultimately was unsuccessful.

Babski declined to address McKay’s comments about the “climate cultists,” and also did not directly answer a question about why Shell did not seek to sell the leases rather than return them to the state.

“After discussions with the Alaska Department of Natural Resources and other stakeholders, Shell chose to terminate the unit and relinquish the leases,” she said.

That choice could have repercussions for Narwhal, a small, privately owned oil company whose majority stakeholder is a Texas-based family partnership, according to corporate filings with the state.

Narwhal’s leaders include a former Shell employee who worked on the company’s West Harrison Bay development plans. And Narwhal owns more than a dozen of its own leases in the bay that surround the area formerly leased by Shell — though it also hasn’t done any drilling.

For the past two years, Narwhal has pushed Republican Gov. Mike Dunleavy’s administration to pressure Shell into advancing its drilling efforts in West Harrison Bay. It also said in 2022 that Shell had “summarily dismissed” at least a half-dozen of Narwhal’s formal proposals, since 2016, to either jointly drill for oil in the area, or to buy Shell’s leases outright.

Narwhal officials did not respond to requests for comment, and Babski declined to comment on Narwhal’s assertions. But now, if Narwhal wants to buy the leases formerly held by Shell, it will have to win them at an upcoming auction held by the natural resources department, which officials say could happen as soon as later this year.

“The department understands this area to be highly prospective,” said John Crowther, the department’s deputy commissioner.

One major problem for any oil company that ends up finding oil in West Harrison Bay is getting it out.

The land surrounding the nearshore leases relinquished by Shell is all within the National Petroleum Reserve, where the Biden administration just finalized new limits on oil and gas infrastructure and development.

Industry observers say that building a new pipeline from West Harrison Bay across the petroleum reserve and east to connect back to the trans-Alaska pipeline could be difficult, if not impossible, to secure environmental permits for. Crowther and others suggested that perhaps a pipeline could stay offshore, in state waters, until it connects back to state-owned land, where permitting is more industry-friendly.

The big question now is whether any company can secure the investment needed to take up such challenges.

Myers, the former natural resources commissioner, said he thinks that permitting and political impediments have become an increasing problem for Arctic projects, given that oil developments in other areas can often be brought online more quickly.

“You have to look at the time it takes you to permit and develop, even if you’re successful. How does that play into the timing of when we start decreasing oil demand in the world?” he said. “Before, if I sit on it for 20 years, it’s worth hanging onto because there’s always going to be a market for it in the future. Now, oil is systematically being replaced for many of its uses. You’re looking at a different opportunity in the future.”

Myers is worried enough about Alaska’s post-oil economic future that he’s currently investigating whether the state might hold economically valuable underground deposits of a carbon-free fuel: hydrogen.

Dunleavy, the governor, is also hosting a sustainable energy conference this week. But some lawmakers remain deeply skeptical about the need to reposition the state’s economy.

McKay, the Republican state representative, noted that the Alaska Legislature just passed a bill that could help sustain the state’s oil and gas industry by allowing companies to sequester carbon pollution underground.

He also dismissed federal conclusions and the broad scientific consensus about the far-reaching and worsening effects of climate change.

“It’s all emotion. You can’t spend trillions of dollars on something that’s based on emotion,” he said. “I’m just not ready to surrender our oil and gas business.”

Nathaniel Herz welcomes tips at natherz@gmail.com or (907) 793-0312. This article was originally published in Northern Journal, a newsletter from Herz. Subscribe at this link.

Inventor Lance McMullan has a beautiful house on Douglas Island. But he spends almost all of his time in the garage. 

On one side of the room there’s camping gear, a set of winter tires and a small couch. On the other, an enormous 3D printer and dozens of boxes and garbage bags filled with pieces of bright yellow plastic. 

He reached into one of the bags and pulled out a cracked triangular fin. 

“Every part has failed at some point or another,” McMullan said. “I just stay in this room working for days.”

All that time and discarded plastic is a testament to the device hanging from a rope in the center of the room — a sleek tube with a large rotor on one end. It turns powerful ocean currents into renewable electricity. 

“Anyone who has met me in the last 14 years, this is all they have heard about. It’s all I can think about,” McMullan said. “Like, I can’t look at the moon without thinking about another tidal cycle passing.”

