Skip to main Content

Fairbanks natural gas deal, meant to curb energy costs and air pollution, set to close

  • Author: Annie Zak
  • Updated: June 12, 2018
  • Published June 12, 2018

A deal set to close this week aims to bring cheaper energy costs to people in Fairbanks and other parts of Alaska's Interior while also reducing wood smoke pollution that has made the area, at times, among the most polluted in the country.

The Fairbanks-based Interior Gas Utility plans to buy Pentex Alaska Natural Gas Company for roughly $61.3 million from the Alaska Industrial Development & Export Authority as part of the $332.5 million Interior Energy Project.

IGU is owned by the Fairbanks North Star Borough, and Pentex is the parent company of Fairbanks Natural Gas.

Diversifying the Fairbanks area's energy supply with natural gas would hopefully reduce reliance on oil — with its more volatile prices — and make it more affordable for people to heat their homes, said IGU general manager Jomo Stewart.

Between 2008 and 2014, as the prices of heating oil rose and maxed out at more than $4 per gallon, it was a huge financial crunch for people who rely on it.

"There were several years where essentially people were paying more to heat their home than it cost them on their mortgage to own their home," Stewart said. "If people can have cheaper energy at a more stable price, people wouldn't have to burn wood as much."

With no relief in sight from those high prices at the time, more people started putting wood stoves in their homes, Stewart said. That's worsened air pollution issues in the Fairbanks area.

It's gotten so bad that the state has put restrictions on wood sellers to try to curb the problem. For years, the Fairbanks North Star Borough has fallen short of federal pollution rules for fine particulate matter.

"Because of our climatic conditions and our geography, the wood smoke wasn't going away," he said. "It was giving us really bad air quality and we still have it. Some days worse than Beijing. … Natural gas isn't going to be a silver bullet for fixing the air quality problem. It's seen as a tool in the toolbox."

The initial decision approving the sale happened in December. A meeting on Tuesday afternoon is expected to pave the way for the deal to officially close on Wednesday, Stewart said.

The deal will include funding to support infrastructure construction for the project. AIDEA bought Pentex for $52.5 million in 2015.

The next steps for the project after the Pentex sale closes are building additional storage in North Pole and seeking a larger, cheaper supply of gas, Stewart said.

Local news matters.

Support independent, local journalism in Alaska.