By Matt Buxton | Fairbanks Daily News-Miner
FAIRBANKS—First it was due late in 2015, then late 2015 or early 2016 and now it’s late 2016. The delivery date for first gas off the North Slope has slipped a year between Gov. Sean Parnell’s 2012 announcement of a plan to truck gas to Fairbanks and an update presentation in Fairbanks last week.
That target is now in summer or late 2016, according to a presentation assembled by third-party project manager MWH Global Inc., which is handling the construction of a North Slope natural gas plant. The Alaska Industrial Development and Export Authority, one of the state agencies charged with handling the project, explained that the change is largely due to the readiness of local utilities to beef up distribution — you need customers to buy your gas.
“MWH has put forth what they believe is the best-case scenario based on the utilities’ readiness, which is key,” AIDEA spokesman Karsten Rodvik wrote in an email. “This puts the target for first gas sometime into the summer of 2016. Given the complexity of this project together with the many moving parts, we remain on track with an aggressive schedule coupled with a tremendous amount of activity to bring the project on line.”
Rodvik’s comments underline the difficulty of coordinating multiple state agencies, utilities and private contractors in the plan to liquefy, truck, store, re-gasify and distribute natural gas to Fairbanks-area customers.
There’s still a plant to build — the size of which won’t be decided until October — and trucking contracts to sign, storage units to build, service lines to put in the ground and homes and businesses to convert.
It’s not altogether surprising to Borough Assemblywoman Diane Hutchison, one of the supporters of the formation of a municipal utility to serve the medium-density areas of the Fairbanks North Star Borough, that the schedule has slipped.
“At this point I wouldn’t be too concerned about it,” she said, “I never expect anything to happen as first planned. Everything has to be in place, including financing.”
But it’s disappointing to borough Mayor Luke Hopkins, who said he believes that early decisions, or lack of decisions, helped “set the stage” for the delay.
“Sure there’s reasons why it’s slipped, but that’s unfortunate for our community,” he said.
What is higher in the minds of Hopkins and Hutchison, though, is the price customers will pay for natural gas whenever it does make it to Fairbanks.
When the plan was first announced, a target of between $12 and $15 per thousand cubic feet of gas delivered to customers was mentioned. Now, in most presentations and talks the number is solidly $15. That is acceptable to most; it’s equivalent to about $2 per gallon for heating oil.
“I have more concerns about the price than the timing. I think that is the biggest concern of mine is how well we can keep the price to $15,” Hutchison said. “You see $17 and $18 and once it hits around $20, then you’re not going to get the conversion.”
It’s also an issue for the Interior Gas Utility, the entity Hutchison and Hopkins helped form to deliver gas.
“The IGU is also very concerned about the price slip and have seen the initial wholesale price of $10 edge upward,” said IGU spokeswoman Mindy O’Neall. “We are still working to deliver the price at $15 per MCF or as close to that as possible, and the public should be cognizant of this price point and certainly keep an eye out for the latest cost estimates from the North Slope.”
Cost estimates are due in late July and should be nailed down with more certainty in October, when AIDEA is asking to have firm commitments from Fairbanks-area buyers on gas.
Hopkins said he hopes AIDEA officials are listening to the community and considering all available tools to keep the price of the natural gas low. He noted that the Legislature approved hundreds of millions in loans for the project.
“Can any of that be used to pay down the cost? I struggle with why do customers have to pay a market rate to the state of Alaska when they could make it a better deal for our residents,” he said. “Change the cost of financing and help our residents out.”
Contact staff writer Matt Buxton at 459-7544. Follow him on Twitter: @FDNMpolitics.