Company eyes North Slope for Internet data storage center

Cold, dry climate and nearby energy source would benefit center for Internet servers

Posted: Tuesday, May 15, 2001

ANCHORAGE - A newly formed company hopes to tap what Alaska's North Slope has in abundance - isolation, cold temperatures and natural gas - to create a huge Internet data storage center.

It's not quite Silicon Valley on the tundra.

But the proposal by Netricity LLC could create a new market for Alaska's North Slope gas and help Internet companies searching for a reliable source of power keep their data flowing.

The project would include construction of a one-million-square-foot building to house at least half a million computer servers. It would also include construction of a 400 megawatt, gas-fueled electric plant to power the center. The operation would be linked to the Internet via the existing fiber-optic line from the North Slope, which connects with the North Pacific fiber-optic cable.

"We could provide a rock-solid level of reliability, not subject to brownouts like California is facing," said Jim Dodson, an executive vice president with Andex Resources of Houston, one of the investors in Netricity. "All of our turbines would be spinning 24-7 to serve nothing but the needs of the data center."

Netricity was formed earlier this year by privately held Andex and by MDU Resources Group, the parent company of Montana-Dakota Utilities. Billionaire financier George Soros is one of Andex's principal shareholders.

Hundreds of such data centers - also known as Internet hotels or server farms - already exist in and around major metropolitan areas throughout the country.

With the mushrooming growth of the Internet, the need for new data centers is exploding. Yankee Group, an Internet industry research firm, estimates the data center business generated $9 billion in revenue last year and projects that will grow to more than $47 billion by 2003.

"They're a relatively recent phenomenon with the growth of the digital information society," said Karl Stahlkopf, who analyzes energy issues affecting the high-tech industry for the Electric Power research Institute. "The whole thing about these is they can be stuck absolutely anywhere you have a confluence of fiber optic line and power."

But because the centers are such enormous consumers of electricity, utility companies in the Lower 48 are worried about the increasing demand on power systems that are already at or nearing their capacity.

Much of the energy consumed by data centers is needed to keep the buildings cool to keep the equipment from overheating. Backers of the Netricity project said the North Slope's cold temperatures and dry air make it a perfect environment for a server farm and its isolation provides security.

"What has been perceived as negatives in development in Alaska in the past actually starts to look like benefits in this project," said Bob Evans, an Alaska lobbyist for Netricity.

Because the project would be on the North Slope, Netricity could tap some of the 35 trillion cubic feet of proven natural gas reserves directly to fire its power plant.

While Alaska's oil producers are currently studying the feasibility of building a gas pipeline from the North Slope to markets in the Lower 48, the Netricity project would not be dependent on development of a natural gas line.

"We are not a substitute for or in competition with the pipeline project in any way," Dodson said. "We are a supplemental use of the gas in the near term as opposed to the long term."

Dodson said Netricity plans to meet with Alaska's top oil companies, including BP and Phillips Petroleum, to discuss the possible purchase of natural gas.

The company has already approached the Alaska Legislature about the possibility of buying some of the state's share of North Slope gas and lawmakers passed a resolution expressing their support for the project.

Rep. Jim Whitaker, a Fairbanks Republican, said legislators want to know more about the proposal, including how much Netricity would be willing to pay for the gas.

"It's an intriguing concept. The end product brings us into the 21st century very quickly in terms of technology and industries," Whitaker said. "Given that it's a proposal brought forth by credible players, it's worth looking at."

Dodson declined to say how much the company expects to spend on the project.

Netricity officials say the operation would create about 250 jobs. In addition, modular buildings to house the data center and power plant would be constructed in Anchorage or Nikiski, where modular buildings for the North Slope oil industry are built.

Dodson said the company has held talks with landowners on the North Slope about a possible site and with Internet companies that may want to locate their data servers at Netricity's North Slope operation.

If all goes well, company officials hope to have the data center up and running by 2003.

"It's a step for people to go up there. It's a bold move but we think it's a logical move," Dodson said.

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