McMullan isn’t the only one who’s excited. Tidal power could be an alternative to burning fossil fuels like diesel and natural gas, which is driving human-caused climate change. 

And the prospect of tapping into ocean energy has received a lot of buzz and a lot of federal money in Alaska. Especially in Cook Inlet, where proposed large scale tidal projects could eventually power thousands of homes. 

McMullan is starting smaller. His company, Sitkana, makes small tidal generators that are perfect for individual fishing boats and liveaboards. He hopes they can revolutionize ocean power the way rooftop panels revolutionized solar power.

“It’s just so much power, and it’s not being touched,” McMullan said.  “I feel like I have almost a responsibility to bring it to reality.”

Finding a niche for tidal power

Alaska has long been considered the ideal place for developing tidal power. Steep fjords and inlets along the coast amplify the natural rise and fall of tides. When water rushes into those channels, it’s concentrated into a strong current that’s perfect for generating electricity. 

“It’s kind of hard to go anywhere in Alaska without tripping over a good tidal energy site,” said  Brian Polagye, a professor of mechanical engineering at the University of Washington and a researcher at the U.S. Department of Energy’s Pacific Northwest Laboratory.

Because water is so dense, ocean power could be more potent than wind energy. And because tides are consistent and predictable, energy drawn from them could be more reliable than solar, which fluctuates with the weather and the seasons.

But it’s far less popular. That’s mostly because it costs a lot more. 

“If tidal power was the cheapest form of energy, it would be as ubiquitous as a solar panel,” Polagye said.

Standardized designs and mass manufacturing of parts has drastically reduced the cost of solar and wind energy technology over time. So when a tidal project tries to tap into a large grid like the Railbelt, it has to compete with those much cheaper alternatives.

But Polagye says tidal energy could find success by exploiting unique niches in the market. In Alaska, that might mean building in remote places where the grid is less robust. 

He points to the village of Igiugig, which is experimenting with a similar turbine that generates electricity using currents from the Kvichak River. 

“The turbine there is really the best source of power. It’s competing with diesel that’s flown in,” Polagye said. “The fact that it is more expensive than other sources that would be on the grid doesn’t matter if you don’t have a grid.”

Sitkana’s tidal turbines may be best suited to diesel-dependent coastal communities like Angoon, Hoonah and Kake in Southeast Alaska, where energy prices are much higher than in the Lower 48. 

Those places have explored solar and hydropower, but large utility projects take a lot of time and money to build. And as communities adopt things like electric vehicles and electric heat pumps in an effort to cut down on carbon dioxide emissions, demand for renewable energy keeps growing. 

Experts say decarbonization will likely require a mix of renewables. McMullan believes that mix should include tidal power. 

The Chinook 3.0

His effort to make ocean energy accessible began while he was working as a deckhand on a troller in Sitka. From the back of the boat, he would watch the hooks bobbing through water and imagine a tidal generator that could be dragged along like that. 

“It was that summer I started sketching designs,” McMullan said. “But I realized I had no idea what they were or if I could make them work. I didn’t know anything about fluids or mechanical engineering.”

So he went back to school to study engineering, then spent time as a maintenance technician building wind turbines in the Lower 48 before returning to Alaska.

It took him years to develop Sitkana’s current prototype, the Chinook 3.0. The small tidal turbine has a few key differences compared to other tidal generation designs. 

While many tidal projects are anchored to the ocean floor, the Chinook 3.0 is free-floating and portable. It weighs less than a hundred pounds.

“It swims through the water sort of like a fish,” McMullan said. “And installing these is no different than dropping an anchor.” 

The Chinook 3.0 can be hooked up to a small crane or pulley on the back of the boat, then lowered when the tide is rising or falling. 

Tidal currents spin the rotor, which turns a generator inside the body of the turbine to create 1.6 kilowatts of electricity. That’s enough to meet one person’s daily needs, assuming the generator stays in the water for most of the day. 

So a family might need multiple generators. But at just over $1,000 per kilowatt, the cost of energy is relatively low — comparable to the price of wind power. That’s thanks in large part to the Chinook 3.0’s plastic construction. 

Using plastic might also be a solution to maintenance problems, another common hurdle for tidal power. The ocean’s powerful currents and corrosive seawater are harsh on tidal turbines. Constant repairs can disrupt power and challenge communities that might not have the expertise or manpower to keep the turbines running. So Sitkana plans to let the ocean do its worst.

