By ROBERT SEITZ
March 16, 2026 – We are now well into the year 2026, and we are still struggling with how to deal with our Cook Inlet gas. To me this is an issue that all Alaskans should be behind the search for a solution (or solutions) that will get us to a position where Cook Inlet gas is no longer threatened to run out, and to where our energy cost in Southcentral Alaska and the Railbelt electrical utilities could be considered affordable or maybe even cheap.
I have tried to point out that there is no better use of the Cook Inlet natural gas than as an energy source for the citizens of Alaska. State royalty payments on Cook Inlet natural gas could be eliminated and Alaska would be better off. The price of gas might also be reduced by the amount of the royalty to help guarantee cheap energy.
We Alaskans need to agree on the objective of our efforts to improve our production of Cook Inlet natural gas. Then we need to work together for the plan and framework to reach our objective. We got into this mess through an insane environmental policy to cripple hydrocarbon fuel production and distribution, which discouraged financial institutions and investors from supporting any fossil (hydrocarbon) exploration or increased production efforts for a few decades.
This was followed with harsh federal policies that discouraged hydrocarbon production and encouraged investment in alternate energy sources. Then we had state government try to balance a budget that no longer had high crude oil flows through the Trans Alaska Pipeline, with direct taxing on the few barrels of oil we did produce.
When John Hendrix picked up Furie in the 2019 bankruptcy sale, it was partial fulfillment of his dream to have an Alaskan owned oil and gas production company. The complications of encumbrances of Furie and financial institutions weren’t interested in providing help. If Furie had a few crude wells to flow, Furie could have had a cash flow, but Furie was focused on natural gas and there is no cash flow in without a flow of gas out. Most of the demand was satisfied with flow from Hilcorp gas wells, so the incentive to drill more gas wells was low. The pressure of decreasing gas reserves sent the various interested entities looking for other outside sources to augment our natural gas supply.
In the meantime, Hendrix was still working to find ways to finance his effort to produce more natural gas. Alaska state agencies and the Alaska Legislature were the only places he could turn to, and with AIDEA loans he was able to drill some holes and get some production. He did have his detractors, who felt he was personally benefitting from these opportunities and was pocketing a bunch of money. A number of people have testified passionately against Mr. Hendrix effort to find relief from the encumbrances because they felt this was too much special interest or too much benefit to a particular company.
While all this is going on we found solutions that would cost more to achieve and result in buying more expensive gas to supply the need for energy in Alaska: $500 million dollars to renovate an LNG plant to receive gas could very likely be otherwise used to help increase production of natural gas in Cook Inlet. I expect Alaskans to find solutions, not fight with those who need help when normal financial institutions are not available to provide the support needed.
For instance, royalty gas payments could be suspended for all Cook Inlet gas producers so that the producers are paying less. Then if we can find a way the price we pay the producers would be reduced by the amount of the royalty payment. This would go a long way to having cheap energy for South Central Alaska.
The Alaska Constitution would be satisfied because Alaskans would be getting the best deal for Cook Inlet gas by having more affordable energy for heat and electricity, which would attract more businesses and more residents to an affordable Alaska. Legislators can find ways to make legal the mechanisms that will help solve the problem and find ways to let others share in the benefits of the solution. When DNR or other agencies need policy changes to allow them to better manage the efforts for ensuring cheap energy from Cook Inlet the Legislators can work out those issues; everybody working together toward a common goal.
I’m sure that with all the smart people we have in Alaska that there is even a way to limit the maximum rate that would be charged for natural gas from Cook Inlet, to help keep our energy cheap. Our objective should be cheap and abundant energy, to encourage more business and to survive the cold.
John Hendrix and Furie have increased production of Cook Inlet gas and plan to continue to increase their production until they are at a point where no one on the Railbelt will be shouting that Cook Inlet production is too low.
Let’s demonstrate that Alaska does know how to do oil and gas the right way. We can do the same with mining, fishing and timber.
Robert Seitz is a professional electrical engineer and lifelong Alaskan.
7 thoughts on “Robert Seitz: Cook Inlet natural gas production is still a problem”
What a well written and logical article!!! Written with common sense. That’s something that way too many people don’t have anymore. Thank you Robert!
Reference: “We got into this mess through an insane environmental policy to cripple hydrocarbon fuel production and distribution, which discouraged financial institutions and investors from supporting any fossil (hydrocarbon) exploration or increased production efforts for a few decades.”
You hit the ROOT CAUSE! Democrat/Environmental restrictions. A baby step to fixing this problem is to stop voting for democrats. And, to stop allowing outsiders to dictate how we run this state.
If taxes and/or royalty are the only thing stopping private companies from producing then we should ask ourselves if having absolutely nothing of something is better than having it. In theory our state government is made up of the people of Alaska to serve the people of Alaska, if not charging excessive taxes or reducing/removing royalties serves the Alaaskan people then we must consider it.
New development will also inevitably bring up New leaders not in Alaska’s little clique group knows as The Corrupt Bastards Club, they can’t have that challenges tk their group of bulllies who can’t really fight like a real leader. Here they have leverage IN controlling government and bureaucracy.
It’ll take an Act of God on Alaska to disrupt the power in the few holding it. So that they are removed by sudden disasters so New leaders can move in and assume leadership.
The lack of interest in the recent Cook Inlet lease sale pretty much says is all. The people really in the know and who actually make the investments don’t believe that the gas is there. Simple as that.
Does is say that they don’t think the gas is there? I’ve read a bit about it and the people in the know seem to think the gas is there. Simple as it sounds, it might just say that the market to support the enormous monetary considerations involved is not there, or the regulatory environment to support the enormous monetary considerations involved are not there.
It looks like bad timing for the lease sale. I think those who might be interested want to make sure the financial support is there to provide support for the drilling and allow the flowing so there is cash flow to keep the production increase going. I think the leases were too far away for the immediate future.