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AIDEA weighing LNG trucking interest Therriault says public corporation received 16 letters of interest for a state-backed project to bring gas to the Interior Eric Lidji For Petroleum News
While efforts to truck liquefied natural gas to the Interior have largely focused around four players to date, it appears many more are interested in bringing the project to life.
The Alaska Industrial Development and Export Authority received 16 responses to its request for letters of interest, the public corporation of the state recently announced.
The list includes Golden Valley Electric Association, Pentex Alaska Natural Gas Co., Spectrum LNG LLC and the Interior Alaska Natural Gas Utility — four entities that have publicly expressed an interest in recent months in facilitating an LNG trucking project, either in part or in whole. It also includes many familiar names: the Alaska Gasline Port Authority, Alaska Power and Telephone, Arctic Slope Regional Corp., ASRC Energy Services, Black & Veatch, CB&I Services Inc., CH2MHILL, Guggenheim Partners, HDR Inc., KeyBanc Capital Markets, Northrim Bank and PND Engineers Inc.
AIDEA expects to have a preliminary analysis of the responses in February, but Gene Therriault — deputy director for statewide energy policy development for the Alaska Energy Authority and a former state senator — recently told the Senate Resources Committee the responses include both turnkey projects and proposals to collaborate.
The three goals of the Parnell administration, Therriault said, are: to provide the lowest cost gas to as much of the Interior as possible, to get gas to the Interior first while making the facility available to all Alaskans and to use the private sector as much as possible.
Aiming for $15 per Mcf All the respondents, though, are seeking some part of the $355 million financial package that Gov. Sean Parnell proposed late last year to help bring natural gas to the Interior.
With those incentives, the state believes it can help develop a 9 billion cubic foot per year operation capable of delivering gas to consumers between $13.49 and $17.29 per thousand cubic foot, Therriault said. The state reached those figures using engineering information from Golden Valley Electric Association and Pentex Alaska Natural Gas Co., but Therriault told lawmakers that AIDEA and AEA have developed a model that can forecast the delivered price under various volumetric and financing configurations.
The proposed financial package includes a $50 million allocation, $150 million in direct AIDEA bonds and another $125 million in Sustainable Energy Transmission and Supply funds managed by AIDEA, and $30 million in preexisting tax credits for storage projects.
A benchmark price for the project, Therriault said, is $15 per mcf, or roughly half of what Interior consumers currently pay to heat their homes and businesses with fuel oil.
To help hit that target price, the state wants to divide the end users, Therriault said, by using the $50 million allocation to pay down only the utility customers’ share of the project and thereby lower the price of an estimated 4.5 bcf per year piped to homes and businesses or used to generate electricity. The energy intensive industrial customers that are crucial for anchoring the project would pay a price with a higher debt component than the general public, but would still benefit from the size of the project, Therriault said.
The short presentation before the Senate Resources Committee on Jan. 25 was a prelude to a more involved consideration of the project scheduled to take place before the Senate Special Committee on In-State Energy on Jan. 31, after Petroleum News went to print.
Petroleum News will have a report on that hearing in the Feb. 10 issue.
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