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Two finalists for Fairbanks gas; AIDEA team narrows the search
The Interior Energy Project has now selected two candidate companies for the delivery of natural gas at an affordable price to the city of Fairbanks, the board of the Alaska Industrial Development and Export Authority heard during its Dec. 3 meeting. Those companies are Spectrum LNG LLC and Salix Inc., Robert Shefchik, Interior Energy Project team leader, told the board.
Spectrum proposes building a liquefied natural gas plant on the North Slope, with the LNG to be trucked to Fairbanks via the Dalton Highway. Salix wants to build an LNG plant in the Cook Inlet region: LNG could be shipped to Fairbanks by truck, with the carriage of LNG containers by railroad also being a possibility.
The Interior Energy Project team had planned to announce the selection of a single preferred option at the Dec. 3 AIDEA board meeting but after going through the selection process had been unable to choose between the Spectrum and Salix offers, Shefchik told the board. A planned AIDEA board decision on the company selection, originally scheduled for Dec. 17, will now be deferred into early February.
Proposals invited The Interior Energy Project, with an objective of establishing an affordable source of energy for Fairbanks residents and businesses, had invited proposals for a means of delivering energy, probably in the form of natural gas, to the city. Having received 16 proposals from 13 vendors, the project team whittled down the proposal list to five vendors, each of which was invited to present a best and final offer for one energy delivery proposal. Four of the five finalists presented their concepts at a public meeting in Fairbanks on Nov. 4. All the finalists propose the shipment of LNG to Fairbanks as the means of providing a gas supply.
On Nov. 12 the project evaluation committee met to determine which of the finalists to propose to the board, as the selected provider of a gas delivery service. In the event, with Spectrum and Salix both coming IN ahead of the other contenders and both having equally appealing concepts, the committee decided that it needed more information, to enable a more comprehensive understanding of the commercial terms involved in each offer, hence the delay in the resolution of a final decision.
The intent is to pull together all of the required information by Jan. 10, so that the project’s evaluation committee can meet in mid-January for the selection of a single proposal to recommend to the board, Shefchik said. Especially given that much of the work involved in further evaluation of the two remaining finalists would have been required anyway, even with a single selected option, there was no compelling business reason for sticking to the original project schedule, he said.
LNG production only Spectrum, a major U.S. LNG producer, has said that its proposal is only targeting the development of an LNG production facility on the North Slope, but that the company would be willing to coordinate the transportation of the LNG to Fairbanks by truck. The company has said that it has evaluated both Cook Inlet and North Slope LNG options and has found that the North Slope option would result in cheaper gas for Fairbanks. A previous phase of the Interior Energy Project, involving the evaluation by engineering firm MWH of North Slope LNG production, ran aground in late 2014 because the projected costs of LNG delivered to Fairbanks would have been too high for commercial viability. Apparently, Spectrum’s proposal has lower estimated costs than that earlier North Slope LNG concept.
Salix, a subsidiary of electric and gas utility Avista Corp., proposes charging a volumetric fee for producing LNG in a Cook Inlet LNG facility that the company would build. Presumably the viability of this option would depend on the availability of a Cook Inlet gas supply at an acceptable price, and the establishment of an appropriate trucking or rail transportation operation to ship the LNG to Fairbanks. The Interior Energy Project team has also been assessing responses to a request for interest in gas supplies from Cook Inlet gas producers, to determine whether there would be a viable supply, if necessary.
Meanwhile, on the assumption that, regardless of which supply option is ultimately picked, there will need to be a trucking option to ship LNG to Fairbanks, a prototype LNG trailer is arriving in Alaska for road testing. Shefchik said that the trailer will be available for the board to view on Dec. 11, prior to the start of road tests.
And, on the assumption that an expanded natural gas supply will become available for Fairbanks, the two Fairbanks gas utilities, Fairbanks Natural Gas and the Interior Gas Utility, moved ahead over the summer with expanding the natural gas distribution pipeline network in the city.
- ALAN BAILEY
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