Alaska News

Hilcorp acquires Point MacKenzie LNG plant that supplies Fairbanks

ANCHORAGE — Hilcorp Corp. is getting into the liquefied natural gas plant business in Alaska.

The energy company has agreed to buy the Point MacKenzie LNG plant, which supplies LNG to Fairbanks Natural Gas, the Alaska Journal of Commerce reported.

The plant is operated by Titan Alaska LNG, a wholly owned subsidiary of Fairbanks Natural Gas.

Terms were not announced. The Regulatory Commission of Alaska must approve the deal.

The sale sprang from discussions between Hilcorp and Fairbanks Natural Gas about how the Fairbanks utility could secure a long-term gas supply, said Fairbanks Natural Gas CEO Dan Britton, who is also president of Titan.

Hilcorp, based in Texas, holds a contract to supply the plant with gas through 2018.

The plant would be Hilcorp's first foray into LNG, said spokeswoman Lori Nelson.

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"The Titan plant basically represents an opportunity for us to expand within the state to Fairbanks, where less expensive energy is certainly something they are looking for and we have the opportunity to provide," Nelson said.

The plant will be operated by Hilcorp's subsidiary, Harvest Alaska.

Hilcorp has the resources and the will to expand LNG processing, Britton said.

The companies also agreed to a 10-year LNG supply agreement for up to the equivalent of 950 million cubic feet of gas annually. That amount covers the utility's current customer demands, Britton said.

The plant has a peak production capacity of just more than 1 billion cubic feet per year.

Fairbanks Natural Gas is expanding its gas distribution network. The Alaska Industrial Development and Export Authority financed the first phase as part of the state-sponsored Interior Energy Project, which has a goal of trucking North Slope LNG south by late 2016.

The Point MacKenzie plant in Southcentral Alaska is the only option for getting gas to Interior Alaska now, said Hilcorp Alaska Vice President Kurt Gibson, and the 10-year supply agreement is essential.

"For now, (Fairbanks Natural Gas) needs to know they've got a secure supply and turning loose of the plant from their perspective, I think, was conditioned on making sure that they have a long-term supply of natural gas," Gibson said.

Fairbanks Natural Gas remains committed to the Interior Energy Project, Britton said.

"(The Interior Energy Project) has challenges that the parties are all trying to overcome," he said. "For Fairbanks Natural Gas, what we want is LNG available for expansion. We want that available in the most secure and cost effective manner as we can and this transaction with Harvest Alaska I think opens up an alternative opportunity."

Hilcorp has discussed its plans with AIDEA and is not looking to compete with the Interior Energy Project, Gibson said.

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