Supply of Natural Gas in Southcentral Alaska

Abstract

Cook Inlet has been the primary source of natural gas for Southcentral Alaska for more than half a century, but while substantial gas remains in the subsurface, the portion that is physically, technically, economically, and socially available at prevailing prices is considerably smaller. This report evaluates regional availability using a four-dimensional resource framework, reconciles competing estimates of remaining reserves and resources, and considers implications for future supply security, with particular emphasis on economic availability and the prices required to make extraction profitable. Estimates from the Alaska Department of Natural Resources suggest that developing reserves in the near to medium term will require substantially higher prices than those seen today. Using historical production costs, this report constructs an illustrative cumulative availability curve showing that the basin’s lowest-cost gas has already been developed and that each additional unit of production will be progressively more expensive. As a result, the region is entering a transitional period in which imports (either piped gas from the North Slope or liquefied natural gas) may soon be more cost-competitive than new local development, even though large volumes of prospective gas remain and uncertainty about their recoverability and cost poses significant planning and investment risk.