Matt Buxton, Fairbanks News Miner
FAIRBANKS — As the state still works out just where it’ll get gas for the Interior, the local utilities and state officials are working through a laundry list of other issues to prepare the Interior for natural gas.
At the top of the list is figuring out what a unified, single gas utility will look like for the Interior after the state bought Fairbanks Natural Gas with plans to merge it with the municipal Interior Gas Utility.
That $52.5 million buy was completed in October, and in addition to Fairbanks Natural Gas, included a liquefaction facility in Port MacKenzie and the trucking company Fairbanks Natural Gas has used.
At the Dec. 3 meeting of the Alaska Industrial Development and Export Authority’s board, Interior Energy Project lead Gene Therriault told the members the combination of the two utilities is currently being worked out, but it’s planned to be complete by mid-2016.
He also said the administration plans on introducing legislation aimed at easing the financial burden to convert homes to natural gas appliances.
Work on combining the utilities is already underway and members from the two utilities, AIDEA and a contractor met in Anchorage on Friday to discuss an area-wide plan.
Steve Haagenson, a board member and general manager of the Interior Gas Utility, attended the meeting. He said it’s too early to announce just what the plan will be, but said it was productive.
“Both utilities have good planning with them and this meeting really brought together the different components of the planning for the whole system as a unit,” he said. “We ranged around talking about storage and build out and all sorts of different topics.”
The Interior Gas Utility had planned on a phased approach starting in North Pole area and moving Northwest around the borough, outside the city, with the final phase in the Chena Ridge area. It completed its first phase this summer and installed about 70 miles of pipes in the North Pole area.
Fairbanks Natural Gas had been more focused on the city of Fairbanks and its recent efforts have been focused on filling out lines throughout the city in preparation of additional gas.
“We each have different assets and different ways of looking at things,” Haagenson said. “We’re working together. … There’s no sacred cows in the room.”
Haagenson said just what the refocused buildout plan looks like will depend in large part on the source of additional gas the state finally settles on.
“Before you start spending money you have to figure out how much money you have available,” he said. “The selection of the vendor in the Interior Energy Project may influence that.”
The state is currently in talks with two different private companies, Salix Inc., and Spectrum LNG, to provide additional gas.
A final decision was slated for December 17, but Bob Shefchik, who’s overseeing that decision for the state, said the strength of the two applications warranted additional time.
“There was no good business reason not to extend and make sure we have the best information,” he told the board at its meeting.
That decision is now slated for mid-January.
At a November town hall, Spectrum LNG’s President Ray Latchem said the company could deliver gas to Fairbanks at $10 per thousand cubic feet of gas. That wouldn’t include the cost to deliver to local stores or distribute the gas, but goes a long way to meeting the project’s target of $15 per thousand cubic feet, which is roughly equivalent to $2 per gallon heating oil.
That project requires $30 million of capital funds from the state and $50 million in low-cost loans.
The Salix proposal requires less money from the state than the Spectrum proposal at $30 million in capital funds and $30 million in loans, but it only offers to provide a liquefaction facility in the Cook Inlet region. The source of gas, delivery to Fairbanks and distribution would all be additional costs.
The last time it offered a public estimate of costs was in a 5-page proposal released in September. There it estimated the cost to liquefy natural gas would be around $2.87 per thousand cubic feet.
Spectrum’s November presentation quoted a liquefaction fee of $2.73 per thousand cubic feet of natural gas.
However, Shefchik and other officials have said that with the ongoing negotiations both companies are working to revise their numbers.
Contact staff writer Matt Buxton at 459-7544. Follow him on Twitter: @FDNMpolitics.