Utility eyes plan for gas supplies

GVEA says it has a contract with BP that would run 20 years.

Petroleum NewsSeptember 22, 2012 

Alaska North Slope gas could fuel electric power generation in Fairbanks by 2015 if a proposal by Golden Valley Electric Association continues to move forward.

The project now has a crucial element: a natural gas supply contract with BP Exploration (Alaska) Inc. Golden Valley, the Fairbanks area electric utility, said it has contracted with BP for a 20-year supply of natural gas. The utility said the contract allows it to purchase up to 23 billion cubic feet a year.

The project was first announced by Golden Valley and Flint Hills Resources Alaska in 2011. It proposes to use natural gas to produce liquefied natural gas on the North Slope, which would then be trucked to Fairbanks. The LNG would fuel the utility's North Pole Power Plant, while Flint Hills would use it to power crude oil refining operations at its North Pole refinery.

Cory Borgeson, Golden Valley's interim president and CEO, said the project includes purchasing natural gas, liquefying it, transporting it and regasifying it at a North Pole facility.

"This positions GVEA as the aggregator, which is kind of like a wholesaler," with all fuel purchases flowing through Golden Valley, the utility said.

The North Slope LNG facility would be built on a site on Spine Road in the Prudhoe Bay unit; 17 acres would need to be developed for the project, he said, along with a million-gallon LNG storage tank and a half-mile pipeline to the site.

Golden Valley has already acquired a 20-acre site at North Pole, outside Fairbanks, for that end of the project, which would include a 2.4 million gallon storage tank, enough capacity to store about a five-days's supply of gas.

Once the facility is in operation, currently projected for 2015, 23 trucks a day would make the 513-mile trip, creating about 50 jobs, Borgeson said.

The utility is looking at 13,500-gallon LNG tankers, and plans for them to be LNG-fueled, he said.

Borgeson said Golden Valley and Flint Hills each have so far invested about $1 million in the project. He said engineering for the project is at the 30 percent plus-or-minus confidence level for cost.

The cost of natural gas will be about $14 per thousand cubic feet delivered, Borgeson said, with about one-third of that cost from transportation. He estimated that would save the utility about $15 million a year.

The North Slope facility will also extract some 10,000 gallons of propane a day, he said.

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