Millions for carbon-capture study, gas pipeline and a trail project: a tour of Alaska’s capital budget

By Nathaniel Herz, Northern Journal - December 28, 2023

Other highlights: money for tree planting and thinning, a new state vessel and plane and a major budget boost for the state grant program funded by oil production in the National Petroleum Reserve

Little did Alaska Republican Gov. Mike Dunleavy know, when he posed for a photo at the groundbreaking of the Wasilla airport’s expansion, that it would become the perfect illustration for a story about his new priorities for state capital and construction projects (Photo: Office of the Governor)

Alaskans love new projects, and building new stuff. So, naturally, there’s usually a lot to find interesting in the yearly capital budget, which the state uses to buy major new assets like boats and planes, fund infrastructure projects like roads and bridges, and pay for long-term research projects—among many other things.

Republican Gov. Mike Dunleavy introduced his new capital budget proposal, for the fiscal year starting July 1, on December 14. Here’s a quick review of some of the newest and most interesting items in the plan, which would spend $300 million in state general funds and some $3 billion in federal money. Like Dunleavy’s operating budget proposal, which I previously analyzed, this proposal is preliminary: The Legislature will likely remove some of Dunleavy’s priorities and add some of their own.

• The Department of Natural Resources is asking for $1 million this year—and $5 million over five years—to convert the old railroad between Cordova and Chitina into a trail for walkers, bicyclists, four-wheelers and snowmachines. The railroad was built a century ago to connect the Kennecott mines deep in Alaska’s Interior to the ocean; the proposed project involves “title work, trail improvements, small suspension bridge and culvert construction, signage” and other expenses, the department says in budget documents. The Department of Transportation is separately asking for another $4.25 million—and $12.75 in total over three years—for work on the first eight miles of the route from Chitina, which it says will be done in partnership with tribal groups in the area.

• The Division of Forestry wants to launch a tree planting and thinning project that it says will boost Alaska’s timber industry and, potentially, state revenue from carbon credits. Of the $3.5 million it’s asking for, $2 million will cover the “purchase and planting of commercial conifer seedlings in areas where existing timber has been removed”. The remaining money would go toward thinning “overly dense young forests” in Southeast Alaska, which the division, in budget documents, says would otherwise be “less valuable because trees growing too close together grow more slowly and are more stressed due to intense competition for limited sunlight and soil nutrients”.

• The state agency advancing Alaska’s expensive natural gas pipeline is asking for $4.5 million to continue its work, saying that money lawmakers previously budgeted is running out. The Alaska Gasline Development Corp. is developing the state-owned project, which could cost $40 billion or more; it says existing appropriations are running out and that its fund will hold less than $1 million at the end of the fiscal year.

• The University of Alaska Fairbanks is asking for $2.2 million to match a $9 million federal grant it’s applied for to conduct a feasibility study of a major carbon capture and storage project. The grant, from the Department of Energy, would allow the university to study the construction of a new, 400-megawatt power plant, and the potential to safely and cost-effectively store its carbon emissions—and those of two other “existing facilities”—in an underground reservoir on the north shore of Cook Inlet, a partially-depleted oil and gas reservoir near Anchorage, the university says in budget documents.

• As oil production increases in the National Petroleum Reserve – Alaska, grants dedicated to locally impacted communities on the North Slope are rising sharply, too. Next year’s budget for what are known as NPR-A “impact grants” has risen to an estimated $46.9 million from $13.8 million just two years ago. The growth comes as ConocoPhillips has brought two oil projects online in the reserve—Greater Moose’s Tooth one and two—and even more money is expected to arrive once the company finishes building its new Willow development. Under federal law, Alaska’s revenue from the reserve has to be prioritized for areas most directly impacted by the development; grants recommended for approval by Dunleavy’s administration last year included $720,000 for “local operations” in the village of Anaktuvuk Pass, and an array of fish and wildlife research projects by the North Slope Borough. Keep an eye on this program during the legislative session: Dunleavy, in his first term, attempted to divert, to the state, some of the North Slope’s other oil-related revenues, citing the expected growth in grants tied to oil production in the petroleum reserve.

• The state commission that regulates Alaska’s electric and natural gas utilities is asking for permission to spend $1.5 million to replace its case management system. The current system is antiquated and hard for staff to access remotely, with an “overly complicated and cumbersome” platform for public access, the Regulatory Commission of Alaska says in budget documents. The money would come entirely from regulatory fees that the the commission charges utilities, according to the documents.

• The Alaska Energy Authority is asking for authority to accept $100 million in grants from the federal government, over five years, under a U.S. Environmental Protection Agency program called “Solar for All”. The $7 billion program, designed to expand the use of residential solar panels in low-income and disadvantaged communities, will include one award to serve each state, and AEA, in partnership with the Alaska Housing Finance Agency, submitted Alaska’s only “notice of intent” to apply, the authority said in budget documents.

