Fairbanks Natural Gas to build North Slope LNG plant, will truck LNG south

Faced with problems with gas supplies from Cook Inlet, Fairbanks Natural Gas is moving ahead with plans to build its own LNG plant on the North Slope, Dan Britton, the company’s president, told Petroleum News Dec. 20.

“We have obtained a land use permit from the North Slope Borough and are working on the lease of a pad with the (Alaska) Department of Natural Resources,” Britton said. Britton also said that the company is working on gas supply agreements with the North Slope producers.

LNG from the plant will be trucked to Fairbanks, using the Haul Road.

FNG has not yet finalized a site for the plant. However, the company has a preliminary plant design and ultimately expects the plant to process about 10 million cubic feet of gas per day. Britton said that a number of the permitting issues for the plant have been resolved.

“Our plan is to try to have the facility operational for the fall of 2007,” Britton said. “That’s a fairly aggressive time schedule. … Most of the equipment will be skid-mounted, packaged units that we just interconnect.”

FNG has been sourcing its gas from LNG trucked to Fairbanks from an LNG plant at Point MacKenzie on the west side of Cook Inlet. But things turned sour for the company in late September when the dwindling deliverability of natural gas from the Cook Inlet resulted in the termination of the company’s gas supply from Aurora Gas. The Regulatory Commission of Alaska subsequently approved a special contract for gas sales and transportation service between Enstar Natural Gas Co. and FNG, effective Oct. 1, forestalling loss of gas for some 800 residential, commercial and institutional customers in Fairbanks.

There has been speculation that FNG would move the Point Mackenzie LNG plant to the North Slope, but Britton said that moving the existing plant is impractical. Instead, the company will keep the Point Mackenzie facility operating until the North Slope facility is running smoothly. After that point the company expects to source all of its gas from the North Slope.

—Alan Bailey