FAIRBANKS — After much educated guessing about just how much it will cost to truck natural gas to the Fairbanks area, the price came in at about what everyone expected.
“The number is less than $13 (per thousand cubic feet or mcf),” MWH Managing Director Rick Adcock told a packed Interior Energy Project meeting on Wednesday night. “Now let me explain that.”
The $13 figure includes the cost of gas, the cost to liquefy the gas at the North Slope facility and the cost to truck the gas to Fairbanks, explained Adcock. It doesn’t include the cost to store the gas and distribute it to homes and businesses.
That’s with the estimated cost of the North Slope gas plant at about $233 million, a price that many representatives said was on the high end of the spectrum and expected to be lower.
Last week, the municipal Interior Gas Utility Board President Bob Shefchik told the Borough Assembly that the estimated cost to store and distribute the gas was about $6.50 per mcf.
That puts the price of natural gas at the meter at about $19.50 per mcf, $4.50 more than the original community goal when the project was pitched to the 2013 Alaska Legislature.
The heating oil equivalent to an MMBtu of natural gas is about $30 at $4 per gallon heating oil.
Alaska Industrial Development and Export Authority project manager Nick Szymoniak was careful to say that while the estimates may seem higher at the moment, they’re at the higher end of the range and that the expectation is that through refinements to the
project and to the financing structure for each part of the project will bring the cost down.
After the meeting Shefchik expressed concern with the $19.50 per mcf figure, which doesn’t include the cost to convert a home to natural gas, and that it could discourage people to convert to natural gas, but he was optimistic that there are still tools out there, particularly through better financing deals, to bring the project’s cost down.
AIDEA Executive Ted Leonard was a bit more cagey when asked what the Alaska Legislature would have to do to meet the $15 per mcf goal set by the community.
He said the agency needs to continue through its due diligence with the existing money before making that call.
FEDCO head Jim Dodson said that he was pleased to see the state engaging the community to discuss the increasing price and encouraged the members of the public to stay involved with the project.
“This is the Interior’s energy project, it is a project belonging to the people of Fairbanks. The way you’re going to keep the cost down is to stay engaged. If you’re not engaged the cost is going to come out at where the cost is going to come out,” he said. “Every candidate who ran for election said their priority was lower cost energy in the Interior. Let’s keep their feet to the fire and continue to push this cost down.”
The Interior Gas Utility plans to hold a conversion workshop for Interior residents tonight at the Hotel North Pole from 5-7 p.m.
The Interior Energy Project was created in 2013 by the Alaska Legislature and makes about $330 million of low-cost loans, bonds, tax credits and grants available for gas processing, trucking, storage and distribution. The first gas is expected to arrive in Fairbanks in late 2016.
Contact staff writer Matt Buxton at 459-7544. Follow him on Twitter: @FDNMpolitics.