By Matt Buxton email@example.com
FAIRBANKS — With utilities wary of costs, the state could offer three more months to get the Interior Energy Project right.
The Alaska Industrial Development and Export Authority could offer project development firm MWH an additional three months to continue work on a North Slope gas processing facility and ink contracts with Interior utilities.
The offer would extend the concession agreement that is set to expire today to March 30, 2015. The agreement covered the work MWH was doing to advance the design, construction and operation of a North Slope gas processing plant that would serve the Interior.
AIDEA was supposed to have information like the cost of the plant as well as signed contracts with the utilities before the end of the year in order to decide whether to make the final call on the plant.
Without an extension, the future of the project is unclear, but it would likely require a change in direction that could result in additional delays to final delivery of gas to the Interior.
AIDEA Executive Director Ted Leonard, in a letter, urged MWH to meet the Dec. 30 deadline, but says an extension is an option.
“AIDEA will be evaluating how to best proceed, which, among other options, could include the Board considering a one-time extension,” he wrote.
In a numbered list, Leonard explained the framework of the extension.
MWH and its subsidiary Northern Lights Energy must have the final project cost for the North Slope plant by Jan. 31, 2015. Agreements with the utilities must be signed by Feb. 28, 2015.
MWH and Northern Lights Energy would be limited in the cost they can recover from AIDEA and the state for any work done after today.
In an interview earlier this month, AIDEA board member Gary Wilken, a former Fairbanks lawmaker, said he didn’t want the project to be scrapped and said he hoped additional time could settle concerns about the project.
Chris Brown, MWH Vice President and Alaska Regional Manager, said his company has been in discussion with AIDEA and “anticipate reaching an appropriate resolution.”
“We are consulting with our development partners with the expressed intent of finding a path that makes business sense and can be supported by Interior communities, the Fairbanks area utilities, and AIDEA,” he said.
He also stood behind the project, adding that MWH and its partners “continue to believe that the North Slope LNG is the fastest, least expensive and most efficient way to bring energy cost relief to the Interior while improving air quality in Fairbanks.”
The head of the municipal Interior Gas Utility’s board, one of the likely buyers of gas, opposed the extension, saying he didn’t have confidence MWH could salvage the project and felt it was better to begin exploring alternatives immediately.
But the other two potential buyers, Fairbanks Natural Gas and Golden Valley Electric Association, supported an extension.
GVEA CEO Cory Borgeson said the project might not be the best, but it’s better than nothing.
“We at Golden Valley have looked at this a long time and we believe we’re very close to a project that will bring gas into the community at a little bit higher than we hoped, but it’s better than we’ll get anywhere else,” he said.
Other alternatives have included bringing up gas from Cook Inlet, something FNG already does, but some of those prices have started at about $15 per thousand cubic feet of natural gas, which doesn’t include distribution.
The community goal when the project was first funded by the state was $15 for consumers, and Borough Mayor Luke Hopkins said anything much higher makes the project difficult to support. The estimated prices have come in closer to about $20 per thousand cubic feet.
“I understand they’re negotiating but it’s not down at the level that is acceptable to the major number of the community that are needed for clean air and penetration into the market so we can maintain that pricing,” he said. “It needs to be a better price than what they’re showing.”
Contact staff writer Matt Buxton at 459-7544. Follow him on Twitter: @FDNMpolitics.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]