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A role for propane in rural Alaska? Heinze proposes distributing propane from North Slope natural gas to rural communities Alan Bailey Petroleum News Staff Writer
Could the use of propane reduce the spiraling cost of buying diesel fuel and fuel oil in rural Alaska? Harold Heinze, chief executive officer of the Alaska Natural Gas Development Authority, thinks so.
At the Fairbanks Aug. 23 joint meeting of the Alaska Legislature’s House and Senate Resources committees and the House Special Committee on Oil and Gas Heinze described his ideas for propane distribution. There are a bunch of folks out there studying the transportation of compressed natural gas and liquefied natural gas to rural Alaska, he said, but “one of the pieces of the puzzle that seems to be missing is the propane connection.”
ANGDA recently commissioned a feasibility study on the distribution of propane to coastal Alaska. This study commented on how easy and convenient propane is to store and transport, and noted that it is already a familiar fuel for cooking in rural Alaska. Propane is clean burning, propane-burning equipment tends to be very reliable and much existing cooking or heating equipment can be converted to use propane.
Heinze thinks that it would be cost-effective to extract propane from natural gas at the point where a North Slope gas line crosses the Yukon River — people could then barge that propane to communities along the river system.
“Why wouldn’t we do something at that point and use the river as a transportation system to move energy up and down,” Heinze said.
Heinze also pointed out that the Fairbanks area could form a hub for propane distribution because about every proposed North Slope gas line passes through there. He also said that getting North Slope gas to tidewater opens up the possibility of barging propane to coastal communities.
And Heinze thinks that North Slope gas could furnish substantial propane supplies for Alaska.
“It would be very easy to make available in Alaska up to 40,000 to 50,000 barrels a day of propane,” Heinze said. Barge transportation Heinze said the use of large, re-usable propane tanks carried on barges provides the key to initial, low-cost propane distribution. Barges could deliver tanks of liquid propane to local distribution points and entrepreneurs could distribute propane by truck or other means.
“A local person then who was in the propane business might sell it for underground tanks or whatever,” Heinze said.
The feasibility study looked at the potential pricing of this propane at various coastal communities and how this pricing compares with the current cost of diesel fuel, heating fuel, propane and electricity. The study found that one of the biggest cost factors for propane delivery to a community would be the length of time during the year that the local port is accessible.
“If you only had a short summer season … that affected the economics because you’ve got to build storage basically to hold everything for a whole year’s supply,” Heinze said. Distribution centers Heinze said the establishment of a couple of distribution centers, perhaps with one in Unalaska, significantly improves the economics of a coastal distribution system. The study also found that distribution using purpose-built, propane-carrying barges would prove much more efficient than distribution using barged propane tanks, especially for bulk distribution to large communities and distribution centers, or for electricity generation. However, the economics of propane varies from one community to another, depending on local energy sources and fuel costs. But Heinze said that there’s a consistent pattern to the economics.
“If done efficiently it appears that propane could be a tremendous help on an individual house in reducing, say, the cooking and water heating costs,” he said. “… As far as (electrical) power generation we found only a few examples where we would consider using propane.”
So, with the data presented in the feasibility study suggesting a clear potential for cost savings from the use of propane, Heinze urged lawmakers to keep open all options for cheaper rural energy.
“It’s very powerful in rural Alaska to think about what that kind of money freed up would mean,” Heinze said.
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