Pentex sale deadline extended

The board of the Alaska Industrial Development and Export Authority during its April 27 meeting passed a resolution further extending the deadline for finalizing the terms for the sale of Pentex Alaska Natural Gas Co. to the Interior Gas Utility. The board had previously extended the deadline from March 31 to April 30 but has now moved the deadline to May 31.

The planned sale comes as part of the Interior Energy Project, a project to provide a greatly expanded supply of affordable natural gas to the city of Fairbanks and its surrounds. Pentex, currently owned by AIDEA, owns utility Fairbanks Natural Gas, as well as a liquefied natural gas facility near Port MacKenzie on Cook Inlet and a trucking operation for shipping LNG to Fairbanks. The concept behind the sale of Pentex to IGU, the other Fairbanks gas utility, is to enable the establishment of IGU as a single, consolidated utility in Fairbanks, with IGU also owning and operating the Cook Inlet LNG plant and the LNG trucking operation.

Gene Therriault, IEP team leader, told the board that significant headway is being made in preparing the sale documentation but that the documentation would not be finalized by the end of April.

Closure of the Pentex sale depends also on the establishment of a new Cook Inlet gas supply at a workable price for boosting the LNG production for Fairbanks. So far a gas supply agreement, being negotiated by IGU, remains elusive. However, Pentex currently has a gas supply agreement with Hilcorp Alaska that provides gas for FNG’s existing customers in Fairbanks. Given that the Hilcorp supply agreement terminates on March 31, 2018, the AIDEA resolution passed on April 27 also contained a provision approving a new agreement between Pentex and IGU. That agreement enables Pentex, rather than IGU, to negotiate for a new gas supply contract that would at least assure continuing supplies for those existing customers. The Pentex negotiations could start any time after May 1, although Pentex and AIDEA would also keep IGU fully informed about what is happening.

- ALAN BAILEY