Parnell Discusses Natural Gas Projects in Fairbanks

Jun 18, 2014

Two natural gas projects were the subject of a gubernatorial address in Fairbanks.  KDLG’s Chase Cavanaugh has more.

Alaska Governor Sean Parnell visited the Fairbanks Chamber of Commerce to address various energy concerns. Specifically, he discussed the progress of two liquefied natural gas projects that would provide cheaper energy to the city of Fairbanks and help Alaska as a whole.

Parnell first described progress on the Interior Energy Project.  First proposed in 2012, IEP is a public-private partnership between the Alaska Industrial Development and Export Authority and gas utilities.  AIDEA provided funding to build a Liquefied Natural Gas plant at North Slope.  Once liquefied, the gas would be transported by truck to Fairbanks and North Pole, where it would be distributed by local companies. Parnell says the public-private partnership was an effective way to bring cheap gas to Fairbanks.

"The Interior Energy Project is meant to work in concert with the private sector.  We stepped in with a gas trucking solution when the private sector was not able to respond to inerior Alaskan's concerns.  The project was not intended to sweep aside private sector interests or money.  Frankly, it's been a catalyst to leverage private sector investment when none was available before."

Parnell praised AIDEA, as it has already purchased the location and is working through the bureaucratic process toward plant construction.  At the same time, he said the project’s success depends on private sector cooperation.

"AIEDA has worked effectively.  It has produced a viable project to deliver affordable long-term energy to this whole interior region.  The Interior Energy Project is positioned for success, but now the utilities, IGU, FNG, GVA, they've gotta make their commitments.  Gas contracts.  They must act and the time is now to do that."

Governor Parnell also addressed the Alaska LNG Project.  It involves the construction of a gas treatment plant at Prudhoe Bay, which would clean out impurities, as well as two pipelines.  One would run from the Point Thompson gas fields to Prudhoe Bay, feeding natural gas to the plant.  A second pipeline would run across the state from Prudhoe Bay to Nikiski.  Some of the pipeline’s gas would be used by Alaskans, but ultimately, it would end up at a to-be-constructed LNG plant along Nikiski.  Once the gas is liquefied, it would head to a shipping center for export.  While the largest sponsors are private, including ExxonMobil, ConocoPhillips, BP, and TransCanada, the Alaskan government also has partial ownership.  Parnell says this stake is necessary to reaping the pipeline’s benefits. 

"Ownership ensures we either pay ourselves for project services, or at the very least, understand, negotiate, and ensure the lowest possible cost for Alaskans.  This structure is also attractive to the North Slope producers because from their perspective, their costs are reduced by an amount proportional to the percentage of state take from royalties and taxes."

As for progress, Parnell says it’s going well.

"In January, we signed a commercial agreement, it was known as a heads-up agreement, for the Alaska LNG Project.  The signers were Exxon, BP, ConocoPhillips, TransCanada, AGDC, Department of Natural Resources, and Natural Revenue.  That agreement set the roadmap for development of the Alaska LNG Project, with the State of Alaska as a full, equal partner.  We agreed to seek enabling legislation to allow the state to be a participant.  We committed to transition out of the AGEA framework and into this new partnership, and we all agreed to develop the next level of contracts and committments that would move us into FEED in 2016." 

FEED is an acronym for front-end engineering and design.  The governor thanked the Chamber for their work in advancing these projects and said they will benefit Fairbanks and the state as a whole. 

Additional information on Parnell’s speech can be found at the governor’s website.