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Coming soon to Fairbanks: LNG truckers

Pat Forgey

The Alaska Legislature on Friday passed a bill to bring natural gas to Fairbanks by truck, not the long-awaited, multibillion-dollar pipeline. Still, the plan to convert North Slope natural gas to liquified natural gas for shipment down the Dalton Highway to Fairbanks is an important step, said Sen. John Coghill, R-North Pole.

"The Interior is finally going to see some short term-relief through trucking natural gas," he said. "While this is not a final solution, it is an important first step as the Legislature continues to work towards long-term solutions," Coghill said.

"This is not the silver bullet everybody is hopeful for, but it is the light at the end of the tunnel," agreed Scott Kawasaki, D-Fairbanks.

House Bill 23 would enable the state-owned Alaska Industrial Development and Export Authority to issue bonds to finance construction of a plant to convert natural gas on the North Slope to LNG for transport. It would then be trucked down the Haul Road, and then regasified for distribution in Fairbanks. Total costs are estimated to up to $355 million.

"It will truly unlock an Alaskan stranded asset on the North Slope for the first time," said Sen. Pete Kelly, R-Fairbanks.

Additional AIDEA money could be used to finance the build-out of the natural gas distribution system in Fairbanks as well.

Legislators rushed to hold a press conference Friday where they praised the unanimous final passage of the bill, but also worked to rein in expectations.

The project won't be operating until mid-to-late 2014, and will only be available to those connected to the existing system or big users such as refiners, power plants or big box stores, Coghill said.

"Your commercial and industrial base is going to get a big lift," Coghill said.

Small businesses, homes, and even some rural areas can benefit in the future, legislators said.

"It's not going to bring natural gas prices down tomorrow, it's a process that will still take time but its the fastest one we have on the horizon," Kawasaki said.

The expansion of natural gas usage will enable further build-out of the distribution system so that when and if a pipeline arrives the city will be able to make use of it immediately. Depending on a number of yet-to-be determined factors, with the largest being future gas and oil prices, legislators said they expected energy cost savings of about 40 percent.

Electric power production, now done with expensive diesel, will now be able to be done with cleaner, cheaper natural gas, supporters said.

"That's where we are going to see some costs decrease immediately," Kawasaki said.

Exactly how the loans would be structured and who would get them has yet to be decided.

Golden Valley Electric Association and Fairbanks Natural Gas are possible players, and options for shipping propane beyond the in-ground distribution lines are all possibilities, legislators said.

"This is a loan package, and what it is ultimately going to look like we can't know right now, but we hope there will be a piece for rural Alaska as well," said Kelly.

The bill now goes to the governor for his signature, which is expected.

Contact Pat Forgey at pat(at)alaskadispatch.com