For Alaska Manufacturers, the Gas Line Question Is Really an Energy Cost Question

Lacey Ernandes
Aug 17
6 min read

Winding mountain road beside a large pipeline through dark pine forest, with rocky peaks and a bright cloudy sky beyond.

There are a lot of ways to talk about Alaska’s proposed North Slope gas pipeline.

Who builds it.Who finances it.How it is taxed.Whether the full LNG export project gets completed.How much gas moves south and where it ultimately goes.

Those are important questions.

But for Alaska manufacturers, there is another one that cuts through almost all of them:

What will the energy actually cost?

Because manufacturers do not run on project announcements. They run on power.

Alaska leaders are again debating the state’s future energy supply as Cook Inlet gas becomes more constrained and expensive. The proposed North Slope pipeline is being positioned as one possible long-term answer, moving gas hundreds of miles south to serve Railbelt utilities and potentially support a larger LNG export project.

From a manufacturing perspective, the supply question matters. But supply alone is not enough.

A pipeline can deliver enormous quantities of natural gas and still fail to improve Alaska’s industrial competitiveness if the delivered price is too high. That distinction deserves much more attention.

Manufacturers Need More Than Energy. They Need Competitive Energy.

Every manufacturer has an energy equation.

For some businesses, it is relatively small. For others, it determines whether the entire operation works.

A seafood processor has refrigeration and freezing loads.

A fabrication shop has welders, compressors, CNC equipment, ventilation, and heating.

A food manufacturer may run ovens, refrigeration, pumps, packaging lines, and sanitation systems.

Cold storage can operate around the clock.

Data centers and other energy-intensive facilities take that equation much further.

In every case, energy ultimately becomes part of the cost of the product.

So when we ask whether Alaska has enough energy for future industry, that is only half of the question. The other half is whether that energy is affordable enough for the business to compete once it uses it.

That matters right now because Southcentral Alaska is facing real uncertainty around future gas supply.

ENSTAR has warned that customers are likely to see higher bills as existing Cook Inlet supplies tighten and replacement gas becomes more expensive. Alternatives exist, including imported LNG.

But those alternatives carry their own cost and volatility.

At a recent Commonwealth North energy forum, estimates presented for imported LNG ranged from roughly $9 to $21 per thousand cubic feet depending on market conditions and associated shipping and infrastructure costs. ENSTAR projections discussed there put future imported gas even higher in some scenarios.

The proposed North Slope pipeline is partly a response to that problem. But even there, the economics depend heavily on how much of the larger system gets built and how much gas ultimately flows through it.

That is why the conversation cannot stop at whether a pipeline exists.

The delivered price matters.

Energy Certainty Is Part of Economic Development

Imagine an Alaska manufacturer considering a major expansion.

The company wants to add equipment, increase production, hire another shift, or move into a larger facility.

That decision may require millions of dollars in investment.

Before committing that money, the business has to make assumptions about what its operating environment will look like several years from now.

Freight.

Labor.

Inputs.

And energy.

If the company cannot reasonably estimate what power or fuel will cost, the investment becomes harder to justify. Not because the business lacks ambition. Because uncertainty has a price too.

The wider the range of possible future energy costs, the harder it becomes to confidently model margins, financing, and payback periods.

That means energy certainty itself becomes economic infrastructure.

We often talk about economic development as attracting a new company. But long before a company chooses Alaska, someone is running numbers.

What will labor cost?

What will freight cost?

What will electricity cost?

Can we get enough power?

Can we trust that supply?

How exposed are we to future price swings?

A ribbon-cutting happens at the end of that process.

The spreadsheet happens first.

Cheap Energy Changes What Is Possible

There is another side of this conversation that is easy to miss.

Energy cost does not just affect businesses already operating here.

It helps determine which businesses exist here at all.

Recent analysis around the gas-line proposal has raised the possibility that substantially lower delivered gas prices could improve the economics of industrial projects that have struggled in Alaska, including fertilizer production, mining development, and data centers.

Those outcomes are far from guaranteed. But the underlying principle is important.

