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Railroad looking at Fairbanks LNG supply Sees shipping containers north from Southcentral as a cost-effective interim means of moving Cook Inlet gas to the Interior Alan Bailey Petroleum News
The Alaska Railroad can provide an effective means of transporting liquefied natural gas from Southcentral Alaska to the city of Fairbanks in support of efforts to bring affordable natural gas to Fairbanks and the Alaska Interior, Dale Wade, vice president, marketing and customer service for the railroad, told a breakfast meeting of the Resource Development Council on Feb. 19.
“The Alaska Railroad stands ready to provide a logistics solution for that,” Wade said.
Wade said that railroad executives had made a presentation to the Alaska Industrial Development and Export Authority in 2013 about the railroad shipment option, but at that time AIDEA was focused on moving LNG south by truck from the North Slope. But, with a much improved outlook for gas supplies from the Cook Inlet, it now looks as if the railroad option “has some legs in it,” he said.
ISO containers The concept is to load LNG into what are called ISO containers, 40-foot tanks that can be carried by truck or on a railroad flat car. While more expensive than shipping gas through a gas pipeline, the railroad LNG shipment option could be implemented more quickly and easily than a pipeline, Wade said. The pipeline option would involve pipeline construction costs and issues such as potentially having to lay the pipeline through the Denali National Park.
Under the railroad concept, the Alaska Railroad would purchase the necessary flat cars for leasing to LNG shippers, and would need to also purchase three additional locomotives, Wade said. The shippers would need ISO containers and the equipment for loading the containers on and off the flat cars.
Assuming an annual Fairbanks gas demand of 5.18 billion cubic feet in 2017, 66 flat cars would be needed. However, rather than acquiring all of the equipment up front, it would be possible to ramp up the shipment capacity progressively, in step with increasing Fairbanks gas demand, Wade said.
Several possibilities A rail spur line under construction from the town of Houston to Port Mackenzie at the mouth of the Knik Arm and passing close to an existing LNG plant already used for Fairbanks gas supplies may provide a means of shipping LNG without the need for trucks. However, completion of that spur line requires an additional $120 million of state funding, a funding challenge, given Alaska’s current fiscal situation. But LNG could be easily trucked to Houston or Pittman on the main rail line - both of those locations have sufficient track space to set up an LNG staging area, Wade said. LNG trains carrying a minimum of 60 ISO containers would travel north to Fairbanks.
Were an LNG plant to be built in Anchorage, flat cars with ISO containers could be appended to existing freight trains that ply the route between Anchorage and Fairbanks, with this arrangement being less expensive than the use of dedicated LNG trains, Wade said. Alternatively, LNG produced at Nikiski on the Kenai Peninsula coast could be trucked to a railroad staging area at Crown Point on the peninsula for shipment by rail to Anchorage where, again, the flat cars with ISO containers could be added to existing Fairbanks-bound freight trains.
Fairbanks option At the north end of the railroad, the ISO containers with their cargos of LNG could be offloaded in Fairbanks or in the adjacent town of North Pole. In Fairbanks the Alaska Railroad has rail sidings adjacent the site where gas utility Fairbanks Natural Gas has proposed building an LNG storage tank. And delivery to North Pole would be convenient for gas supplies for Golden Valley Electric Association’s North Pole power generation plant and for the Flint Hills oil refinery, Wade said.
Wade said that shipping LNG by rail would be more cost effective and safer than trucking the material. The Alaska Railroad would need a permit from the Federal Railroad Administration before it could start LNG shipments - the Railroad has already submitted a request for a permit and does not anticipate any difficulty in having a permit approved, Wade said.
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