Archaic Federal Law Keeps Alaskans From Using Abundant Natural Gas Reserves

Alaska is an energy behemoth with massive reserves of oil, natural gas, and petroleum. It also, oddly, faces a looming natural gas shortage—not good for a state where half of electricity production depends on the stuff. The problem is that most natural gas deposits are far from population centers and pipelines to transport the gas don’t yet exist and may never be built. So, to get gas to Alaskans, you need to transport it by ship. But federal law requires that only U.S.-flagged liquid natural gas (LNG) carriers be used, and there aren’t any.

Vast Energy Reserves

Alaska really is a powerhouse. According to the U.S. Energy Information Administration, the state’s “proved crude oil reserves—about 3.2 billion barrels at the beginning of 2022—are the fourth-largest in the nation.” It’s “recoverable coal reserves are estimated at 2.8 billion tons, about 1% of the U.S. total.” And, most impressively, Alaska’s “proved natural gas reserves—about 100 trillion cubic feet—rank third among the states.”

With that much natural gas to draw on, it’s no wonder the state gets about half of its total electricity from generators powered by natural gas, with roughly three-quarters of power to the main Railbelt grid coming from gas. Nevertheless, the lights could soon flicker—and a lot of people’s furnaces and stoves sputter—because of lack of access to the vast natural gas reserves.

“Alaska lawmakers are searching for solutions to a looming shortage of natural gas that threatens power and heating for much of the state’s population,” Alaska Public Media reported in February. “The state’s largest gas utility is warning that shortfalls could come as soon as next year – and imports are years off.”

But Not Where It’s Needed

It turns out that the gas Alaskans use comes not from the vast North Slope reserves, but from wells in the Cook Inlet. Most companies say it’s not worth their time to drill there, and so sold their leases to Hilcorp over 10 years ago. Hilcorp is a Texas-based company that specializes in getting the most out of declining oil and gas wells—and the existing Cook Inlet wells are decades old and long past their peak. The company expects to produce about 55 billion cubic feet of gas this year but predicts production will fall to 32 billion cubic feet in 2029.

If few companies want to drill more wells in the Cook Inlet, it makes sense to draw on the natural gas in another part of Alaska, the North Slope. In 2020, federal and state officials approved a pipeline to transport gas from the North Slope to the Kenai Peninsula for local use as well as export. But building another pipeline across rugged Alaska is a massive undertaking and the project has struggled to find backers. It won’t be ready for years, if ever.

That leaves transportation by sea. The gas could be transported from the North Slope by LNG carrier and offloaded in the populated areas where it’s needed. But there’s a hitch.

No Ships for You

A century ago, Congress passed the Merchant Marine Act of 1920 (better known as the Jones Act) to prop up the country’s shipping industry. The law “among other things, requires shipping between U.S. ports be conducted by US-flag ships,” according to Cornell Law Schools’s Legal Information Institute. The ships must also be built here. So, to move natural gas from one part of Alaska to another, you need American LNG carriers. And here we find another shortage.

“LNG carriers have not been built in the United States since before 1980, and no LNG carriers are currently registered under the U.S. flag,” the U.S. Government Accountability Office found in 2015. And while there’s lots of demand for more LNG carriers for the export market, not just for Alaska, “U.S. carriers would cost about two to three times as much as similar carriers built in Korean shipyards and would be more expensive to operate.”

U.S. Customs and Border Protection did make an exception to let foreign LNG carriers transport U.S. natural gas to Puerto Rico earlier this year, but only because the gas was first piped to Mexico before being loaded onto ships. Isolated Alaska doesn’t have that option.

The feds are diligent about prosecuting Jones Act violations, too. In 2017, the U.S. Department of Justice imposed a $10 million penalty on an energy exploration and production company for transporting a drill rig from the Gulf of Mexico to Alaska’s Cook Inlet in a foreign-flagged vessel. That company’s intention was to bring more natural gas to market in Alaska.

Given the law’s strict terms and the government’s enthusiastic enforcement, “it will be perfectly legal for ships from other countries to pick up liquid natural gas from the new production facility in northern Alaska—as long as they don’t stop at any other American ports to unload,” Reason’s Eric Boehm noted in 2020.

