ALASKA RESOURCE REVIEW FALL 2024 40 Son of former governor touts improvements that could be beneficial BY TIM BRADNER IN THE LATE 1960S, FORMER ALASKA GOV. WALTER HICKEL SAID A RAILROAD TO THE NORTH SLOPE SHOULD BE CONSIDERED IN LIEU OF A PIPELINE TO TAP LARGE NEW OIL DISCOVERIES. The Prudhoe Bay discovery was confirmed in 1969 and, as oil companies began discussions about how to get oil off the North Slope, a pipeline seemed the best prospect. Hickel’s idea of a railroad wasn’t taken seriously. It was even joked about within the companies. It’s likely the pipeline was the best option then, but the rail option was never seriously investigated. Fast-forward to 2024. For several reasons, it might now be worth a revisit, says Brian Murkowski, an energy consultant and also son of former Gov. Frank Murkowski, who championed Alaska Railroad expansions for years as a U.S. senator, then as Alaska governor, and now in retirement as a frequent commentator. Frank Murkowski’s vision was a rail connection to the Lower 48 through Canada. That would involve an extension of the present Alaska Railroad east from its northern terminus in Fairbanks to Delta and Yukon Territory at the Alaska-Canada border, where it would link with a railroad built north through British Columbia and Yukon. That plan should be considered, but so could a rail extension north from Fairbanks, Brian Murkowski said. Limited work on a northern rail has been done, but the information is now dated. “Prior to construction of the Haul Road (now the Dalton Highway) and TAPS, the U.S. Department of Transportation prepared detailed alignment and engineering studies to extend rail 470 miles from Nenana to Prudhoe Bay,” Murkowski wrote in a white paper he recently co-authored on the rail idea. “The concept remained in the Alaska Railroad’s extension plan until the mid1980s, but then faded away due to lack of demand by the North Slope oil industry.” The transportation needs of the North Slope were met by the pipeline for oil movement and by the Dalton Highway for oilfield support by trucking, Murkowski wrote in his paper. The pipeline remains an efficient way to move oil, but over time North Slope production will decline and the per-barrel cost of moving oil will increase. At some point Alyeska Pipeline Service Co., the TAPS operator, has said the system will also encounter operating problems. An expensive reconfiguration may be needed, such as “batching,” or periodic operation of the pipeline with crude oil stored on the North Slope and shipped in batches. At that point, the per-barrel cost will rise substantially. Rail might be an option in meeting this. Not only is crude oil transport by train done in the Lower 48, but the flexibility of rail could reduce exploration and production costs for future activities on the Slope, allowing producers to book more reserves. It opens up possibilities of making petrochemical products on the North Slope and shipping them south by rail. In January, Harvest Midstream, an affiliate of Hilcorp Energy, will begin selling liquefied natural gas, or LNG, at its new LNG plant at Prudhoe Bay. The Interior Gas Utility, the customer, will truck the LNG to Fairbanks. If rail were available, LNG could be shipped at a lower cost. Harvest could also enlarge its plant, and the service could be extended to Southcentral Alaska, where there are looming shortages of natural gas. LNG shipment by rail will need federal approval, but the Alaska Railroad conducted a demonstration of this under a special federal program to show it can be done safely. Other products can be made and shipped from the slope. Alyeschem, a small Alaska-based company, is building a North Slope plant to make methanol for local customers. The plant could eventually make products and ship to elsewhere. Rail could facilitate that, too, as well as mining development in the Ambler region. Since rail is two-way, equipment and materials can be shipped north as well as ore, LNG or crude oil shipped south. RAIL TO NORTH SLOPE SHOULD BE REVISITED BRIAN MURKOWSKI In January, Harvest Midstream, an affiliate of Hilcorp Energy, will begin selling liquefied natural gas, or LNG, at its new LNG plant at Prudhoe Bay. The Interior Gas Utility, the customer, will truck the LNG to Fairbanks. If rail were available, LNG could be shipped at a lower cost.
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