part of the state’s research base can serve as the Technology base for building a more value-adding economy

a)  In the declining salmon and timber sectors, our educational infrastructure and business service sector have to become at least as capable in the manufacturing or processing of resources as we are in the assessment and harvesting of those resources or we have no future in those sectors.

 

2. The state has to focus at least as much on the risk capital environment as it does on the technology base if more Alaskan firms are to be launched to be part of the supplier base. Without risk capital, the state will have few corporate headquarters and R&D functions. Increased management and intellectual capital in the state can produce both higher wage jobs, and more importantly the rewards of ownership.

engineering information and the lack of geologic data for many potential oil and gas basins in

Alaska; (b) complex regulatory process administered by a large number of agencies; (c) lack of

public and government understanding that Alaska’s oil resources are finite, have limited life, and

that access and time to develop are critical to the future of oil development in Alaska; (d) inadequate communications between all stakeholders; (e) a large portion of the remaining

discovered oil resource is heavy oil and will be difficult and economically marginal to develop;

and (f) the high cost of hydrocarbon exploration and production in Alaska.
Technical research priorities that were identified to address the barriers were: (a) development

of a regional geologic framework for new basins in Alaska and development of common

databases to expand data availability for new basins as well as developed basins; (b)

technology for economic production of heavy oil; (c) improved understanding of potential

environmental effects of climate change on infrastructure, vegetation, wildlife, and development

of plans and technology to deal with the change; (d) development of dismantlement, removal,

and restoration (DR&R) technology and strategy (see the comments under the natural environment - human activities section); (e) carbon dioxide sequestration options and

technology requirements; (f) technology and research data to improve the regulatory process

and to ensure that regulations are factually based; (g) improved understanding of the impacts of

development on wildlife; (h) development of baseline data before development starts; and (i)

cleanup and spill mitigation technologies for offshore application.
Many of the technical issues related to oil recovery in Alaska remain unchanged from earlier

workshops. Development of oil resources in Alaska’s high-cost, fragile, and harsh

environment continues to be a challenge, but significant progress has been made in the last few

years through the adaptation of advanced technology such as extended-reach drilling and multilateral wells for production of heavy oil.

to sales of conventional gas from the North Slope, and to natural gas development from

alternative sources such as methane hydrates and coal bed methane. Barriers and challenges

included: (a) resource identification and production throughout Alaska; (b) environmental issues

related to infrastructure development and maintenance; (c) infrastructure, construction, and

transportation costs that control the economics of development of gas resources; (d) marketing

of gas including identification of local, regional, national, and international markets; (e) public

policy including regulatory and permitting issues; and (f) dissemination of public information and education.

and technology development for production of gas hydrates and coal bed methane, including

drilling in rural areas; (b) technology related to process improvements for gas-to-liquids (GTL)

conversion technology, GTL product use, and GTL transportation in TAPS; (c) environmental

research related to CO₂ capture and sequestration technology, including its use for enhanced oil

recovery; (d) arctic engineering related to pipeline construction such as collecting geotechnical

data, developing improved stream-crossing technology, and evaluating geological hazards; (e)

public policy issues where UAF can play a vital role as education liaison and as an unbiased broker of data and analysis; (f) socioeconomic studies related to communities and pipeline legal

issues; and (g) restoration technologies related to removal of gravel, restoration of streams and

permafrost, and re-vegetation.

These were: arctic engineering research, resource and reservoir identification studies focused

on coal bed methane, natural gas hydrates, and conventional natural gas, gas-to-liquids

engineering, and public policy issues.

pollutants and ash disposal; (c) mining issues such as impacts on permafrost, sampling within

the mine, real-time analysis, and access; (d) regulatory issues such as the Jones Act and its

impact on shipping costs; (e) determination of coal characteristics and matching quality to

market needs; (f) processing issues related to fines generation and grinding size; (g) coal

conversion processes such as low-rank coal-water fuels; (h) marketing problems resulting from

the perception that low-rank coals are inferior and the due to the distance of Alaska coal from major world markets; (i) health and safety risks to public; (j) utilization of aging power plants and real-time quality control; (k) negative public perception of coal; and (l) transportation cost and lack of infrastructure.
R&D Priorities were divided into high, medium, and low priority areas. The high priority category included (not in any particular order): (a) determination of mercury levels in Alaskan coal and its impact on power plant emissions, (b) ash utilization; (c) low rank coal-water fuel demonstration and commercialization; (d) coal drying; (e) cost-effective small-scale technology for remote-power generation using coal such as fuel cells, small-scale gasification, novel mining strategies for small-scale mining, and co-combustion of coal with waste materials; (f) cold weather road dust control; (g) combustion optimization and testing; (h) issues related to use of low-rank coal in power plants; and (i) real-time online analysis.
The medium priority R&D areas included non-destructive analysis, CO₂ sequestration, dealing

