Alaska’s Road to Power from Power Generation
Time for LNG to be replaced by UHVDC in Alaska
While this eight hundred ton, one-hundred-foot long transformer built by ABB is very large, it is very compact when compared to a similar facility built to convert AC to ultrahigh voltages.
Photo © ABB
Members of the State of Alaska’s Legislature Resource Committee got the bad news August 24 when their energy consultant reported, “The Alaska LNG Project, in its current form, is one of the least competitive natural gas fields vying for large multi-year contracts with Asian cities.” The options appear to be to put more cash into LNG, through more State ownership, or bring the cost of investment down.
These options will be discussed in Juneau, but the right answer is to look at new technology and value added. The new technology is Ultra High Voltage Direct Current (UVHDC) transmission and the value added is creating and shipping power rather than a condensed form of methane.
Forty years ago I took a class at MIT named Resource Allocation. It was a new requirement to the engineering curriculum, replacing Surveying as a required course for graduation. I was a little more than upset as my dad, Franklin Jordan, was an Alaskan surveyor in the Territory of Alaska and somehow the world minimized the profession in favor of the concept of Time Value of Money (TVM).
Dad spent time running through his yellow waterproof field book rechecking all the calculations at the kitchen table after work to ensure the cipher was correct. I was lucky in the sense that technology replaced the slide rule with a four-function calculator while I was at MIT and I learned engineering before 1980. This story is important as we need to remember that technological changes happen and we need to adapt overnight. The other thing to remember from my mentor, Dennis Nottingham, is that an engineer should solve the problem using $1 for every $2 used by the “other guy.”
A similar story is unfolding today in Alaska. Oil prices and oil production are down. Alaska has a huge reserve of methane gas at Prudhoe Bay and maybe the solution for the State of Alaska is to move that gas to tidewater and reap the reward. Alaska’s proven reserve of approximately 40 trillion cubic feet (cf) of gas might sell for $3 per thousand cf if it were at Henry’s Hub in Louisiana. A $120 billion prize, minus the cost of transport from the North Slope and production: neither the transport nor the production is inexpensive. Technology and TVM will change the equation.
MIT forced its engineers into TVM to help them understand that the prize is not captured today, but over time. Time will erode that prize at a discount rate. Using a discount rate of 5 percent over thirty years, compounded annually, changes the prize to a PV of $77 billion in 2016 dollars. Against this prize, someone has to invest the costs of delivery to market. If that cost were $40 billion invested over five years with an expected return of 15 percent compounded annually, that investment becomes $80 billion and sums to a net negative investment. This is vastly oversimplified economics and the results change with different rates, value of prize money, and importantly, the cost of transport.
Before we discuss making the movement of gas to Southcentral Alaska or a gas pipeline network in Mid-Canada, we need to consider our experience with Cook Inlet gas. A trillion cubic feet of natural gas was found in the Inlet, and Southcentral needed power. The Chugach Electric engineers could have shipped gas to Anchorage to make power or build a plant on the edge of nowhere and ship power. We know the economics favored building the power facilities in Beluga on top of the gas field and shipping power. The economics were simple. Build a huge gas line or build overhead power and subsea cables. The economics were so powerful that despite the need to build a new barge dock, camp, airfield, living quarters, and operating the IBEW crews on a rotation schedule, power was shipped instead of gas. That was the economics from fifty years ago. Those engineers spent $1 for every $2 used by a “ship gas” solution.
Skipping back to transport cost, economically one would rather ship oil versus gas, as a cubic foot of crude oil might deliver 100,000 BTU/hour. Methane gas only delivers 1,000 BTU/hour for the same volume. Increasing the pressure on the gas and dropping the temperature to very low temperatures can create condensed gas that acts like a liquid which will reach the equivalent BTU/hr. But this is at the cost of major cooling and compression facilities.
So why not ship power out of the North Slope instead of methane? Distance was the problem in 1970. Shipping power back then cost a lot over long distances. Edison and Westinghouse argued direct current (DC) versus alternating current (AC) for transmission before America had electricity. Back then, the DC alternative lost a lot of energy over distance due to the resistance of the conductor and AC power was good both in less “line loss” and motors were more efficient using the phasing power of the alternating waves of electricity. At low voltages, DC attempts to push a large amount of electrons through the same space and heat is created when they get into each other’s way. AC current created less heat (and thereby less “line loss”) by not moving electrons all the way to the end of the chain.
