Fairbanks Daily News-Miner Community Perspective
FAIRBANKS — For many months now, our community has waited to receive more definitive information regarding the status of the North Slope liquefied natural gas trucking and local natural gas distribution project from the state’s lead entity for project development and finance: the Alaska Industrial Development and Export Authority (AIDEA). We’ve waited to hear how much the North Slope LNG facility is going to cost, who the private-sector funding partner in the facility is going be, how much money they will be bring to the table and how much return on investment they’ll be expecting.
At 5:30 p.m. Wednesday evening in the Westmark Gold Room, the major participants in the Interior Energy Project (IEP) will again convene to update the public on their progress toward turning the dream of lower-cost energy in the Interior into the reality of affordable natural gas in the homes and businesses of Fairbanks and North Pole. You should come. The headliner will be AIDEA representatives, who — after almost two years of work and many months of behind-the-scenes negotiation — is finally ready to announce to the public the deal they’ve struck regarding the North Slope LNG facility and the impact it will have on the cost of gas to local consumers.
In 2013, the Legislature, intent on providing very-near-term energy relief to the Interior, passed Senate Bill 23. In addition to making AIDEA the effective manager of the project, SB 23 made more than $350 million ($57.5 million in grants, $125 million in loan fund capitalization, $150 million in bonding authority and tens of millions of dollars in LNG storage tax credits) available to support the IEP.
However, recognizing even $350 million would only be enough to start the project, and that standard commercial practices and terms might not be able render an affordable enough gas price, the Legislature empowered AIDEA to waive any regulations necessary to make the project a go. Further, after positively directing them to partner with the private sector, the administration granted AIDEA the ability to assume whatever heightened degree of financial risk might be required to secure private-sector partners and funds.
In short, AIDEA was given extraordinary responsibility, power and tools to help the IEP meet the community’s energy goal of $15/mcf natural gas (roughly equivalent to $2 per gallon fuel oil) delivered to homes and businesses.
For much of 2014, AIDEA has been using those powers and tools to work the deal, but has been mostly mum as it has progressed its deal-making. Recently, though, on Nov. 4, AIDEA received what it had been awaiting: cost estimates for the North Slope LNG facility. This was in addition to the level and desired terms for private investment in the facility.
So now, having made arrangements to communicate that information to members of their board of directors, AIDEA staff can publicly disclose: cost estimates for the North Slope facility; the amount and nature of state match (grants and energy loans) required to construct the facility; and the estimated cost of LNG coming out of the facility. In addition, based on calculations using their still-undisclosed financial model (which touches on all components of the North-Slope-to-front-wall natural gas transportation and delivery chain, and can perform financial sensitivity analyses on any single system component, suite of components or the system as a whole), AIDEA will provide attendees with the estimated cost of natural gas delivered to city gate, to industrial and utility purchasers, and, finally, to residential and commercial customers under their agreed project scope and financial regime.
Can and will.
So come out to the Westmark at 5:30 p.m. Wednesday. The sate’s manager for the Interior Energy Project — our community energy project — has big news they want to share. I encourage our community to come hear it.
Jomo Stewart is an energy projects manager for the Fairbanks Economic Development Corporation.