“What we’re doing is accepting that these are going to get destroyed,” McMullan said. 

When a generator breaks, they’ll pull it out, replace it, and recycle the plastic from the broken unit. 

Soon, McMullan will send the Chinook 3.0 prototype across the country, to a tidal testing facility in Cape Cod, Massachusetts. There, they’ll monitor the turbine in the water to see how fish and other wildlife respond to it. 

“But we’re getting very close. It’s here, it works,” McMullan said. “Now it’s just about scaling it and getting it out there and producing the power.”

Sitkana expects that the generators will hit the market sometime next year, for about $2,000 each. 

Correction: A previous version of this story referred to the price of energy in cost per kilowatt hours. Cost is measured per kilowatt.

Energy bills passed by the Alaska Legislature will help the state address natural gas supply problems in Southcentral’s Cook Inlet region and energy problems statewide, Gov. Mike Dunleavy said on Monday.

But he and his staff members are still poring over the details of the bills that passed and things that were left out, the Republican governor told reporters. In the latter category was a bill he introduced, House Bill 276 and Senate Bill 194, that would have reduced royalties for Cook Inlet natural gas and oil. A different royalty reduction bill, House Bill 223, passed the House but not the Senate.

Dunleavy, speaking to reporters gathered at a U.S. Department of Energy-sponsored event in Anchorage, said he has not decided what to do now about Cook Inlet royalty relief.

“Obviously, we wanted all of our bills to move and pass because we saw specific problems that we’re trying to solve,” he said. Examining the approved legislation will take a bit of time because several bills wound up being combined, he said. “And so, probably within the next week or so, it makes sense . . .to see what we’ll do with Cook Inlet in terms of incentivizing more gas production.”

Asked about the possibility of calling a special session on Cook Inlet royalty relief, Dunleavy was noncommittal.

“We’re going to take a look at what else was passed and what was left out to see what we need to do in the near future, what we need to get ready for next year,” Dunleavy said. The possibility of a special session “depends on, once we do our analysis of the bill, what that looks like.”

One important provision that did pass, he said, concerned regulating Cook Inlet natural gas storage. That will increase storage capacity in the region, he said.

That proposal was originally intruded in a standalone measure, Senate Bill 220, but wound up bundled with other energy provisions into a larger bill that was also about carbon capture, reserves-based lending and geothermal energy.

The carbon-storage provisions were originally proposed in a standalone bill the governor introduced last year. If signed by Dunleavy, the bill passed by the Legislature will enable the state to set up a regulatory framework for leasing what is known as “pore space” underground where carbon gases may be stored.

Related to that effort was a bill passed last year enabling the state to start a system of selling carbon credits to preserve sections of state-owned forested land. Regulations for those sales are still being made final, and potential buyers have shown interest, Dunleavy said.

“We have had a number of tire kickers, seat-sitters, look-under-the-engine people, but they’ve been waiting for the regs,” he said.

Discussions are ongoing with potential customers in Japan and other Asian allies that could help Alaska monetize carbon, he said.

Monday’s event at which Dunleavy spoke was a daylong energy meeting called Connecting the Arctic that was a prelude to this week’s Alaska Sustainable Energy Conference.

Dunleavy and Alberta Premier Danielle Smith both spoke about oil and gas production that is continuing in their regions even as they work to limit emissions of carbon gases. Scientists say the accumulation of those gases in the atmosphere creates a greenhouse layer that causes climate change.

“We’re transitioning away from emissions. We’re not transitioning away from production,” Smith told the meeting audience.

Compared to Alaska’s estimated remaining oil reserves of 3.6 billion barrels, Alberta has 1.2 trillion barrels of oil remaining, Smith said. At the same time, Alberta has available for storing carbon dioxide “the second-largest pore space in the world, aside from Russia,” she said. “And we’re a better friend and ally than Russia, even though they’re close.”

Alberta, like Alaska, is hoping to use those vast underground spaces for carbon storage, she said. “My officials tell me that we have enough pore space to capture, theoretically, all of the CO2 emissions that have already been produced by man so far.”

This story originally appeared in the Alaska Beacon and is republished here with permission.

Gold mines near the British Columbia border are controversial in Alaska because of the potential for negative impacts to the environment and fisheries downstream. A nonprofit group called the Environmental Investigation Agency (EIA) released a report in January that found that these gold mines operate somewhat like a Ponzi scheme.