This is where technology and engineering move into the equation. We already know that high voltage lines are used to move AC current from Beluga to Anchorage. A representative line loss example: a one-hundred-mile line carrying 1,000 MW of power at 765,000 volts, or 765 kV, can have losses of 1.1 percent to 0.5 percent. A 345 kV line carrying the same load across the same distance has losses of 4.2 percent. For context, the Intertie to Fairbanks is about 345 kV and is longer than one hundred miles. We know the line loss is greater. A North Slope to Southcentral line is still greater in distance and there are larger line losses.
The science behind the lower losses is a combination of different properties and formula. For this article focus on the relationship of voltage (the desire of the electron to get from one place to another) and current (amount of electrons passing through) and power. Power is Voltage times Current (P=V*I). Increasing voltage will correspondently reduce current in the power equation. Less current means less resistance and equates to smaller “line loss.” Enough science: higher voltage means greater economy.
The Trans-Alaska gas pipeline study estimated line loss at 5 percent, which would represent the energy lost due to pumping against the friction and gravity inherent in the pipeline through Canada. The technology change is that 765 kV and higher voltage DC lines are now possible with line losses of 3 percent to 7 percent. UHVDC lines were always possible but not economical until recently. Since 2012, a number of companies have made conversion of electron flow a matter of semiconductor technology.
Back in the great debate of Edison and Westinghouse, the transmission of DC power would have required stepping up the voltage to something more than the 120V we use in America. The line loss was created by using transformers which change voltage by lots of copper windings around a mutual core creating resistance heat and electromotive force inductance (another unexplained mystery of quantum physics as far as I am concerned). One had to step from 120v to 240v, then 240v to double that number and so on. To get to 745 kilovolts (kV), it was a lot of steps up from 120v and then a lot of steps down from 745 kV. What if someone was able to convert the steps, using semiconductor technology and computers to convert the power?
It appears that three worldwide companies have bridged the gap. Siemens, ABB, and Alstom have changed the landscape for energy transmission since 2012.
This submarine cable is being loaded for use in the North Sea for Statoil and will carry 100 megawatts of DC power. This particular installation is 80 kv and with higher voltages the cross-sectional area gets smaller. It is easy to see how the smaller size will be cheaper in materials, environmental impact, and installation costs. The cable will be supplying power from the Norwegian grid to Statoil’s North Sea Johan Sverdrup offshore facility, eliminating the need to burn diesel and gasoline to power the offshore platforms, which are expected to produce 550,000 to 650,000 barrels of oil per day.
Photo © ABB
The Right Solution?
Instead of a natural gas pipeline from the North Slope to market, the right solution may be shipping power directly to the consumer. Incredibly the world is already investing or has invested in power shipping rather than transporting resource. The largest coal plants in America are in Wyoming and Northern Texas and they are shipping power and not low-grade coal. Internationally, Sweden is shipping power to their offshore islands, not fuel. UVHDC transmitted this power to the island community.
China has a wealth of power potential in the Western Himalayan Mountains, but the energy users are more than one thousand miles east of the hydroelectric and coal power. The Chinese are not shipping coal or coalbed methane gases east but power in the form of UHVDC and are setting records for distance and number or transcontinental lines.
Alaska has been described in many forms including Seward’s Folly, “a place where the Northern Lights r’ a running wild,” the Last Frontier, America’s Backyard, a Resource State, and an Energy State—but maybe the future is as a Power State. We build the plant on the gas field and ship the power.
Shawn Freitas wrote his master’s thesis at UAF about shipping power instead of methane through a TransAlaska gas pipeline to Calgary. At the time I was an IBM consultant to the Department of Energy as the Anchorage lead for Arctic Energy. When I read his work, there was certain “electrification.” Shawn allowed me to use his thesis in UAA classes on engineering economics and hoped that his work had real merit. Shawn ran economics that cut the investment cost for using Alaska gas in half.
I taught an engineering economics class when I was teaching at UAA, and I asked the senior engineering students of all four disciplines—civil, mechanical, electrical, and computer science—to break down Freitas’s estimate. The assignment was to find reasons it was incorrect or improve upon the assumptions and conclusions. Multiple classes over multiple years came to the same conclusion: Half was a good estimate. I taught in that same class that a conceptual estimate was as good as the time you put in and a Very Rough Order of Magnitude (VROM) estimate was worth +30 percent to 45 percent of the real cost, and that might cost 1 percent of the total project cost. When I talked to Freitas, he admitted his estimate did not have that kind of investment, but his work survived multiple reviews by hundreds of engineering students trying to find a flaw.
