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BP-GVEA contract supplies 20 years of gas
Kristen Nelson Petroleum News
Alaska North Slope gas could be fueling some of Fairbanks’ electric power generation by 2015 if a proposal by Golden Valley Electric Association moves forward.
The project now has a crucial element — a natural gas supply contract with BP Exploration (Alaska) Inc.
GVEA, the Fairbanks area electric utility, said it has contracted with BP for a 20-year natural gas supply. The utility said the contract allows it to purchase up to 23 billion cubic feet a year.
The project, to use natural gas to produce liquefied natural gas on the North Slope and truck the LNG to Fairbanks, was announced by GVEA and Flint Hills Resources Alaska in 2011. The LNG would provide gas to power GVEA’s North Pole Power Plant, while Flint Hills would use the gas as a supply fuel for crude oil refining operations at its North Pole refinery.
“This positions GVEA as the aggregator, which is kind of like a wholesaler,” the utility said Sept. 18 in announcing the contract, with all fuel purchases flowing through GVEA.
Cory Borgeson, GVEA interim president and CEO, told the Alaska Oil and Gas Congress in Anchorage Sept. 19 the project includes purchasing natural gas, liquefying it, transporting it and then regasifying it at a North Pole facility.
The North Slope LNG facility would be built on a site on Spine Road in the Prudhoe Bay unit; 17 acres would need to be developed with gravel for the project, he said.
GVEA has already acquired a 20-acre site at North Pole for the project, which will include a 1 million gallon LNG storage tank on the North Slope, a one-half mile pipeline to the site and a 2.4 million gallon storage tank in North Pole, which Borgeson said would provide about five days storage.
The trucking segment Borgeson said additional trains could be added to the North Slope facility in the future if more LNG is needed.
Once the facility is in operation, currently projected for 2015, 23 trucks a day will make the 513-mile trip, and there will be 50 jobs in the Interior, Borgeson said.
GVEA is looking at 13,500-gallon LNG tankers, and plans for them to be LNG-fueled, he said.
Borgeson said GVEA and Flint Hills each have so far invested some $1 million in the project. He said engineering for the project is at the 30 percent plus-or-minus confidence level for cost.
In its Sept. 18 statement GVEA said it can convert the North Pole Expansion Power Plant to burn natural gas, displacing expensive oil-fired generation.
The cost of natural gas from the project will be about $14 per thousand cubic feet delivered, Borgeson said, with about one-third of that cost from transportation; he estimated that would save GVEA some $15 million a year.
The North Slope facility will also extract some 10,000 gallons of propane a day, he said.
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