• The Department of Fish and Game is asking for $7.5 million to buy a new vessel for marine research and survey work. The department’s previous vessel “was deemed unseaworthy and disposed of” during the current fiscal year, the department says in budget documents.

• The fish and game department is asking for $350,000 to do a comprehensive subsistence survey in the Nome region, due to what it describes as a “current data gap”. Such surveys are an “important baseline in advance of pending development projects”, the agency said in budget documents, and a major graphite mine is under development in the area.

• The Department of Corrections is asking for $4.2 million to cover the first year of a three-year, $12.6 million project to replace what it describes, in budget documents, as “obsolete and failing closed-circuit television systems” at its 13 institutions.

• The corrections department is also asking to spend $250,000 on renovations that it says are necessary to reopened a closed dental clinic at its Anchorage jail. The dental clinic “had obsolete and failing equipment that required replacement”, the department said in budget documents, but the new equipment “no longer fits within the existing space”.

• The Department of Public Safety is asking for $9.5 million to replace the Enforcer, its large patrol vessel in Southeast Alaska. The existing Enforcer is only 20 years old, but the Texas-based shipyard that was the low bidder on the department’s 2002 solicitation used “deficient design and construction methods” and delivered an “unsatisfactory vessel” that was “physically dropped twice”—during initial launching and again while it was loaded for shipping, the department says in budget documents. While the state pursued legal action, the bond company went bankrupt and the shipyard defaulted on the judgment and ultimately went out of business, the department says. The vessel was docked a year ago due to its design flaws and “mold infestation”, according to the department, and it says it’s now seeking to build a new one to patrol an area with more than 1,000 islands and 18,000 miles of coastline.

• The Department of Public Safety is asking for $6.2 million to buy a new plane, a Pilatus PC 12NG. The single-engine, turbine-powered propeller plane, the department says in budget documents, would be a “lifesaving and mission critical asset” with the ability to land at 96% of Alaska’s 215 maintained airports. It would help provide “rapid law enforcement response” to communities with airports, save money on moving employees to and from assigned posts and training, and aid in the movement of prisoners statewide, the department says.

• The Alaska Housing Finance Corp. is proposing a new, $25 million down payment assistance program. It would cover up to 1,250 households with $20,000 in assistance, with no income limits, and people earning a college degree or trade school certificate in the past five years could qualify, the corporation says in budget documents. One of the conditions is that recipients would have to live in the home for five years to receive the full benefit, the corporation says. Some $21 million for the program would come from AHFC, while the rest would come from the state’s general fund.

• The Department of Transportation is asking for $7.6 million over the next three years, including $2.5 million next year, to replace the firefighting foams used at Alaska’s airports. Existing foams contain hazardous substances called per- and polyfluoroalkyl substances, or PFAS, which have contaminated soil and groundwater at sites across the country. The department says it will cost $3.5 million to switch foams at 25 airports and train some 250 firefighters to use the replacement fluorine-free version, and it will cost another $4.1 million to clean and decontaminate rescue and firefighting vehicles.

• The transportation department is asking for $8 million over three years, including $2.7 million next year, for improving a 15-mile road used by fishermen as part of a shortcut—one that allows them to reach the Bristol Bay salmon fishing grounds from Cook Inlet without driving around the Alaska Peninsula. The Williamsport-Pile Bay Road connects Cook Inlet with Iliamna Lake; vessels can start in ports like Homer, cross the Inlet, be driven to the lake and then follow the Kvichak River out to the bay. The department, in budget documents, says “large segments of the road are in poor condition”, and problems with the landings at either end could require the landings to move to new sites.

• The university system’s Alaska Center for Energy and Power is asking for $1 million next year, and $2 million in each of the following years, to develop what it calls a new “long-term data governance strategy”. The center says in budget documents that it will work with several other state agencies to “evaluate existing data sources for inclusion” in a single source.

• UAF is also asking for permission to accept $5.6 million in potential federal grant money that would pay for renovation of its University Park building into a childcare center. The work includes remodeling 10 classrooms and associated spaces to create “early childhood education labs and the construction of age-appropriate restrooms, eating and playground facilities”, the university says in budget documents, and major mechanical and electrical systems will also be updated. The university has “long needed more childcare and childhood development options for employees and student-parents”, it says.

• UAF is asking for $10 million in state funding, which would be matched with $10 million in university receipts, to help grow the number of its yearly PhD graduates to at least 70, from 40. The money, the university says in budget documents, would allow it to move from “Research 2” to “Research 1” under what’s known as the “Carnegie Classification System”, and the new status would be the “highest ranking of doctoral granting research universities in the United States”. Attaining the status would “provide global recognition for UAF’s high research productivity; enhance competitiveness for external funding; attract globally competitive faculty, staff and students, further improving the quality and caliber of UAF research and education; increase student enrollment; and provide economic benefits to the broader Fairbanks community and beyond”, the university says.

This article was originally published by the Northern Journal newsletter. The author encourages those with an interest in Alaska to subscribe. He can be contacted at [email protected] or on 001 (907) 793-0312.