On July 9, the Alaska Industrial Development and Export Authority, or AIDEA, executed loan agreements for project loan financing of up to $70 million to support Alyeschem LLC's $140 million development of a first-of-its-kind methanol and ultra-low sulfur diesel production facility on Alaska's North Slope. This strategic investment will help monetize stranded natural gas, create jobs, reduce fuel imports, and strengthen the state's energy infrastructure, AIDEA said in a press release the same day.
The facility -- part of Alyeschem's Distributed Chemical Manufacturing, or DCheM, platform at Prudhoe Bay -- will convert North Slope natural gas and waste CO₂ into methanol and hydrogen. The hydrogen will be used to refine high-sulfur diesel into ultra-low sulfur diesel, or ULSD, reducing emissions and improving fuel quality for oilfield operations.
The plant will also serve as a launchpad for future clean fuel and chemical production, including possibly dimethyl ether, or DME, and enhanced oil recovery, or EOR, chemicals.
In a recent interview with Petroleum News, Alyeschem CEO JR Wilcox said DME can easily be made out of methanol and is a "potential alternative fuel that burns like propane but burns cleaner."
Alyeschem's project has received strong support from Gov. Mike Dunleavy, the North Slope Borough and other state leaders. With major permits secured and front-end engineering and design completed, Alyeschem is preparing for construction.
"That giant check wasn't cashable. Right now, we're trying to move from loan closing to beginning fabrication," Wilcox said.
Alyeschem's plant shares the 15-acre gravel pad with Hilcorp subsidiary Harvest, which is on the west side, while Alyeschem is on the east side. Hilcorp is the operator of Prudhoe Bay.
The two companies will also be sharing a gas pipeline.
Using the existing pad will minimize new environmental disturbance, AIDEA said in its July 9 press release. Its location is strategically positioned to serve oilfield operations and reduce long-haul transport needs.
Alyeschem's project is anticipated to generate more than $5 million annually in tax and royalty revenue for the state of Alaska and the North Slope Borough. AIDEA expects to receive a minimum of $2.39 million annually from loan repayment and royalties.
By producing methanol and diesel locally, the facility will reduce reliance on imported fuels, cut transportation costs, and enhance the resilience of the Trans-Alaska Pipeline System, or TAPS. (Methanol is a critical chemical used to prevent pipeline corrosion and freezing.)
"This facility is an Alaskan solution to long-standing logistical challenges, which will allow us to replace key fluids currently imported to the North Slope with locally made methanol and clean diesel," Wilcox said. "The North Slope is a world-class energy basin and can be for generations to come. Its future hinges on the ability to lower operating costs, increase the resource base, monetize gas, and adapt to changing markets. Value-added chemistry is an invaluable tool for addressing all of these challenges."
Long-term employment
This initial project is expected to create approximately 80 construction jobs and 15 permanent operational positions, with a strong emphasis on hiring Alaskans and supporting long-term employment in the Arctic. It is projected to reduce CO₂ emissions by 93% -- approximately 45,000 tons per year -- compared to current supply methods. Additionally, the facility will eliminate an estimated 4,000 truck trips annually, reducing road wear and emissions across the region.
50-50 split
"We have to supply $1 of equity for every dollar loaned to us -- a $140 million project will be a 50-50 split," Wilcox said.
Founded by Alaskans, Alyeschem, is committed to sustainable development and long-term partnerships with Alaska-based investors, local communities, government entities, and industry partners.
The company is backed by leading private equity sponsors, including McKinley Alaska Private Investment (www.mckinley-alaska.com) and BP Energy Partners (www.bpenergypartners.com).
BP stands for Boone Pickens, not the oil and gas giant that used to operate on the North Slope.
"Founded in 2012 by Alex Szewczyk and Michael Watzky, in collaboration with the late T. Boone Pickens, our story is rooted in deep sector experience, an unwavering commitment to our investors, and a shared vision for a more viable future," BP Energy said on its website.
AIDEA'S mission
Dana Pruhs, chairman of AIDEA's board of directors, emphasized the Alyeschem project's alignment with AIDEA's mission in saying, "This Alaskan project would meet AIDEA's mission by creating Alaskan jobs and providing an economic return to Alaskans for generations. AIDEA is committed to supporting projects that strengthen Alaska's economy and enhance our energy independence."
"This is exactly the kind of project AIDEA was created to support," said Randy Ruaro, AIDEA executive director. "It unlocks the economic value of stranded gas, creates jobs, and strengthens Alaska's energy infrastructure for decades to come."
Geoff Johns, AIDEA's chief financial officer, added, "This investment reflects AIDEA's commitment to financially sound, high-impact projects that deliver long-term value to the state. Alyeschem's facility not only generates strong returns for public funds but also catalyzes private capital and innovation in Alaska's energy sector."
