Fairbanks utility indicators deal to purchase liquefied pure fuel trucked from the North Slope

Amid issues over future provides of pure fuel from Cook dinner Inlet, a small Fairbanks utility has signed unprecedented agreements with associates of Hilcorp to purchase fuel trucked from Alaska’s North Slope oil fields.

An official with the Inside Fuel Utility stated that the unsure outlook for fuel from Cook dinner Inlet prompted it to discover a new answer.

On Wednesday, the utility inked agreements with Hilcorp North Slope, the operator of the large Prudhoe Bay oil area, and Harvest Alaska LNG, a subsidiary of petroleum shipper Harvest Midstream, a Hilcorp affiliate.

The agreements name for the development of a small gas-liquefaction plant close to Deadhorse, the commercial city that’s the jumping-off level for North Slope oil fields. On the plant, pure fuel will likely be chilled right into a liquid, known as liquefied pure fuel or LNG.

Truck shipments of LNG to Fairbanks, a distance of 500 miles largely alongside the gravel Dalton Freeway, may start as early as late 2024, stated Elena Sudduth, head of public relations for the Inside Fuel Utility.

The utility is small however rising, she stated. It distributes pure fuel for residence and residential heating in Fairbanks and North Pole.

Sudduth stated the deal is historic as a result of it will likely be the primary time that North Slope pure fuel has been shipped out of the area on the market. A small quantity of North Slope fuel is already being utilized by North Slope communities, she stated.

She stated the prices to prospects of the North Slope liquefied fuel will likely be akin to Cook dinner Inlet fuel.

Inside Fuel Utility’s present contract with Hilcorp for Cook dinner Inlet fuel was not set to finish for almost one other decade, Sudduth stated. The utility at present will get its fuel from a small liquefaction plant at Level MacKenzie alongside Cook dinner Inlet, often known as the Titan plant. However doubts about future Cook dinner Inlet fuel provide imply a once-planned growth of that plant to fulfill the utility’s future wants, at $60 million, was not a sound funding, Sudduth stated.

Transport the North Slope’s huge portions of pure fuel to outdoors markets has lengthy been a dream of Alaska leaders. North Slope fuel, a byproduct of the oil manufacturing, is at present reinjected underground to maintain stress excessive in reservoirs, serving to squeeze up extra of the dear oil.

The proposed plant will likely be able to producing 150,000 gallons of LNG every day, sufficient to fulfill the small utility’s wants properly into the long run, Sudduth stated.

However that’s only a tiny fraction of the fuel that will circulation within the state’s $39 billion Alaska LNG undertaking, a long-pursued however nonetheless far-off proposal that requires development of an 800-mile pipeline to ship fuel to Alaska communities and finally to Asian markets, if the undertaking can entice buyers.

It’s additionally only a small fraction of the fuel at present consumed by utilities from Fairbanks to Homer. These utilities have been assembly to handle the issues about Cook dinner Inlet fuel provide within the coming years. They’re weighing future choices, together with bringing on extra renewable vitality and even importing LNG from Outdoors.

[Could oil-rich Alaska be forced to import natural gas? 2 utilities are looking into it.]

For many years, pure fuel from Cook dinner Inlet has been the dominant gasoline supply for energy and warmth within the so-called Alaska Railbelt. However Hilcorp final spring warned utilities that it didn’t at present have sufficient pure fuel reserves in Cook dinner Inlet to supply for brand new fuel contracts, although it stated it was persevering with to drill in hope of adjusting that.

Officers with two electrical utilities stated they could look to capitalize on pure fuel from the plant sometime, if it’s useful for the utilities and ratepayers.

John Burns, president of the Golden Valley Electrical Affiliation in Fairbanks, stated the utility is trying into particulars of the undertaking.

“We’re learning it to know impacts and alternatives,” he stated. “It sounds prefer it’s definitely a great transfer for (Inside Fuel Utility). What it means on a broader scale must be evaluated.”

Tony Izzo, chief government at Matanuska Electrical Affiliation, based mostly in Palmer, stated he may see how occasional shipments of liquefied pure fuel trucked from the North Slope may function a “bridge” because the utility reduces its reliance on Cook dinner Inlet pure fuel and transitions to different gasoline sources sooner or later.

“We’re evaluating that together with lot of different choices,” he stated.

Arthur Miller, chief government of Chugach Electrical Affiliation in Anchorage, congratulated IGU, Harvest and Hilcorp for the deal in an announcement.

“The power to entry North Slope fuel units the inspiration for expanded utilization of our intensive in-state sources,” Miller stated. “It is a optimistic growth as we glance to diversify our sources of pure fuel as a key element in assembly Alaska’s future vitality wants.”

The Inside Fuel Utility has signed a 20-year contract for the fuel, with potential extensions.

There’s room to broaden the plant underneath the agreements, Sudduth stated. It’s potential the at present deliberate output may triple sooner or later. The plant may doubtlessly assist handle different utilities’ wants in the future, she stated.

“There’s loads of room for future development,” Sudduth stated. “If we will carry a truck to Fairbanks, we will take it to Anchorage.”

Sudduth stated the utility is wanting to buy new tanker-trailers to haul the fuel, costing probably $7 million. It expects to contract with a trucking firm to ship the fuel, she stated.

Inside Fuel Utility has about 2,000 residential and enterprise prospects, however is extending fuel strains to about 600 new prospects every year, Sudduth stated. It’s serving to exchange particular person heating methods that may include wood-burning stoves which have sullied the Fairbanks air.

If regulatory approvals are granted, development of the North Slope facility is predicted to start in summer time 2023, Harvest stated in an announcement.

Harvest will construct the power. The corporate declined to reveal the fee.

“We’re happy to be investing in a undertaking that makes use of North Slope fuel to carry dependable vitality to the Inside,” stated Jason C. Rebrook, chief government of Harvest Midstream. “There’s nonetheless quite a lot of work to be performed to carry this undertaking to completion, however we’re excited concerning the partnership with IGU that may give Alaskans larger long-term vitality safety.”

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