The report says mines are allowing day traders and Canadian taxpayers to assume most of the financial risk that comes with gold prospecting, while a much smaller group of shareholders reaps the rewards.

KFSK’s Shelby Herbert has been following this story in Petersburg.

Ava White: Shelby, what does this report say about how these mining companies operate?

Shelby Herbert: The EIA is reporting that there’s basically a network of about 500 companies that have direct or indirect stakes in gold mining claims in the transboundary region. They use something called the prospect generator model, which is when junior mining companies acquire land packages with good prospects for gold, or other precious metals and minerals. Then they carry out the initial exploration work, to suss out the viability of the mine before the drilling gets started.

In order to pool resources and spread out the risk, they’ll then seek out joint-venture partnerships for the claims. These partnerships give a major or mid-tier miner the ability to earn interest in exchange for funding drilling.

This model is used by mining companies all over the world. But the authors of the report have noted that mining operations in the transboundary region operate like the prospect generator model on steroids.

Most of those companies in the region are publicly traded, and actually generate very little revenue. The EIA report found that a lot of the top 20 claim-holding companies in the transboundary watershed region operate at a deficit and generally have a negative trend in their stock price.

Ava White: So, how do they make any money?

Shelby Herbert: Well, these companies certainly make money. But their small-time investors? That’s a different story.

According to the report, the companies in this network are largely funded by stock sales from small investors — day traders, non-professionals, folks like that. And then they’re also buoyed by tax incentives. There are several Canadian tax incentives that greatly benefit mining companies, like Flow-through Shares and the Mineral Exploration Tax Credit.

So, the model does turn a profit — even when they’re not turning out much gold. Owners and principal investors are making millions of dollars a year, and using it to drill hundreds of miles of new holes.

Ava White: How many of those mines actually yield gold?

Shelby Herbert: A fraction of a fraction. According to the Association for Mining Exploration, only about one in 10,000 exploration projects actually becomes a mine. And most of that risk falls to — like I said — small-time investors and Canadian taxpayers. That’s why the authors of this report are drawing a comparison to Ponzi schemes. I reached out to many of the heavy-hitters in the British Columbia mining network to get their reaction to this comparison, but they never got back to me.

Ava White: Are there any environmental concerns about simply drilling for gold? Even if the prospectors never find it?

Shelby Herbert: The report says that even the boreholes that don’t become mines could hurt the surrounding watershed. There isn’t a lot of published information on the direct environmental impacts of mining exploration. But a 2019 study by the environmental group,  Center for Science in Public Participation, looked at the effects of exploration at the controversial Pebble Mine in northwestern Alaska, and it gives us a little insight. Researchers found elevated levels of aluminum, iron, and copper in surface water near drilling sites. And some of those exceeded water quality standards. Dissolved copper also happens to be neurotoxic to salmon, and potentially prevents them from navigating back to their home streams.

Ava White: And what do the mines mean for people downstream?

Shelby Herbert: It’s important to note that a lot of these mines are really close to watersheds that feed fish habitat. Take a look at where I’m at, here in Petersburg — Enduro Metals’ mining claims cover an area about the size of New York City. And about three quarters of that area is within three miles of rivers or streams, including the Iskut River — the Stikine River’s largest tributary, which feeds into the waters near where I am.

Several groups in Southeast Alaska are concerned about what pollution from the mines means for fish. That’s tricky to quantify, with other factors like climate change and bycatch at play here. But by many accounts, mines and fish don’t mix.

A study published in 2022 in the journal Science Advances found a consistent pattern of harm to salmon habitat and watersheds from British Columbia mines. Groups like Salmonstate are concerned about declining populations of salmon, as well as hooligan and trout. And Indigenous people in Wrangell, Metlakatla and Ketchikan have long talked about the changes they’ve seen in fish populations where these rivers meet the ocean.

Also, about 20 percent of the current claims that have been staked in the transboundary region are covered by glaciers. As those glaciers recede due to climate change, they’ll leave behind thousands of miles of new salmon streams. But the fish are in direct competition with the mining companies, who are waiting to dig into the ground.

Ava White: How are people in the fishing industry reacting to this?

