FAIRBANKS — The closer the community, the state and the Interior’s utilities can work together on a project to truck natural gas to the Interior, the lower the price will be to consumers.
That was the overall message from an update on the Interior Energy Project delivered by the many state agencies, contractors and utilities held at the Westmark Hotel on Monday night.

Mark Davis, the deputy project manager at the Alaska Industrial Development and Export Authority, explained that better cooperation will ensure that the Fairbanks-area utilities interested in buying natural gas — Fairbanks Natural Gas, Interior Gas Utility and Golden Valley Electric Association — can commit to buying more gas.

“Every number shows more demand lowers the price to utilities substantially,” Davis said. “The key to bring the price down to the consumer is to have sales.”

Davis explained that AIDEA is in the process of developing a model that can determine the price to consumers based on each expense along the way — from the construction of the plant, its operation, trucking, storage and distribution. He said some things, such as the plant’s operation, have a bigger impact on price than others and that in the coming months the agency will work with its contractors to target the state’s funds most effectively.

Currently, Davis said the model is showing the delivered price of gas from the North Slope to Fairbanks is between $11 and $13.50 per thousand cubic feet of gas. That doesn’t include distribution, which ranges from about $3 to $8 per thousand cubic feet.

The community’s goal of delivered gas is $15 per thousand cubic feet, said Jim Dodson, the president of the Fairbanks Economic Development Corporation.

Davis said that work is already underway on the North Slope for the processing facility and that he expects the gravel pad to be finished this year.

But everything from the size of the plant to number of employees needed to operate it is still being decided and will depend on a number of factors in the Fairbanks-area, such as the number of homes and businesses ready to convert to gas.

The financial agreements that outline everything about the plant, setting it on the path to construction, are expected to be inked sometime in November.

To control some of those costs, Davis suggested that the state and utilities band together to form a trucking and storage consortiums in order to pool resources and reduce costs.

On the consumer side, many people in the audience asked about the state’s plans to help people shoulder the cost of converting to natural gas, something that can range from a few thousand dollars to well more than $10,000.

Davis said an in-progress study shows that a subsidy isn’t as important to encouraging people to convert as much as the ability to spread the cost out over time. One of the most popular ways of doing that would be to attach the conversion payments to the utility bill, a simple solution especially if the homeowner sells the house.

Alaska Energy Authority Deputy Director Gene Therriault said that as the project moves forward increased attention will be paid to just where the state’s funds will be used on the distribution side to maximize the cost savings to the consumer.

Another open house will be held next Monday in North Pole at the Hotel North Pole from 5 p.m. to 7 p.m., with a presentation at 5:30 p.m.

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