Alaska Proposes $4.4 Billion Synthetic Aviation Fuel Refinery Using Beetle-Killed Trees

Alaska officials want to build a $4.4 billion refinery that would turn beetle-killed timber and forest waste into 150 million gallons of aviation fuel per year.

The state's pitch: Alaska imports most of its jet fuel despite sitting at the geographic center of global air cargo routes, and woody biomass offers a cheaper feedstock than the cooking oil and animal fats most other synthetic fuel projects use.

The proposal targets Fischer-Tropsch gasification, a decades-old technology that converts wood into synthetic paraffinic kerosene. Most U.S. projects under construction use a different pathway that processes lipids. Deputy Commissioner Katherine Keith said the state evaluated 23 million acres in the Mat-Su Valley and Kenai Peninsula and estimates Fischer-Tropsch production at $4.85 per gallon versus over $7.50 for lipid-based fuel.

Commissioner Ryan Anderson said Alaska produces only 30% to 40% of the aviation fuel it needs. The state handles more than 700 wide-body freighter flights through Anchorage every week and supplies over 900 million gallons of fuel per year to air carriers.

The capital cost estimate includes $3 billion in direct construction costs plus preconstruction and contingency reserves. Keith said the state modeled a 250-megawatt power plant fueled by natural gas and recycled process gases to achieve a carbon intensity score of 20.7 grams CO2 per megajoule. The refinery would also produce renewable diesel and naphtha, she said.

Keith said the feasibility study is available online and the state is seeking feedback from industry and researchers on the assumptions and calculations. Officials want experts to evaluate whether the project can compete with refineries using other pathways already moving toward commercial production, she said.

Michael Darcy, chairman and CEO of DG Fuels, said his company's Fischer-Tropsch process achieves 97% carbon conversion efficiency and a 200-million-gallon facility uses about 1 million dry tons of timber waste. DG Fuels' operating cost is $1.72 per gallon, competitive with oil at $40 per barrel, Darcy said. The company is pursuing two Alaska projects planned side by side.

The Alaska projects would export 443 megawatts of carbon-neutral power during normal operations and 1.4 gigawatts during shutdowns, Darcy said. The facility can produce military fuels including JP-5, which is critical for aircraft carriers because of its high flash point. The Department of Defense has described projects like his as national security priorities, Darcy said.