It turns out that the transmission cable was not only about 6 inches in diameter but could be buried. The line losses were less if hung from a transmission tower and even lower if in water. This is a key fact to remember. The early cost review was easy because a 6-inch cable is much smaller than a 52-inch pipeline and would take a lot less material, just 1 ¼-inch thick, high strength steel times 2,300 miles. The environmental impact would be measured on a scale of a crew with a trench digger versus an army of welders and pipe layers.
An enterprising student called out one session, “Mr. Jordan, I didn’t repeat Mr. Freitas’s work but shortened the route by running to Valdez and then going submarine to Seattle. What Alaska is trying to do is get power to the market and with power you don’t need to go to Calgary or Chicago, the power grid is connected at Seattle.” Sure enough, the route is not only shorter, the Northwest power grid is already connected to the users, and a submarine cable is cheaper with less line loss.
So the next semester, I reassigned the same project and expounded upon the brilliance of the former student who had seriously changed the economics of the project. Not to be outdone, a mechanical engineering student, challenging the former student and my civil engineering degree from MIT says, “Mr. Jordan, you must not be very familiar with turbines as the power offtake is a function of the temperature differential between the intake air and the exhaust temperature, about 900° F. North Slope intake air is very cold and you get about 10 percent more power.” True story, the Alaska oil field generates more oil in the winter as the cold intake air allows the turbines to generate more power, resulting in more gas compression, hence more production given low gas to oil ratios. If you ship Alaska gas to anywhere in the world that on average is warmer than the North Slope, it could not generate as much power as if it were produced in the Arctic. Any line losses generated are absorbed by the increased power production. Said another way, if the world wants 5 to 10 percent less greenhouse gas production, just generate the power in a cold climate.
Not done yet. Other UAA undergraduates proposed what more could be done: more power could be created by using the world’s largest heatsink, the Arctic Ocean, to cool intake air; CO2 and waste heat could be used for oil or coal processing; and the same equipment that currently compresses 8 billion cf per day for reinjection could be used for power production without changing the air quality. My only caveat is some of that equipment is pretty old and modern turbines can produce 30 percent more power than a turbine built in 1980.
Siemens will be supplying transformers for an approximately 2,050 mile (3,300-kilometer) high-voltage direct-current (HVDC) transmission line designed to carry DC voltages of 1,100 kilovolts. These are the highest transmission voltages ever realized commercially for lines and transformers.
The distance from Prudhoe Bay to Seattle is slightly longer than this Chinese UHVDC line commissioned this spring with delivery scheduled for 2018. The TransCanada gas pipeline alternative would have shipped an energy equivalent of 10 gigawatt converted to power.
Additional Potential Power Sources
Natural gas to power is only part of the story. There is low oil flow, coal bed methane, geothermal, wind, hydropower, and even solar wind potentials that can also be shipped as power.
Let’s start with low oil flow. The Alaska oil pipeline is flowing four times under capacity at less than five hundred thousand barrels per day. The oil flowing at four times the old rate will take four times longer to get to Valdez for transport. In the winter, four times slower means the rate of cooling is sixteen times faster, an inverse square law. Alyeska pipeline is already poised to spend more transportation dollars to get that oil to market and it gets worse with time. At about two hundred thousand to three hundred thousand barrels per day of transport, the pipeline pumps will have pressure problems as well as temperature problems. A solution at that point may be to convert the remaining oil, perhaps a billion barrels, to power.
Few understand that oil and gas is less than 5 percent of Alaska’s energy potential, and most of the rest is coal reserves. Broadly, two thirds of the world’s coal is in the United States and half of that is in Alaska. Incredibly, the largest coal field in Alaska is on the North Slope and ASRC is struggling with how to get the energy to market.
I am not going to skip geothermal, wind, and other renewal sources, such as solar wind, as they also exist in the Arctic. The converters necessary to convert power to DC for transmission do not care about phase changes, modulation, fluctuations, or other power grid concerns. If generating power on a UHVDC system, the system can use the power without concern for how that power needs to be delivered downstream.
Finally, we can ship our resource to another market and they will convert it, gaining the added value. Another approach may be to add the value here in Alaska and, through cheaper transportation of the finished product, Alaska becomes a “Power State.”
Freelance writer Darryl Jordan lives in Anchorage.
This article first appeared in the November 2016 print edition of Alaska Business Monthly.