Providing coverage of Alaska and northern Canada's oil and gas industry
February 2018

Vol. 23, No.7 Week of February 18, 2018

AIDEA bond extension moves in Senate

Kristen Nelson

Petroleum News

Senate Bill 125, extending the time the Alaska Industrial Development and Export Authority has to issue bonds for the Interior Energy Project by 5 years, has been heard in two Senate committees. The bill, introduced in the committees by sponsor Senate President Pete Kelly, R-Fairbanks, would extend the time AIDEA has to issue bonds to June 30, 2023.

The House version, House Bill 261, had not been scheduled for a hearing when this issue of Petroleum News went to press.

The project liquefies Cook Inlet natural gas and ships it to Fairbanks as LNG. It is then distributed as natural gas.

Why not a pipe?

In testimony to the Senate Community and Regional Affairs Committee, and later to Senate Finance, Gene Therriault, the Interior Energy Project team leader for AIDEA, said in response to a question that while the project is now focused on meeting the Interiorís energy needs by providing liquefied natural gas, the pipe option has been evaluated. The difficulty, he said, is the seasonal swing in Fairbanks, with the requirement to triple delivery into the community in the depth of winter. There were proposals for plastic pipe to Fairbanks, he said, but a single plastic pipe couldnít meet the seasonal needs: Two plastic pipes would have been required. The requirement for two pipes ate up funding, Therriault said, and there wouldnít have been enough money for the distribution system within the Interior communities.

The expectation is that ultimately there will be a large pipe bringing natural gas down from the North Slope, and Interiorís needs will be met from that pipe, Therriault said. But, he said, if the pipe appeared right now, Fairbanks and North Pole donít have the distribution system in place to move natural gas to end users.

You need the distribution system first, Therriault said, and that is being built now.

But the limited distribution system isnít the only factor holding up system growth.

Therriault said LNG storage in Fairbanks is the limiting factor for expanding the system, and work is now underway to increase that storage. Unless the project can pledge to be able to serve a firm delivery contract customer in the dead of winter, it cannot sign up additional customers, he said, and storage is required to meet that pledge.

Additional storage will be completed by mid-summer 2019, Therriault said, allowing more production from the Cook Inlet LNG plant in the summer to fill expanded storage in Fairbanks for winter delivery.


Financing for the Interior Energy Project, established in Senate Bill 23, included a $57.5 million capital grant, a $125 million SETS loan (Sustainable Energy Transmission and Supply Development Fund) and the $150 million in AIDEA bonding authority, Kelly told the committees.

He said the AIDEA team overseeing the Interior Energy Project has diligently deployed the original financing packages to advance development of the consolidated investment-grade local gas utility, but unfortunately the AIDEA bonding authority is set to expire June 30 this year just as they are finally able to deploy it.

The bonding authority is needed for increasing the production capacity of the LNG plant at Point MacKenzie and further expansion of the gas distribution lines in Fairbanks, Kelly said.

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