For second time, private partner has separated from state-led effort
The Alaska Industrial Development and Export Authority has quietly parted ways with its private industry partner on the Interior Energy Project for a second time.
IEP team lead Gene Therriault said in a written response to questions from the Journal that the decision to end its relationship with Salix Inc., which was working on a plan to expand the LNG plant at Point MacKenzie used by Fairbanks Natural Gas and is owned by AIDEA, was made after it was determined a new model to develop the LNG facility could lower the financial risk for potential Interior natural gas customers.
“The IEP team and Salix together developed the agreement for the sale of the pre-FEED (front-end engineering and design) project development work product that concluded Salix’s involvement in the project,” Therriault said. “The IEP team has enjoyed the professional manner in which Salix has participated in the project development.”
Salix is a subsidiary of the Washington-based utility company Avista Corp. Avista purchased Juneau’s electric utility Alaska Electric Light and Power Co. in 2014.
Company spokeswoman Jessie Wuerst said the parting was a joint decision.
Salix was never under contract with AIDEA to work on the IEP, but was selected as the authority’s preferred partner in March after an eight-month selection process that generated plans from 13 firms with plans to get affordable energy to the Interior.
According to Therriault, Salix was first approached about possibly selling its pre-FEED work sometime in August. The AIDEA board unanimously approved a resolution to buy Salix’s pre-FEED work on the LNG plant expansion for $250,000 at its Oct. 27 board meeting without discussion.
The prospect of buying out Salix also was not mentioned in the authority’s Oct. 11 quarterly update to the Legislature on the project.
Additionally, Therriault did not discuss ending work with Salix during his status report on the project at the Oct. 27 meeting just before the resolution was passed when he told the board: “We are still making progress. Is it slower than we had hoped? Absolutely, it is. Do we think we are still on track to achieve the goals of the IEP? We believe we are.”
When asked by the Journal if the board was involved in the decision and why the decision to end the relationship was not made public, Therriault said: “The AIDEA board made the decision to allow the option to move the IEP forward without Salix when it approved (the resolution) at its Oct. 27th board meeting.”
AIDEA cut ties with MWH, the large engineering firm that was working on a North Slope LNG plant for the IEP, in December 2014 after capital costs for the plant came in higher than anticipated to meet the IEP goal of $15 per thousand cubic feet, or mcf, of natural gas.
Look for updates to this story in an upcoming issue of the Journal.
Elwood Brehmer can be reached at email@example.com.