Alaska approves 50-year land lease for large natural gas-powered data center in the Arctic

The Alaska Department of Natural Resources on Tuesday approved a 50-year land lease for a proposed large-scale computing data center on the North Slope near the Dalton Highway, the trans-Alaska oil pipeline and the proposed trans-Alaska natural gas pipeline.

In its final approval, the department said the lease is in the best interests of the state of Alaska, and additional permits will be needed before construction takes place.

The proposed “STAK Energy Campus,” estimated to cost $500 million, would include a multi-gigawatt natural gas power plant fired with gas produced locally on the North Slope. 

Writing in response to public comments about the plan, the DNR wrote, “this proposed development presents circumstances that are, in important respects, without direct precedent in the State’s historical management of its lands and resources.”

To date, Alaska has no large-scale commercial computing data centers.

The data center complex, which is expected to cover about 715 acres, would be air-cooled and would not be tied into the electrical grid that covers Alaska’s Railbelt, though operators could sell power to customers in and around Prudhoe Bay.

“Construction is expected to require a peak workforce of up to 1,500 workers, while ongoing operations are anticipated to employ between 50 and 150 permanent personnel on rotating shifts,” DNR wrote.

The state intends to charge the owners of the data center a fee based on the amount of electricity produced and used by the data center, as well as rent on the land, with the amount to be determined after market appraisal.

Construction on the privately financed project is expected to take six years, according to information shared with DNR officials, but additional permits — including a federal wetlands permit and a state air quality permit for the power plant — are needed first.

Earlier this year, DNR extended a public comment period on the proposed land lease and received more than 1,200 public responses, most in opposition to the proposal.

Many commenters raised environmental concerns, which DNR addressed in a 30-page response filed alongside Tuesday’s approval.

Unlike data centers in the Lower 48, which use liquid cooling, the proposed STAK data center would be air cooled, raised above a gravel pad in order to allow Arctic air to circulate above and below an array of modular computer buildings.

“STAK’s Cumulative Impact Analysis (CIA) estimates that this approach will reduce direct operational water consumption by 90 percent or more compared to evaporative cooling at lower-latitude data centers,” DNR wrote.

Some objectors raised concerns about STAK’s ability to finance and actually build the data center complex, but DNR officials said that doesn’t fall within their purview. 

“The Division is not … obligated to conduct a general corporate or financial investigation beyond what bears on the decision of whether the proposed disposal is in the best interest of the state,” it wrote.

As for the long lease term, DNR wrote, “STAK requested a 50-year lease term, and the Division’s determination that a term of that length serves the State’s best interests reflects the capital intensity of the proposed development: a project requiring approximately $500 million in initial capital expenditures, a multi-year construction buildout, and an operational life extending well beyond that buildout entails a lease term long enough to allow STAK to recover its investment and operate the facility over its designed useful life.”

Some commenters raised noise concerns.

“The facility will be visible from the Dalton Highway at roughly one mile and will operate a 1-3 gigawatt generation system, producing continuous turbine, cooling, and equipment noise that could carry across several miles of flat Arctic terrain,” DNR wrote, but said that any noise must be considered against the fact that the data center would be placed within the busy industrial corridor connecting the oil fields around Prudhoe Bay to the rest of the state.

The data center will be 60 miles from the nearest inhabited town, and its buildings and a supporting gas pipeline will be designed to avoid impacts on nearby caribou.

“Project-specific baseline environmental studies – including site-specific air quality monitoring,

wetland delineations, and water quality assessments – will be required by other agencies as part of subsequent permitting processes that follow this lease decision,” DNR wrote.

Some commenters expressed concerns about the potential greenhouse gas emissions caused by the natural gas power plant, but the DNR division in charge of ruling on the lease said that analysis is not part of its job.

“The Division is not the agency responsible for establishing or enforcing greenhouse gas emission standards, conducting statewide climate monitoring, or making technical determinations regarding the causes, extent, or future trajectory of climate change,” it wrote.

Tuesday’s decision is subject to a 20-day reconsideration period and could be challenged in court. If no challenge is filed, the project may advance to the next phase of permitting.