convergence of key players may finally bring long-held visions of utilizing local North Slope natural gas resources to fruition. The Interior Gas Utility (IGU) is advancing plans to power the Fairbanks area, while Pantheon Resources and the Alaska Gasline Development Corporation (AGDC) are exploring options to supply Southcentral.

Economic implications for energy consumption in the Interior are substantial. According to IGU, diesel fuel was 26 percent more expensive than natural gas with equivalent energy content, as of July. For a region with some of the highest energy costs in the nation, the prospect of affordable natural gas represents significant economic relief.

IGU had begun the transition away from diesel by trucking natural gas to Fairbanks from its Titan liquefaction facility on the shore of Cook Inlet. Around the time Hilcorp, the inlet’s largest producer, announced a lack of certainty regarding natural gas availability, IGU management had been preparing to proceed with an approximately $60 million expansion project at Titan. Because of the announcement, IGU no longer found it feasible to make a sizable investment into an asset that may become unusable as soon as 2032, when IGU’s last available contract renewal would expire.

But the reality that IGU needed more liquefaction capacity to sustain its growth did not change, so IGU looked for alternatives. The search culminated with two twenty-year contracts on the North Slope. IGU representatives hailed the new course as both historic and exhilarating.

According to a statement from IGU, “The move to the North Slope for natural gas supply is what allows IGU to continue fulfilling our mission of providing clean-burning, affordable natural gas to as many people in the Fairbanks North Star Borough as possible, as soon as possible.”

IGU’s initiative is set to generate substantial economic activity through infrastructure development and home conversions. “There is significant economic activity that is generated by new natural gas installations,” the IGU statement adds. “IGU employs a seasonal crew that installs natural gas main and service lines. We also contract out some of that work to one or multiple contractors. Natural gas conversion work inside customers’ premises generates work for mechanical contractors, as well as supply houses.”

Beyond economics, the shift to natural gas addresses critical environmental concerns. The Fairbanks North Star Borough has been designated by the US Environmental Protection Agency as a non-attainment area for air quality, a status that carries significant economic risks, including the potential freeze of highway funding. Natural gas has been widely recognized as the cleanest-burning fossil fuel, offering a recognized path to improving air quality.

This shift to North Slope gas is more than a mere change in supply source; it’s an expansion for IGU’s core mission. By tapping into this abundant resource, IGU aims to deliver cleaner-burning, more-affordable natural gas to an ever-expanding customer base in the Fairbanks North Star Borough. The economic ramifications are profound, particularly in a region burdened by some of the nation’s highest energy costs.

Since it was formed in 2010 as a subsidiary of the Alaska Housing Finance Corporation, AGDC has been spearheading a project that could revolutionize Alaska’s energy landscape: the Alaska LNG project. A federally authorized, integrated natural gas and liquefied natural gas (LNG) export project, Alaska LNG aims to deliver natural gas within Alaska and up to 20 million tonnes per annum of LNG for export. AGDC’s work exposed a new path to commercialize North Slope gas—building a large-capacity pipeline to meet in-state demand and then using the existence of that pipeline to shorten the timing gap and lower the risks associated with an export pipeline to tidewater. Then in-state users would benefit from the lower-cost gas.

Ever since the first proposals fifty years ago to tap natural gas stranded on the North Slope—at first, via a pipeline along the Beaufort Sea shore to the Mackenzie River in Canada—designs have envisioned a starting point somewhere around Prudhoe Bay. New developments farther south, however, offer an alternative source for an in-state pipeline.

Great Bear Pantheon is seeking to develop two large North Slope oil fields, Kodiak and Ahpun, containing some 2 billion barrels of recoverable oil, condensate, and natural gas liquids. There will be significant volumes of associated natural gas, and what Pantheon had previously seen as an inconvenience that would require costly reinjection wells is now positioned to be its solution to a cost effective project that benefits all.

Pantheon has offered to supply low-cost natural gas to the Alaska LNG project to significantly improve the project’s ability to provide the lowest-cost energy alternative to Interior and Southcentral. In June, the London-based company signed a gas sales precedent agreement with AGDC.

