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IGU to source LNG for Fairbanks gas supplies from the North Slope
Alan Bailey for Petroleum News
In a major change in business strategy, the board of the Interior Gas Utility, the gas utility for the Fairbanks-North Pole region, has decided to shift its source of natural gas from Cook Inlet to the North Slope.
During a Jan. 17 special meeting, the board unanimously approved a resolution authorizing IGU General Manager Dan Britton to execute a sale and purchase agreement with Hilcorp Alaska for the purchase of North Slope natural gas for LNG manufacture, and with Harvest Alaska LNG for IGU to purchase LNG from a new 150,000 gallons per day LNG plant that Harvest will construct on the North Slope. IGU will establish a trucking operation for shipping the LNG from the North Slope to Fairbanks. IGU has LNG storage facilities in Fairbanks and North Pole, from which the utility feeds gas into its gas distribution pipeline system. Harvest is Hilcorp’s midstream affiliate.
The Titan plant Currently, IGU manufactures LNG at its Titan LNG plant near Point Mackenzie on Cook Inlet, using Cook Inlet natural gas purchased from Hilcorp. The plan had been to expand the Titan plant, to accommodate increased gas demand in the Fairbanks region, as IGU increases its customer base. However, major uncertainty in the oil and gas markets following the onset of the COVID pandemic caused IGU to place the planned Titan expansion on hold in May 2020. But several months ago, Hilcorp indicated to its customers that it was not clear whether Hilcorp may be able to fully meet natural gas demand in the Cook Inlet region beyond the terms of current supply contracts, Britton told the board.
The consequent Cook Inlet natural gas supply uncertainty renders the planned Titan expansion no longer tenable, Britton said.
A need for expansion Meanwhile, as IGU continues to sign up new gas customers, the utility anticipates having the maximum number of customers that can be supported through the existing Titan plant by the end of the coming year’s construction season, Britton told the board. To place a hold on signing up more customers at that point would put the expansion plans into the doldrums and somewhat defeat IGU’s objective of making affordable natural gas available to people and businesses in the Fairbanks region while also reducing winter air pollution.
Britton said that IGU investigated several alternatives to expanding the Titan plant: the construction of a removable LNG plant next to the Titan plant; the import of LNG from Canada; and the Harvest LNG plant on the North Slope. For various reasons, including the reliability of long-term natural gas supplies and the potential for future expansion, the Harvest LNG plant proved the best of the alternatives.
- ALAN BAILEY\
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