State Looking for new Natural Gas Source

FAIRBANKS — The state is on the hunt for new sources of natural gas after the contractor on the North Slope plant bowed out of the project.

The Alaska Industrial Development and Export Authority announced last week it had formally ended an agreement with private project development firm MWH, allowing the state agency to pursue new sources of natural gas.

“(The) action was the formal termination necessary for AIDEA to move forward with investigating alternatives for bringing natural gas to Interior Alaska,” AIDEA spokesman Karsten Rodvik said.

The move sets AIDEA on a new path in the wake of MWH ending work on the natural gas processing facility.

That plant was intended to be the primary source of natural gas for the Interior, under the umbrella of the Interior Energy Project.

But just where AIDEA can source its gas is unclear.

Rodvik said AIDEA will work with local utilities and mentioned both North Slope and Cook Inlet as alternatives.

“We also look forward to working with participants to evaluate gas supply options, and we will continue public outreach activities to share information including expected delivered costs, project schedule and the scope of work for North Slope and Cook Inlet natural gas alternatives,” he said.

The Interior Energy Project was a roughly $330 million effort by the Alaska Legislature to process, truck, deliver, store and distribute natural gas to residents in the North Pole and Fairbanks areas beginning some time in 2016.

The North Slope processing facility, the project’s big-ticket item, was expected to be finalized and sent into permitting and construction by the end of 2014.

But as the scope and cost of the project slipped, MWH failed to get the project into construction by the end of the year and withdrew its request for an extension.

Public support for the project, largely represented by Borough Mayor Luke Hopkins and municipal Interior Gas Utility head Bob Shefchik, eroded in recent months as the original goals for the cost of gas rose.

The intended goal was an equivalent to $2 per gallon of heating oil, but the final price estimate neared a $3 heating oil equivalent.

Rodvik said regardless of recent changes for the project, AIDEA will continue its work on bringing lower-cost and cleaner-

burning fuel to the Interior.

“Our commitment to pursuing a reliable source of gas for the Interior at reasonable cost means we are working to look at all options,” Rodvik said, “including those not available as long as the (agreement with MWH) was in place.”

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

@FDNMpolitics.