AGDC President Frank Richards says, “Our recent agreement with Pantheon sets the terms for accessing enough gas to meet Alaska’s energy needs for the foreseeable future. Alaska LNG is the only project capable of heading off the looming energy crisis facing Southcentral Alaska and resolving longstanding air quality problems plaguing Interior Alaska.”

Pantheon’s gas improves AGDC’s project economics by providing a gas supply at minimal cost. Not only are its fields close to the Dalton Highway but the gas contains less carbon dioxide that would have to be scrubbed out, avoiding the need to build an expensive conditioning plant.

Under the terms, Pantheon agrees to supply up to 500 million cubic feet per day of natural gas at a maximum base price of $1 per million BTU (mmBtu) in 2024 dollars. The agreement takes effect only if AGDC and Pantheon make affirmative final investment decisions for their respective projects, including required permits and regulatory approvals.

Pantheon’s previous plans for Ahpun focused on developing up to 200 million barrels from three or four pads along the Dalton Highway, modeled to plateau out at a rate of approximately 40,000 barrels per day. The agreement with AGDC potentially opens additional development pathways. The Ahpun scope can be expanded, with an accelerated pace of ramp-up by 2028 or 2029, in line with in-state gas demand and AGDC’s development schedule.

AGDC is pursuing an option to prioritize Phase 1, the in-state segment consisting of a 42-inch pipeline to provide natural gas for customers in Southcentral. Phase 1 does not involve construction of a liquefaction plant, lowering the capital expenditure and allowing gas transport as early as 2029. Phase 1 has an estimated price of $10.7 billion, compared to $44 billion for the fully integrated export gasline.

“Phasing Alaska LNG by leading with the construction of the pipeline will make Alaska LNG’s export components more attractive to LNG developers and investors, and this agreement will help unlock the project’s substantial economic, environmental, and energy security benefits for international markets as well as for Alaska,” says Richards. “This agreement solidifies the commercial foundation needed for the Phase 1 portion of Alaska LNG and provides enough pipeline-ready natural gas, at beneficial consumer rates, to resolve Southcentral Alaska’s looming energy shortage as soon as 2029.”

Although the agreement focuses on Phase 1, it also creates opportunities for Pantheon to benefit when the full gasline, including export capability, is completed.

“We are delighted to have the opportunity to create a win/win for the State of Alaska and for Pantheon as we turn the fantastic exploration an appraisal success of the past five years into the development of two giant oil and gas fields on Alaska’s North Slope,” says Pantheon Executive Chairman David Hobbs. “When we set out our strategy to achieve early production and cashflow on the path to financial self-sufficiency, we considered gas monetization (as a path to non-dilutive funding) only one of several possibilities. However, the availability of our pipeline-quality associated gas created the opportunity to bolster the Alaska LNG project, including the pipeline, LNG export facilities, and gas conditioning facilities.”

The initial term of the precedent agreement is until June 30, 2025, and it will automatically renew for additional one-year terms until either party provides notice of termination.

The potential economic impact of releasing North Slope natural gas from its geologic captivity is significant. The project promises to create approximately 10,000 construction jobs and 1,000 permanent high-paying operations jobs, boosting Alaska’s economy and increasing its strategic value both domestically and internationally.

Outside of direct job creation, the project could open new economic frontiers by decreasing energy costs, making the state more attractive for energy-intensive industries like mining. The Alaska Center for Energy and Power reported that long-term reliable sources of gas have the potential to reduce costs of energy to existing industry and to precipitate new energy-intensive development in the Railbelt region. All future energy mix scenarios outlined for a cleaner energy transition in Alaska will require supplemental power from conventional fuel products.

The collaborative efforts of IGU, Pantheon Resources, and AGDC represent a significant opportunity toward securing Alaska’s energy independence. By leveraging the vast gas reserves of the North Slope, these initiatives promise to bring affordable, clean, and reliable energy to both the Interior and Southcentral regions of the state. This transition not only alleviates fiscal burdens on businesses and residents but also addresses critical environmental concerns, paving the way for a sustainable energy future. As these developments unfold, they herald a new era of economic growth and stability through energy independence, positioning Alaska as a key player in the global energy market and ensuring a more energy-secure future for residents.