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ANGDA continues to push for propane Heinze argues for use of this abundant North Slope resource as an alternative to diesel fuel or gasoline for commercial vehicles Alan Bailey Petroleum News
For a number of years the Alaska Natural Gas Development Authority has been pushing for the use of propane from North Slope oil fields as a fuel for rural Alaska, to alleviate the impacts of the crippling costs of fuel oil and diesel fuel for rural residents. And in an Oct. 19 interview ANGDA President and CEO Harold Heinze talked to Petroleum News about the latest status of the ANGDA propane initiative and about his ideas on propane use.
With the ultra low sulfur fuel that is now mandated for diesel engines being expensive, tightly regulated and requiring dedicated storage tanks, diesel fuel usage has become especially expensive in rural Alaska. Propane is a significantly cheaper fuel option that could be transported conveniently in tanks, especially around the Alaska river system. And propane would also prove cheaper than fuel oil for applications such as heating buildings and cooking, Heinze said.
Cheap and clean Propane has a lower energy density than diesel fuel or gasoline — in other words, for a given weight or volume of fuel, propane has a lower energy content. Nevertheless, propane turns out to be cheaper than traditional liquid fuels, in part because it is relatively simple to extract from the product streams of oil or gas fields, and in part because its price tends to be linked to natural gas prices rather than oil prices, Heinze explained. And propane, having few impurities and a relatively high hydrogen content, enjoys the additional advantage of being a clean burning fuel. The fuel is easy to transport, store and handle.
The ANGDA concept involves establishing a wholesale propane distribution point that would tap into the North Slope’s huge propane resource, with a primary rural distribution point where the North Slope Haul Road crosses the Yukon River. Propane tanks, already widely available for propane transportation and storage, could easily be carried by barge along the Yukon, to villages around the Yukon drainage system, ANGDA thinks.
In fact, the economic and environmental advantages of using propane in rural Alaska are so overwhelming that many communities, particular river communities, will likely transition to the use of propane, regardless of whether the propane comes from Alaska or Canada, Heinze said.
ANGDA plans to prepare a proposal to use the ice resistant ferry, the M/V Susitna, for the transportation of propane in northwestern Alaska or on the Yukon River, Heinze said. Funded primarily by the U.S. Navy, the Susitna is intended for use as a ferry in the Cook Inlet, but has not gone into operation because of a lack of suitable docking facilities.
Delivery point Although ANGDA originally envisaged drawing propane from a future North Slope gas line at the Yukon River crossing, the authority now favors establishing a wholesale delivery point at the Central Gas Facility on the North Slope, pulling propane from the rich gas stream passing though that facility. The gas facility cools down gas produced at Prudhoe Bay to extract propane and other natural gas liquids that are used for enhanced oil recovery and that are also mixed with crude oil for delivery to market.
But about 75,000 barrels per day of propane remain mixed with the natural gas and are re-injected underground into the Prudhoe Bay oil field reservoir, Heinze said. Could not some of that propane be extracted for sale as a useful product, he asked.
“If you added a fairly simple propane recovery facility … you could make available a much larger (propane) stream,” Heinze said.
Heinze said that there is already a small plant at the Central Gas Facility for the production of propane for use as a refrigerant in NGL production. But that plant, used to periodically top up the refrigerant stock, only runs one or two days per month, Heinze said. Why not run the plant full time, selling the excess propane through a propane loading facility that could be set up quite simply, he asked.
“That’s basically been ‘the ask’ at this point, that the (Prudhoe Bay) unit, and in particular the unit operator, makes available at least some volume of propane, using the existing facilities, with a slight add on,” Heinze said. At this point ANGDA is comfortable that at least two of the three unit owners are ready to sell propane, he said.
Steve Rinehart, spokesman for BP, the Prudhoe Bay operator, confirmed Oct. 19 that BP has discussed the propane proposal with ANGDA.
“We understand the important role energy plays across Alaska, including rural communities, so we will evaluate this carefully,” Rinehart said.
Commercial fleets North Slope propane, in addition to being used in rural Alaska, could prove a major benefit as an alternative to ultra low sulfur diesel in fueling Alaska’s commercial vehicle fleets, including commercial vehicles operating on the North Slope and the trucks that ply the Haul Road, Heinze said. Nationwide, the pollution from diesel engines and the high cost of ultra low sulfur diesel, are pushing trucking companies towards the use of gasoline-fueled vehicles, while on the North Slope ultra low sulfur diesel has to be trucked in from elsewhere, Heinze said. At the same time, new Ford trucks now come with gasoline engines that can be very simply converted for propane use. And Rousch CleanTech has developed an engine conversion that uses liquid propane, rather than propane gas, thus eliminating problems associated with gasifying the propane in cold winter weather.
“The engine itself is totally compatible with propane,” Heinze said. “As a matter of a fact it actually works better on propane than on gasoline.”
ANGDA has spoken to BP, North Slope contractors and the State of Alaska about the potential to use propane fueled vehicles in Alaska, Heinze said.
Sea route Heinze also thinks that propane could be shipped by sea direct from the North Slope, using shallow draft barges that could ply the notoriously shallow water around Alaska’s Arctic coastline. In addition to shipping propane to rural villages by this means, the export of propane from the slope could open up broader markets. For example, Hawaii, where propane has become the primary road vehicle fuel, has told ANGDA that it would be interested in importing Alaska propane, should the opportunity arise, Heinze said. There is a huge untapped Alaska business opportunity, he said.
“The scale of the propane resource at Prudhoe Bay is world class,” Heinze said.
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