Fairbanks Daily News-Miner
News-Miner opinion: During a winter marked so far by relatively mild temperatures and moderate heating fuel prices, state officials and utilities aren’t taking a breather in pursuit of sustained low-cost natural gas for the Interior. The recently completed sale of Pentex to the state, pending best-and-final offers from potential gas suppliers to the Alaska Industrial Development and Export Authority and efforts to make changing from heating fuel to natural gas less onerous to homeowners, are all pieces moving into place for a solution to the gas puzzle. With luck, the outlook for the Interior Energy Project a month from now will be considerably clearer than it is today.
The state completed its purchase of Fairbanks Natural Gas parent company Pentex late last month, promising a substantial rate cut — estimated earlier this year at 13 percent — for current gas customers even in the absence of an end-to-end solution for the Interior Energy Project. State operating costs for the utility will be lower than those under FNG, according to officials explaining the planned rate cut.
Officials in Gov. Bill Walker’s administration have said state custody of Pentex should be temporary; that would be beneficial to the Interior’s long-term gas goals. A period of state ownership is necessary given the financing of the purchase and the fact that others involved in getting gas to the Fairbanks area, such as the Interior Gas Utility and Golden Valley Electric Association, have plenty on their plates, when supply is lined up and gas contracts are being drafted, it will be in the best interest of the project to have a few anchor tenants willing to line up for substantial supply rather than several smaller gas buyers with competing needs and interests. Additionally, having the state in the position of owning a gas company puts it in an odd position with regard to other oil and gas players, especially in Cook Inlet, where Pentex’s liquefaction and processing facility is located. The state would do well to pass on ownership as soon as it is feasible.
As residents heard Wednesday, several companies are on board to make pitches to the AIDEA board to be the energy project’s gas supplier. Their proposals cover the bases with regard to potential supply. Some, such as Spectrum LNG, favor the project’s original focus on North Slope gas, while others look to Cook Inlet, where there is considerably less natural gas but more developed infrastructure and easier transport. The Alaska Railroad Corp., a potential transportation partner if supply comes from Cook Inlet, recently became the first railroad in the nation certified to transport LNG.
The next month will be consequential. AIDEA and local utilities are considering the offers of potential energy project partners, and they’ll make their pick at their meeting Dec. 3. A day later, partners on the energy project’s big brother, the Alaska LNG natural gas pipeline, will vote on whether to continue with the next year of work and funding. And local and state leaders are contemplating mechanisms to make changing over to natural gas less of a major financial commitment for homeowners, a crucial aspect to ensuring as much demand for gas as possible at a time when heating fuel is competitive in price.
There are still many items up in the air, but those moving pieces are coming into place. With hard work by local utilities, the state and other concerned parties, the Interior Energy Project will have far fewer question marks hanging over it by 2015’s end than at the year’s beginning.