with fines, spontaneous heating, combined IGCC and GTL plants, blending of Alaskan coal with

other coals, wear-surface materials, opacity versus grain loading, background water metals and

toxicity, flocculants in cold water, market analysis of future Alaska power demand (20+ years),

and sulfur adsorbent materials for Alaskan coals for small systems.
The resource utilization sector notes that major changes in the US electricity industry that may be applicable to Alaska include the development of small-scale renewable (e.g. wind or wind/diesel combinations, and high efficiency small hydro generators) sources of electrical energy and new technologies for on-site power production (residential and commercial), and in-situ cogeneration (combined heat and power sources). Other rapidly advancing technologies in areas such as ceramics and fuel processing are on the verge of making solid oxide fuel cells a realistic candidate for applications in remote as well as urban areas. Implementation of these developing technologies in Alaska is hindered by lack of local experience with them, distances between fuel sources and end-use locations, and Alaska’s climatic and geographic characteristics. The major needs and opportunities are for continuing research in materials and their performance under Arctic conditions, and test and evaluation of the evolving approaches in Alaska. Like the resource extraction sector, utilization companies could benefit from improved coordination, information sharing, and state support.
Additional insight into some of the unique R&D and related problems associated with rural energy were provided by the road mapping sessions at the “Rural and Affordable Energy for Rural Alaska” Conference held in Fairbanks in September 2002. A major conclusion of the conference was the need to continue discussions among all constituencies involved, to bridge cultural as well as technological gaps. The Northwest and North Slope areas are setting models for this process through their annual summits, supplemented by committee work throughout the year. Although the final report is not yet posted, the highest priority issues, as suggested by a combination of the rural utilities and user groups, agency representatives, vendors and university researchers were:

-- Financial: Revision of the PCE formula to reward efficiency and capture benefits locally. This will require not only increasing the endowment, but researching true costs, including contributed capital, and developing standards to reflect them;

-- Diesel fuel: R&D on cold weather fuel operations, additives, recovered heat, types of fuel, and blending to ensure reliable and safe operation in cold weather;

--Diesel technology: T&E of new diesel engine system designs including: diesel hybrids, various operational scenarios, and system components to reduce emissions, increase efficiency and reliability, and reduce maintenance and operation costs; and

-- Natural gas, coal and biomass: project packaging to attract funding, particularly for small villages and projects to employ appropriate new technology.
Finally, another aspect of energy that has not been adequately explored is the potential for Alaska to exploit its abundant energy resources within the state to attract energy-intensive industry. Iceland’s use of its abundant geothermal and hydro energy for aluminum smelting is a model. Examples that have been very briefly discussed during the development of this report include:

-- exploitation of the geothermal potential near Unalaska and Dutch Harbor,

-- electrolytic production of hydrogen using excess electricity from Tyee or from a geothermal source, followed by in-state hydrogen distribution for clean transportation or rural fuel cells; and

-- in-situ generation of electricity by burning North Slope coal, then using the CO₂ effluent to displace methane from the hydrates (thus sequestering CO₂ while generating an additional energy resource) and the electricity for GTL processing; excess power could be transmitted to urban areas, or used for additional hydrogen production.

-- Economic: Economic impact operates through lead and lag effects. Lead effects relate to investments necessary to make others worthwhile; e.g., roads that provide access to markets, and open other opportunities. Lag effect investments make it possible for communities to “cash in” fully on the impact of earlier improvements. The distinction is important because of implications for appropriate levels of government intervention, typically higher for lead effect investments. Since impact is usually a combination of the two effects, the extent of intervention often becomes a matter of policy and judgment. There are also synergies between different types of infrastructure improvements (e.g. health programs depend on the availability of power for light and refrigeration). Understanding synergies is often as much of an art as a science, and thus in decisions about timing it is essential to educate beneficiaries about what they can expect from different projects, and empower them to make the choices; the challenge here is to ensure that empowerment is real, and not a disguised way to hand out subsidies. A third task is to determine how much is enough. Again there are value judgments, since this often involves trading peoples’ time for money. Reasonable conclusions require systematic and detailed monitoring of projects, coupled with econometric analysis. Overall, the, economic aspects of rural investment policy require clear understanding of the economic role of rural infrastructure, effective decision making processes, and strong monitoring and evaluation. All of these would benefit from both fundamental and program-specific R&D.

-- Social: There are some clear direct links between social policy and infrastructure, e.g. clean water and health, transport and emergency aid. There are also some subtle indirect links involving time allocation or impacts on nutrition and education. To improve our understanding of both, R&D is needed on three issues: affordability, and thus the ability to reach all segments of a society; employment, both during construction and through new job opportunities, including the labor rates associated with the jobs; and vulnerability to natural and economic hazards, balanced between mitigation of impact and attacks on root causes.

