Natural Gas

Update. GVEA had agreed to take natural gas for use in its North Pole Expansion Plant during the summer with a price to GVEA around $10/mcf. Summer is a slow season for natural gas as heating load is less, so that is helpful to the economics.

Converting the expansion plant to accept dual fuel (using a light version of naptha now) will probably cost several million dollars. GVEA however won’t be able to afford to take natural gas from IGU if the price is too high. It appears that the price may be too high from IGU’s projections.

GVEA wants to help the IGU create a viable project, but also aware that a major subsidy for the benefit of IGU impacts all of GVEA’s members. Stay tuned.

April 2015
Having a supply of natural gas delivered to Fairbanks has been a pipe dream for many years/decades. Only a limited handful of folks and large businesses in Fairbanks now have a supply from Fairbanks Natural Gas. FNG says they are limited to .95 bcf/year by not finding any more willing sellers.

There are lots of moving parts and so many various ways to get a supply of cleaner burning energy to Fairbanks that I believe we are cursed with too many choices.

The Interior Gas Utility (IGU) is trying to develop a natural gas system, but it has been hard.
In partnership with the Alaska Industrial Development and Export Authority (AIDEA) and locally by the Interior Gas Utility.

Here is a presentation made to the AIDEA board outlining the direction being taken following approval of HB 105 in late April by the Legislature.

A lay description, as much as a lay description can be offered, was printed in the Petroleum News May 10, 2015, provided courtesy of AIDEA.

You can easily see the complexities of getting affordable natural gas to Fairbanks.

According to answers to my questions at a May 12, 2015 forum, GVEA can either go along with whatever pricing gets negotiated by AIDEA for a supply and delivery of gas to Fairbanks or make their own arrangements.

GVEA would likely need 2 bcf (billion cubic feet) per year. Interior Gas Utility might eventually ramp up to 1.5 bcf in the next few years. Fairbanks Natural Gas now uses close to 1 bcf and could add more if they had more supply, something that is a component of what AIDEA is working on. Figure a total demand in the near term of 5 bcf/year.

Storage is something that FNG, IGU and GVEA would work together on. GVEA’s cost of converting their newer 60 mw LM 6000 turbine in North Pole is about $5 million, which is very doable from a cost-benefit analysis.

Getting residents to convert to natural gas is a future challenge. The model to make it affordable is based upon 75% conversion. For that to happen, there needs to be a grant/loan financing package for residents to help defray the cost. Whether than can get through the Legislature is a serious concern on my part – a future elephant in the room.