When Boehm wrote, the century-old protectionist law contributed to high prices for Alaskans. Now it may actually precipitate a crisis by making it effectively illegal for energy companies to ship abundant natural gas from one part of the state to eager customers in another.

A Law In Need of Repeal or Relief

In 2018, the Cato Institute’s Colin Grabow, Inu Manak, and Daniel J. Ikenson delved into the damage done by the Jones Act in terms of higher costs and distorted markets, even as it fails to keep the domestic shipping industry from withering. The authors called for the law’s repeal. Failing that, they recommended the federal government “grant a permanent exemption of the Jones Act for Alaska, Hawaii, Puerto Rico, and Guam.” These isolated jurisdictions suffer the most from Jones Act protectionism and would benefit from greater leeway for foreign shipping.

Until that happens, Alaskans may suffer from a natural gas shortage while having plenty of the stuff to sell to the rest of the world.

– J.D.

Related Topics:#JDTuccille AlaskaEnergy The Rattler

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Trump’s tariffs made Ottawa suddenly start talking about new east-to-west pipelines, but how long will it last?

Energy

Trump’s tariffs made Ottawa suddenly start talking about new east-to-west pipelines, but how long will it last?

Published on February 26, 2025

Todayville

For years, oil pipelines have been a political fault line in Canada, with battles over environmental policies, economic development and national energy security. The Liberal government under Prime Minister Justin Trudeau, has sent mixed signals – championing climate goals while approving some energy projects like the Trans Mountain Expansion. But now, with a trade war looming over Canada, a surprising shift has occurred: a consensus across the political spectrum in favour of building new pipelines.

And it’s all due to one man: United States President Donald Trump.

Trump’s threat to impose a 10 percent tariff on Canadian energy and 25 percent on other Canadian exports has woken up Ottawa. Previously, Trudeau’s government made decisions that killed off big pipeline projects like Energy East. Bill C-69 was blamed for creating an uncertain regulatory environment that discouraged investment in pipelines.

But now, Liberal ministers are talking about revisiting those projects.

On February 6, Energy Minister Jonathan Wilkinson, a long-time climate crusader, surprised many when he said Canada is too dependent on the U.S. as an oil buyer and suggested Ottawa should consider a pipeline to Eastern Canada to diversify energy exports. He’d made similar comments in September and October 2024 when he said oil demand had peaked and pipelines were unnecessary.

The next day, it was reported that Industry Minister François-Philippe Champagne followed Wilkinson’s lead, saying Canada must reassess its energy infrastructure given Trump’s threat. He even suggested Quebec, which has long opposed pipelines, might be open to reconsidering Energy East.

Shortly after, Alberta Premier Danielle Smith seized the moment, urging Ottawa to restart talks on national energy infrastructure.

And then on February 9, Champagne again said Quebecers might have a different view on pipelines now that their economic security is at stake.

This is a stunning reversal. Just months ago Wilkinson and other Liberal officials were saying oil demand was declining and Canada should focus on renewables and electrification.

However, is this a real policy shift?

While some senior Liberals are suddenly in favour of pipelines, one key figure has been silent: Mark Carney, the front runner in the Liberal leadership race.

Carney has made climate action a central plank of his campaign, but says he supports the “concept” of an east-west pipeline.

His silence raises a big question: Are the Liberals really in favour of oil pipelines or is this just a reaction to Trump?

Despite Carney, Wilkinson and Champagne’s comments, big industry players remain skeptical. Pipeline projects take years of regulatory approval, billions of investment and political will at both the federal and provincial level. The Trudeau government’s track record has been one of obstacles, not encouragement, for big energy projects.

And some experts say pipeline companies may not be keen to jump back into the fray. TC Energy, the former proponent of Energy East, divested its oil pipeline business in 2023. Would a new pipeline proponent be willing to navigate the regulatory and political minefield that Ottawa itself created?

The political fallout could be immense.

If the Liberals go for pipelines, it will be one of the biggest policy reversals in Canadian energy history. It will also expose deep divisions within the party. Environmental groups and Liberal voters in urban centres will likely rage against such a shift while oil-producing provinces like Alberta and Saskatchewan will remain skeptical of Ottawa’s new enthusiasm.