Shelby Herbert: Commercial fishermen are some of the key players in campaigns to protect transboundary watersheds from mine pollution, like Salmon Beyond Borders. There are international treaties that govern this region, including the Boundary Waters Treaty and the Pacific Salmon Treaty.

Heather Hardcastle is the campaign advisor for Salmon Beyond Borders, which is one of the organizations that commissioned this report. She told me that commercial and sport fishermen, as well as subsistence users have been deeply involved with this issue and looking for change, looking for diplomacy, and looking for answers from the U.S. government.

Ava White: And what are Alaska politicians doing about this?

Shelby Herbert: U.S. Sen. Lisa Murkowski called on President Biden last fall to withhold his support for Canadian mines until both countries can establish watershed protections for this region.

But this has been a long, drawn out fight. For close to a decade, people in Southeast Alaska have been asking for a pause on transboundary mining activity until Indigenous peoples and communities in the region can establish enforceable international protections for the watersheds that lie below the mines.

For decades, Alaska shipped liquefied natural gas to Japan, which burned the fuel to generate power — and also generated ample climate-warming carbon emissions.

Now, the Biden administration wants to study whether those Japanese emissions could be captured, liquefied and shipped back to Alaska. There, they’d be injected and locked away underground in Cook Inlet, just west of Anchorage, to help stem the warming of the climate.

Officials from the U.S. Department of Energy announced Tuesday at an Anchorage workshop that they’re starting a formal study of the concept, building on Japan-U.S. cooperative agreements announced by the White House last month.

“Even as the decline of natural gas in the Cook Inlet heralds the end of a previous and impressive energy area in this region, awareness and interest is growing here in the region’s potential to become a storehouse for capturing carbon emissions — both domestically and internationally,” said Brad Crabtree, assistant secretary for the Department of Energy’s Office of Fossil Energy and Carbon Management.

Crabtree spoke Tuesday to an audience at Anchorage’s Sheraton hotel that, in addition to Alaska policymakers and fossil fuel executives, included some 15 representatives of Japan’s energy industries and government.

The Department of Energy’s new study is a reflection of the growing interest in injecting and storing climate-warming carbon pollution in underground reservoirs in Alaska — a trend amplified, in part, by provisions in President Joe Biden’s signature climate law to incentivize greater use of the technology.

Alaska lawmakers are currently debating a bill sponsored by GOP Gov. Mike Dunleavy that would establish a legal system for carbon injection and storage. And one Japanese company recently hired an Alaska-based lobbyist, at $7,500 a month, to track carbon-related policy developments in the state.

Many climate advocates are skeptical of carbon storage’s potential to meaningfully reduce global warming, saying it’s expensive, unproven on a large scale and enables continued dependence on fossil fuels.

But Crabtree, in an interview after his announcement, said that certain substantial sources of carbon pollution aren’t tied to fossil fuel combustion. Cement manufacturing, he noted, generates emissions not just from burning fuels but from a specific chemical process that converts limestone into lime.

“I don’t see this as enabling oil and gas at all,” he said. “I see this as enabling the transformation of our energy industrial economy to be fully decarbonized.”

Alaska, however, has to overcome a significant obstacle in order to participate in the carbon storage industry, according to Crabtree: While it has “enormous” storage potential in the form of depleted oil and gas reservoirs, it produces relatively low quantities of emissions from its few major power plants and industrial facilities.

That’s where Japan, and possibly South Korea, come in.

Japan is the world’s fifth-highest energy consumer, according to the U.S. Energy Information Administration’s most recent statistics. But while Japan has committed to being carbon neutral by 2050, it has limited capacity to deposit emissions underground, as well as risks to the integrity of storage from earthquakes, Crabtree said.

Japanese businesses have already signed study agreements with international partners to explore the idea of shipping carbon to Malaysia and Indonesia and storing it there. Now, Crabtree’s office will examine whether the same idea is possible in the U.S., with a focus on Alaska.

An official from a Japanese company following those developments, who requested anonymity because of their political sensitivity, described the interest from his country as “very, very early.”

“It’s a tool that’s being evaluated,” the official said. “The economics are painfully expensive.”

Oil companies have long injected carbon into their reservoirs to help extract more petroleum. But the federal government has licensed very few projects solely dedicated to storing carbon to keep it out of the atmosphere.

As of September, the Environmental Protection Agency had issued just two permits that have led to projects, both in Illinois, according to E&E News.