-- Other impacts of rural infrastructure which are more diffuse yet perhaps the most important in the long term, include changing attitudes and mentalities, building up social capital, bridging political, social, ethnic or religious gaps, exposing bad or corrupt management techniques, and providing opportunities for communities to develop better governance. Again, understanding these, and balancing them against social and economic impacts, requires R&D.

-- Extensiveness: the dispersion of our needs results in high costs; individual project or per-unit costs may be relatively low, but policy must consider the global financial implications of extensive programs, for both capital investment and operations and maintenance (O&M). Financing alternatives, sustainability, and technology are intertwined in issues of cost competitiveness. Dispersion also means that management of rural and urban infrastructure has to be decentralized; here, trade-offs are inescapable, although one basic principle is not to ignore existing institutions.

-- Heterogeneity: This manifests itself in two major ways, through the nature of the services provided and the size of the group that benefits from the investment. The first distinguishes between public and private good characteristics. Roads are examples of the former, telecommunications the latter. Thus the private sector can be expected to play a dominating role in telecommunications investments; however rural infrastructure is seldom on its own seen as a profitable investment, mandating R&D into regulatory, financing, and assistance schemes to encourage investment and help small firms access the market. Size of the beneficiary group directly impacts the nature of participatory and management approaches. The difficulty in accurately reflecting beneficiaries’ views and preferences increases exponentially with the size of the group, influencing in particular the institutional aspects of policy. Inventory of the overall situation in terms of physical accessibility or access to the infrastructure, demand for its services, and institutional capacity to manage it, is a necessary starting point for policy formulation. R&D on each of these issues, and on their linkages, is needed.
Once the role of infrastructure has been determined, and considerations of dispersion, nature of service, and group size analyzed, there are three main challenges to the policy formulation process that must be addressed globally as well as individually. These challenges are the sustainability of individual projects, their replicability as “programs,” and their poverty alleviation impact. The specifics of the challenges are as follows:

-- Sustainability: This challenge results from the confluence of design, administrative, and financial problems. Economic considerations of small projects usually imply design to relatively low standards, increasing maintenance intensity. This demands skills, and local capacity, which in turn necessitate accountability and financing of maintenance. The difficulty and lack of glamour of maintaining rural investments has traditionally made government a poor candidate for the job, resulting in the need for local communities to develop a strong commitment and sense of ownership. This is more difficult at regional than at community levels.

-- Replicability: Critical weaknesses can occur on financing and technical assistance fronts. Relatively low costs of individual projects can distract from the large cost of infrastructure programs. Pilot operations relying on federal or state funds are likely impossible to sustain at the state level. What is needed is an institutional framework that encourages communities, the private sector, or local government to undertake the programs. This requires resolving the financing problem. Artificially removing this constraint introduces a fatal flaw in replicability. Technical assistance works much the same way. Financial, human, and administrative resources are limited, thus programs must rely on beneficiary financing, information dissemination, existing institutions, and the private sector to the maximum possible extent.

-- Poverty: Sustainability and replicability hinge on community autonomy for financing and implementation. This can favor communities with better human and financial resources, and leave out the poor. This must be addressed without undermining community and local government initiative, which often entails shifting from a dependency to an empowerment mentality. Understanding the links between poverty and infrastructure in Alaska requires R&D in areas such as vulnerability, social capital, governance, and empowerment.

-- Institutions: Most unsuccessful infrastructure programs can be traced to inadequate allocation or acceptance of responsibility for governance, management, finance, or operations. However, there are no standard models, and solutions are both region and time specific; yet, there are at least three basic criteria: (a) appropriate level of decentralization, which is a direct consequence of dispersion; this dictates that decisions be made at the lowest practicable level, although experience has shown that local governments representing multiple communities are typically the weakest link; (b) appropriate reliance on the private sector, recognizing that with the exception of roads, most infrastructure projects provide services in the nature of a private good; further, at the micro-project level, the modus-operandi of local communities is often much closer to that of the private sector than to that of state and federal government; (c) accountability, which can not be taken for granted but must be enforced through well-designed mechanisms that include transparency, audits, participation by all subgroups of the beneficiary community, and wide dissemination of achievements.