Lower-cost, reliable energy expands the range of activities that can pencil out.

A processor may be able to run additional equipment.

A cold-storage operation may become more competitive.

A manufacturer may justify adding automation.

An energy-intensive industrial project that previously made no economic sense may suddenly become worth evaluating.

Energy does not create those businesses by itself. But it can determine whether they ever get past the spreadsheet.

More Supply Does Not Automatically Mean Lower Cost

This is where Alaska needs to be careful.

Large infrastructure projects can create the impression that scale automatically produces affordability.

It does not.

The proposed gas line carries enormous construction costs, financing questions, tax considerations, and uncertainty around how much gas would ultimately move through the system.

Glenfarne has provided project cost estimates, while legislators have continued pressing for more detail about the financial assumptions and risks behind them.

Analysis of the project has also shown that the economics may look very different depending on whether only the domestic pipeline is built or the full LNG export system follows.

That matters because infrastructure costs eventually have to be absorbed somewhere.

By customers.

By investors.

By taxpayers.

By producers.

Or by some combination of them.

Manufacturers should care about where that cost ultimately lands.

This Is Where AKMA Has a Role

AKMA does not need to take a political position on the gas line to have a position on energy.

Our position can be much simpler:

Alaska manufacturers need reliable, predictable, competitively priced energy.

That should be part of the standard used to evaluate major energy decisions.

When policymakers ask how they can help manufacturing, this is exactly the kind of answer we should be able to give.

Ask what major energy decisions do to industrial rates.

Ask whether a project creates enough capacity for future manufacturing growth.

Ask whether manufacturers will have greater or less certainty ten years from now.

Ask how Alaska’s energy costs compare with the places our businesses are competing against.

Those are not partisan questions.

They are operating questions.

And we need manufacturers in that conversation.

Utilities understand energy systems.

Developers understand project finance.

Policymakers understand public policy.

Manufacturers understand what happens when an energy bill lands on a production floor.

Those perspectives belong in the same room.

The Standard Should Be Competitiveness

Alaska absolutely needs to solve its future energy-supply problem.

Doing nothing has a cost.

Relying increasingly on imported gas could expose businesses and households to higher and more volatile prices. But simply securing another source of gas should not be the finish line.

For manufacturing, the standard should be higher.

Can businesses rely on the supply?

Can they predict the cost?

Can energy-intensive companies operate competitively?

Does the system make it easier to invest here?

Does it create room for businesses that cannot economically operate under today's conditions?

Those questions turn an energy discussion into an economic-development discussion. And Alaska needs both.

Where This Moves From Conversation to Action

As decisions about the state's future energy supply continue, AKMA should be asking manufacturers what energy actually means inside their businesses. Not just whether rates feel high.

How much does energy represent in your cost structure?

Has energy cost stopped an expansion?

Would cheaper power change what you manufacture locally?

Have you delayed equipment purchases because future operating costs are uncertain?

Are there products you could make in Alaska if energy economics were different?

Those answers give us something concrete to bring back to policymakers.

Instead of saying simply, “Energy is expensive,” we can show what those costs prevent businesses from doing.

That is a much stronger form of advocacy.

Final Thought

The debate over Alaska’s proposed gas pipeline will involve billions of dollars, complicated financing, taxes, contracts, and competing visions for the state’s energy future.

Manufacturers can cut through some of that complexity with a simpler question:

Will this help us make things in Alaska more competitively?

Because the goal should not just be getting gas from the North Slope to Southcentral Alaska. The goal should be creating an energy system that gives Alaska businesses a better foundation to build on.

More supply matters.

Reliability matters.

But if Alaska wants more manufacturing, cost matters too.

Take the Next Step

AKMA wants to better understand how energy cost and reliability are affecting manufacturers across Alaska.

If energy prices have influenced your hiring, equipment purchases, expansion plans, production decisions, or ability to compete, we want that experience represented in the conversation.

Join AKMA and add your voice to Alaska’s manufacturing community:https://www.akmfg.org/join