By Matt Buxton, mbuxton@newsminer.com

JUNEAU — State officials working on the Interior Energy Plan hope the new focus on the Cook Inlet won’t delay additional natural gas coming to the Fairbanks area.

In a House Energy Committee meeting Tuesday, Interior Energy Plan team leader Bob Shefchik said that “optimistically” the refocused plan will stay on deadline and deliver gas to Fairbanks in late 2016 but admitted a 2017 delivery date is now a possibility.

“Most optimistically would be in the 2016 year as the North Slope project was looking at,” he said. “You would be optimistically in that time range depending on availability of long-lead time equipment. Or into the 2017 year would be the likely time frame.”

Representatives from the Alaska Industrial Development and Export Authority as well as the Alaska Energy Authority spoke to the committee about the multitude of efforts going into finding a new source of gas for Fairbanks after the North Slope plan’s cost and projected price to customers rose.
The representatives explained efforts to merge distribution in the Interior through the state purchase of Fairbanks Natural Gas and to explore all new sources of gas.

But the concern of the lawmakers was summed up by Committee Chair Rep. Jim Colver, R-Palmer, when he asked, “What’s the reality?”

“We’re still doing due diligence,” he said. “When are you going to deliver to Fairbanks? And what gas are you going to deliver?”

That’s where Shefchik, who served as the volunteer head of the Interior Gas Utility up until last week, jumped in to offer the timeline.

As for the source of the gas, that’s where Alaska Energy Authority deputy director Gene Therriault offered some insight.

“There is a team that is working on exploring gas supply; price, duration of the contract, things of that nature. Trying to aggregate demand in the Cook Inlet area,” he said. “Members of that team are being sourced from (the Department of Natural Resources).”

Therriault added that Fairbanks Natural Gas’ existing relationship with Hilcorp, which includes an existing agreement to purchase Fairbanks Natural Gas’ Point MacKenzie liquefaction plant, could be expanded and that the state could partner in a plant expansion.

One of the more contentious issues that has caught the attention of some lawmakers is just how a new source of gas will get to Fairbanks. The Fairbanks Natural Gas supply chain relies on trucks, but both rail and a small-diameter pipeline have been discussed.

The subject was an issue at a meeting later in the day, where the Alaska Railroad’s director of freight sales and marketing, Tim Williams, discussed the potential of moving liquefied natural gas by rail. Williams said the public corporation has already been in talks with private companies about potentially moving gas and that talks have intensified since the state has refocused on Cook Inlet.

The railroad recently applied to the federal government to become the first company to move LNG by rail, something done in other countries but not in the United States.

However, the railroad ran into skepticism from Sen. Peter Micciche, R-Soldotna. Micciche has been a vocal supporter of exploring a gas line solution, explaining that the infrastructure would ultimately be cheaper because it wouldn’t require the energy-intensive liquefaction and gasification plants on either end of the supply chain.

At the Energy Committee meeting, Shefchik said the state will be working out every possibility for bringing gas to Fairbanks, specifically mentioning Micciche’s pipeline concept. Shefchik said using a pipeline would be ideal, but that there are concerns about whether building a pipeline is feasible considering the available money for the project and the desire to lower the Fairbanks area’s cost of energy sooner than later.

“There is no question that the preferred method in the country is a pipeline, but it’s more a question of economics and time than logistics.”

Contact staff writer Matt Buxton at 459-7544. Follow him on Twitter:@FDNMpolitics.