Enhanced tax credits for CO2 storage in Biden’s climate law have boosted industry interest in new projects, but there’s now a major permitting backlog at the EPA. And because the tax credit only applies to carbon captured in the U.S., Japanese emissions shipped to Alaska wouldn’t qualify, Crabtree said.

The energy department’s study, with help from a newly hired contractor, will examine whether the cross-border carbon shipment concept makes technical and economic sense — and what costs and prices for capture and storage would allow such projects to move forward.

One idea is that if Alaska can produce climate-friendly fuels, like hydrogen, to ship to Asia, the same tankers could return to the state carrying carbon emissions.

“We create this value chain of, potentially, exporting energy to Japan and backhauling carbon dioxide, which we then sequester in our rocks,” said John Boyle, Alaska’s commissioner of natural resources.

Studying the technical feasibility should be just the first step, said Kelsey Schober, director of government affairs at Alaska’s branch of the Nature Conservancy, which recently published a study on carbon capture and storage in the state.

“It can’t be the only step. We also have to ask: What are the impacts? Who’s going to feel those impacts the most? Have they been consulted about these projects?” she said.

From an environmental perspective, Schober added, the potential benefits of carbon capture and storage depend on where the pollution is coming from. It’s more valuable, she said, if it’s being used for industries — like cement manufacturing or steelmaking — that are difficult to decarbonize.

“We have to think about prioritizing avoiding and reducing direct emissions — not just using CCUS technologies as a way to bail out existing emission levels,” she said, using an acronym for carbon capture and underground storage.

Nathaniel Herz welcomes tips at natherz@gmail.com or (907) 793-0312. This article was originally published in Northern Journal, a newsletter from Herz. Subscribe at this link.

The regional corporation owned by the Iñupiat people of Northwest Alaska said Wednesday it is severing its ties to the Ambler Access Project, the controversial road that a state agency proposes to build through the Brooks Range foothills to allow commercial mining in an isolated Arctic area.

NANA Regional Corp., based in Kotzebue, said it will not renew a land-use permit for the project that it granted to the Alaska Industrial Development and Export Authority. AIDEA is the state-owned corporation that is seeking to build the 211-mile road through to the Ambler Mining District, the site of deposits of copper and other valuable metals. The land-use permit, which has a three-year duration, will expire this year, NANA said in its statement.

AIDEA’s management of the project led NANA to break away from it, the corporation said.

“This decision reflects unmet criteria, insufficient consultation, and a lack of confidence in the project’s alignment with our values and community interests. NANA upholds a rich legacy of responsible resource development in our region, guided by a commitment to protect and advance our Iñupiat way of life. NANA established specific criteria required to consider supporting AAP, including controlled access, protection of caribou migration routes and subsistence resources, job creation and community benefits. These criteria remain insufficiently addressed by AIDEA,” the company’s statement said.

The NANA decision is the latest in a series of setbacks for the Ambler Access Project.

It has been criticized by environmental and some regional tribal organizations as threatening the region’s environment and the natural resources upon which residents of Indigenous communities depend. Most prominently, the road project is portrayed as a dire threat to the Western Arctic Caribou Herd, one of North America’s largest caribou herds. The project is opposed by numerous tribal governments and organizations representing people who live along the proposed corridor, including the Tanana Chiefs Conference, an Interior tribal consortium. Opponents have cited the disruptions to caribou that roads are known to cause, among other concerns.

Citing those and other concerns, the Biden administration last month announced that it planned to deny a right-of-way permit for construction of the Ambler Access Project. The decision against proceeding with the project was contained in a final supplemental environmental impact statement released on April 19 by the U.S. Bureau of Land Management.

But the road and the mining it would enable are supported by Alaska political leaders and some other Native organizations.

Supporters tout the potential economic benefits, not just in the Ambler region but along the entire corridor, where there are other mining claims and potential development sites. And they have made a pro-environment pitch for the project, arguing that it would provide supplies of copper and other minerals needed for the transformation away from fossil fuels.

NANA, which owns mineral-rich land in the region, still wants the option of developing mines there, the corporation said in its statement. Despite its break with AIDEA, the corporation said it disagrees with the Biden administration decision on the road.