Meanwhile the Conservative Party, the only federal party that has always been in favour of pipelines, will find itself in an unusual position—watching the Liberals adopt its policies as their own.

In the next few weeks all eyes will be on Carney and the Liberal leadership race. If Carney keeps hedging on pipelines, it will be unclear if this new consensus is real or just political expediency in the face of Trump’s tariffs.

For now Canada’s pipeline debate is no longer about energy or the environment—it’s about sovereignty, trade and survival in an uncertain global economy. Will this consensus last beyond the immediate crisis?

Alberta

Can Trump Revive The Keystone Pipeline?

Published on February 26, 2025

Todayville

From the Daily Caller News Foundation

By David Blackmon

In a post on his Truth Social media platform Monday night, President Donald Trump said he still wants to see the Keystone XL pipeline through to completion. Here is the full text of the president’s post:

“Our Country’s doing really well, and today, I was just thinking, that the company building the Keystone XL Pipeline that was viciously jettisoned by the incompetent Biden administration should come back to America, and get it built — NOW! I know they were treated very badly by Sleepy Joe Biden, but the Trump Administration is very different — Easy approvals, almost immediate start! If not them, perhaps another Pipeline Company. We want the Keystone XL Pipeline built!”

For those unaware, the company that spent a decade attempting to finance, obtain permits, and build the Keystone XL pipeline project is TC Energy (formerly Trans Canada), which is headquartered in Calgary, Alberta, Canada.

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Fraught with controversy from the beginning, Keystone XL became a true political football during the Barack Obama presidency as the anti-oil and gas lobby in the U.S. mounted a disinformation campaign to kill public support for it. The mounting of the costly disinformation campaign made the process of obtaining permits at all levels of government – state, local, and federal – far more difficult and time-consuming, needlessly running up the project’s cost in the process.

After the Obama State Department led by Secretary John Kerry refused to issue the international cross-border permit required to complete the line, Trump quickly acted to ensure its approval early in his first term in office. By the time Joe Biden assumed office in January 2021, TC Energy had invested billions of dollars – creating thousands of high-paying jobs in the process – and well over half the line was already in the ground. Still, despite the huge sunk cost and lacking an ability to cite any instance in which TC Energy stood in violation of any U.S. law or regulation, Biden took the extraordinary, indefensible step of cancelling the project with the stroke of a pen.

But can the project really be revived now? It’s an important question given that Keystone XL was designed to bring as many as 830,000 barrels of Canadian oil per day into the United States for refining and delivery to markets.

Here, it is key to note that – as I pointed out last November when then-President-elect Trump raised this topic – TC Energy is no longer the owner of the moribund project. The remnants of Keystone XL were included in a group of assets TC Energy spun off last year when it formed a new company named South Bow Energy.

Complicating matters further is the fact that, after it decided the pipeline was a lost cause back in 2021, TC Energy pulled the installed pipe out of the ground so it could be repurposed for other projects in its portfolio. Then, there’s the fact that many of the permits the company spent years trying to obtain from various levels of governments are no longer valid and would have to go through the application and approval processes again were the project to be revived.

At the federal level, the Department of Interior and FERC would govern most of the necessary permitting processes. President Trump ordered all of his departments and commissions in January to research ways the executive branch can streamline the federal processes and Interior Secretary Doug Burgum included that goal as one of his 6 top priorities in a memo to staff dated February 3.

But even if those projects are successful in speeding up permitting at the federal level, they would have no impact on such challenges at the state and local levels. Activist groups who organized the opposition to the project saw great success in holding up permitting issuances at these lower levels of government, and would no doubt revive that strategy to attack any effort to restart the pipeline.

There can be no doubt that Trump’s desire to get the pipeline built is a laudable goal from a commercial, environmental and national security standpoint. Whether it is a practical goal is another question with many factors arrayed in opposition to it.

But one thing I’ve learned long ago is to never underestimate Donald Trump’s ability to get a deal done, so no one should give up hope just yet.

David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.