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Another Fairbanks natural gas option? When Southcentral utilities start importing gas to bolster local supplies, could some of the imported gas go to Fairbanks? Alan Bailey Petroleum News
There are currently several proposals on the table for bringing new natural gas supplies into Fairbanks in Alaska’s interior by building a gas liquefaction facility on the North Slope and then trucking liquefied natural gas, or LNG, south on the Haul Road.
But, with Southcentral gas and power utilities in the initial stages of planning for the import of LNG or compressed natural gas into Southcentral to bolster dwindling gas supplies from the Cook Inlet basin, could some of this imported gas provide a more cost-effective solution to the Fairbanks fuel supply conundrum?
Fairbanks Natural Gas LLC has for a number of years been trucking LNG to Fairbanks from Southcentral, using LNG manufactured from Cook Inlet gas at a small plant near Anchorage. Tightening gas supplies from the Cook Inlet have caused the Fairbanks utility to pursue the possibility of obtaining its LNG from the North Slope.
Fairbanks LNG On Dec. 12 during Law Seminars International’s Energy in Alaska conference in Anchorage, Jim Posey, general manager of Anchorage utility Municipal Light & Power, commented that, assuming that the import of gas into Southcentral goes ahead, it would make sense to ship some of that gas as LNG to Fairbanks, as an alternative to the Fairbanks supply coming from the North Slope. Essentially the road trip from Southcentral to Fairbanks would be more cost effective than the trip from the North Slope — the road system from the Slope is unpaved for much of its length and crosses the Brooks Range over the 4.700-foot-high Atigun Pass.
Arithmetic “There’s a 500-mile gravel road to Fairbanks from the North Slope. There’s a 300-mile paved road from here,” Posey said.
“Arithmetic says you ought to give that a consideration,” Posey commented to Petroleum News.
And, given that price terms for a longer-term gas import contract would likely be better than for a short-term contract, the purchase of imported gas for Fairbanks could improve the overall economics of the gas import arrangements. A 15 to 20 year purchase contract, for example, would bring the cost of gas down — Fairbanks requires a similar volume of gas to the initial needs for Southcentral and could perhaps help underpin that longer-term import arrangement, Posey said.
In the absence of a large, new gas field coming on line in the near term, the Southcentral utilities see a need to import gas in the winter of 2014-15 to fill a projected shortfall in Cook Inlet gas supplies. The utilities hope that imports will be a temporary phenomenon, filling the supply shortfall until Alaska internal gas supplies can be restored to adequate levels, either from Cook Inlet gas fields or through a pipeline from the North Slope. The utilities expect to decide on their import plan by the end of March, Posey said.
Cost of gas Dan Britton, president and CEO of Fairbanks Natural Gas, has told Petroleum News that he sees the high cost of LNG on world markets as an impediment to the idea of using imported gas as a supply for Fairbanks. The imported gas would be expensive relative to the cost of gas from the North Slope, Britton thinks.
“For Fairbanks and the Interior we feel that LNG from the North Slope has a higher likelihood, primarily because of cost,” Britton said.
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