“Our Elders fought to retain our ancestral lands in the Upper Kobuk, emphasizing both their subsistence value and mineral resource potential. It is our responsibility to steward these lands for future generations,” Gia Hanna, chair of the NANA board of directors, said in the statement. “All decisions about development on our lands need to be made by and with our people at the table. We intend to vigorously defend our right to pursue resource and infrastructure development in alignment with our values.”

“For more than 40 years NANA has successfully developed our resources alongside trusted industry partners in ways that respect our way of life and advance our region as a whole,” said John Lincoln, NANA president and CEO. “While NANA is disengaging from the AAP, we maintain our interest in future mineral development in the region that aligns with the expectations of our shareholders.”

NANA, one of the for-profit corporations created by the 1971 Alaska Native Claims Settlement Act, has been heavily involved in mining. The Red Dog mine, one of the world’s largest zinc producers, has for decades been an economic pillar for the corporation and for the Northwest Arctic region. The mine is located on NANA land and operated by Teck Resources Ltd.’s Alaska unit.

NANA owns some of the lands in the Ambler district and has a partnership with Ambler Metals LLC., the joint venture that is exploring mineral deposits there. Ambler Metals would be the prime beneficiary of the road. The joint venture was formed by Trilogy Metals Inc. of Canada and South32 of Australia.

The partnership with Ambler Metals remains intact, said Kaylee Devine, NANA’s director of communications.

“NANA will work with Ambler Metals to reassess the future of Upper Kobuk Mineral Projects,” Devine said by email. “NANA recognizes the significant value and economic potential the Upper Kobuk Mineral Projects has for the region and to provide critical minerals for the energy transition. However, any resource development project and its associated transportation methods must align with necessary criteria to ensure protection of subsistence and our traditional way of life. The Ambler Access Project, as proposed, does not meet NANA’s criteria.”

NANA’s statement said the BLM decision appears to be illegal, violating a provision of the 1980 Alaska National Interest Lands Conservation Act that guarantees future mining-road access through Gates of the Arctic National Park and Preserve. The road plan advanced by AIDEA includes 26 miles through Gates of the Arctic.

Devine said NANA takes issue with other aspects of the BLM decision. The supplemental environmental impacts statement was inaccurate in the way it portrayed the performance of the Red Dog mine, and those inaccuracies might affect future development decisions, she said. Additionally, the BLM document “appears to overreach in its authority,” possibly limiting activities on NANA’s land, she said.

The Biden administration decision against the road reversed a 2020 decision by the Trump administration to grant a right-of-way allowing construction of the Ambler Access Project. In response to lawsuits filed by numerous Native and environmental organizations, the Biden administration suspended the previous administration’s right-of-way and launched the supplemental environmental impact statement. That new analysis found that the Trump administration had vastly understated the road’s expected impacts to caribou, fish and other resources important to Indigenous culture, as well as to permafrost.

Randy Ruaro, AIDEA’s chief executive, said NANA’s decision effectively removes an exploration mine site on NANA land from the project. That mine site covers 500,000 to 750,000 acres, Ruaro told the Senate Finance Committee on Wednesday.

“But that still leaves nearly 600,000 acres in state mining claims that will benefit from the road and several other large mines. So we’ll respect NANA’s decision and we’ll bend the road to the north and we’ll stay on state land and avoid NANA land,” he told the committee.

He called the decision “unfortunate” but that AIDEA will continue to push for the road.

Also still pushing for the road is Sen. Lisa Murkowski, R-Alaska. At a U.S. Senate Interior Appropriations subcommittee hearing on Wednesday, she said she is considering cutting the Deportment of the Interior’s budget in response.

She told Interior Secretary Deb Haaland at the hearing that the Ambler decision was part of a Biden administration pattern of unfairly blocking resource development in Alaska. Other decisions in that pattern concerned blocking oil development in the Arctic National Wildlife Refuge and new rules limiting oil development in the sprawling National Petroleum Reserve in Alaska, Murkowski said.

“Why are we treated like one big national park and wildlife refuge, instead of a state that has balanced the need for development and the desire for conservation?” Murkowski asked Haaland.

“Right now, I’m in a position, I’m in a place, where it’s really hard for me to discuss the budget requests,” Murkowski said. “All I can think about is: If Interior is going to use its funding to make these kinds of decisions that penalize my state in this way, then I feel like what we need to be doing here is looking for ways to cut the department’s budget until the department gets the point, and returns to following the law and the balance that is reflected within it.”