-- Finance: Well-conceived financing mechanisms strengthen accountability, are the key to sustainability, replicability, and poverty alleviation, and are conducive to the cost savings that entice communities to prioritize their needs forcefully and explicitly. As with institutions there are no blueprints, but there are some basic principles: (a) maximizing cost recovery which is the simplest and often the only effective way to ensure availability of resources for O&M. Providing infrastructure at full cost, imperfect as it may seem, at least gives the poor a choice, and often a choice that will prove less costly than to have no access at all, or to rely on more costly alternatives; (b) maximizing beneficiary contributions to investment costs increases the likelihood that decisions are made in a responsible way and provides the sense of ownership that guarantees sustainability and influences design standards and construction methods. At issue for R&D is the appropriate role and level of subsidies; (c) encouraging private sector financing which is the most effective way to promote replicability. There are challenging questions associated with mechanisms to allow adequate cost recovery, simple and fair regulatory mechanisms, and financial intermediation channels.

-- Measurement and Evaluation: The dispersed and small-scale nature of most rural infrastructure investments means that many communities can afford them on their own, yet also precludes straightforward replication of even well-tested projects. To stimulate local leadership and initiative, it is essential to ensure not just that money is spent in the way intended, but that the impact of investments is in line with expectations. As emphasized throughout this discussion, the links between infrastructure and economic and social development are complex, and vary between communities and over time. Policy formulation must therefore be an adaptive process, based on effective learning mechanisms, thus on monitoring and evaluation conducted by research-oriented institutions with a long-term and broad perspective of development.

-- transportation systems and operations: improved inter-modal operations, closely tied to economic development and improved throughput and performance of existing facilities;

-- transportation infrastructure and construction: improved maintenance methods and new construction techniques that are cost effective but still result in high-performance pavement and bridges capable of withstanding traffic in extreme weather conditions, engineering practices for rural roads to reduce maintenance requirements and improve the ability of local governments and communities to operate and maintain them, and construction techniques that minimize environmental impact and simplify permitting;

-- intelligent transportation systems: suitable for Alaskan conditions that employ real time data acquisition and analysis of traffic and road conditions to optimize traffic operation, management, and safety;

-- mechanical systems and fuel technology to evaluate engines and fuels that are less expensive and more environmentally friendly under extreme weather conditions;

-- transportation safety, including advanced concepts of driver performance, automation, and crash testing, and improvement of road friction and traction under snow and ice conditions;

-- marine transportation: geotechnical, structural, architectural, and coastal engineering studies to improve the design and operations of river and sea ports in Alaskan waters, integration of marine transportation into intermodal systems, and analysis of marine transportation policies and training requirements to promote commerce and economic growth, including the potential of northern sea routes; and alternative occupational opportunities for displaced fishermen;

-- air transport and general aviation: security against incursions at rural airports, alternative low cost options for lighting and passenger and freight facilities, and ways to better integrate air transport into an intermodal transportation system, including development of spatial aviation infrastructure and transportation models.

-- UA’s proposal to establish an official US DOT Transportation Research Center (TRC) . All three MAU’s have been involved in defining this effort over the last year, and the proposal has been coordinated with Alaska DOT. While the proposed funding for this effort is relatively small, creation of a recognized Center would significantly improve coordination and overall management oversight, and provide impetus toward long-term, dedicated efforts. It is notable that the current UA Center for General Aviation Research would be a significant player in the TRC, as would the cooperative R&D planning between UAF and Army’s CRTC. It is also important to note that one of UA’s capacity-developing Research Focus Areas under the NSF Experimental Program to Stimulate Competitive Research directly addresses related engineering expertise. We suggest that even in advance of requested federal support, the state recognize TRC, and with UA take steps to define and implement an effective management structure for it.

-- The Alaska Engineering Design and Information System (AEDIS), a node of GINA, has been initiated as a joint project between CRREL and UA. State support, and state agency participation in this effort, would move it forward more rapidly and inclusively. We envision AEDIS as the repository for much of the information, knowledge, standards, and guidelines that will evolve from other infrastructure-related R&D projects.

-- Cooperation among state and federal agencies, UA, and a number of private non-profit groups, in particular BASC, to reduce costs and increase access to wide-band fiber and wireless communications throughout the state. Efforts in this direction have, to date, been informal, but show significant promise and should be encouraged and supported by the state. Evolution of the envisioned system will require public-private partnerships, but could dramatically improve education and aviation safety throughout the state, and enable the state-wide environmental monitoring networks, as well as contribute significantly to quality of life. UA has recently submitted a proposal to NSF for funding to develop a “Wireless Arctic Network Prototype: that addresses many of the basic issues.

-- The Cold Climate Housing Research Center. An industry-based non-profit corporation conceived and developed by members of the Alaska State Homebuilders Association, CCHRC has received grants from the Alaska Housing Finance Corporation as well as state and federal housing agencies. Its facility will be located on the UAF campus to encourage collaborative R&D, student internship, interaction with other programs like AETDL, and spinoff development. CCHRC is an excellent model of industrial initiative and deserves strong state support.