MILD WINTERS, LOW OIL PRICES WERE THE CURE FOR FAIRBANKS
Missing from the winter malaise was, well, winter. Also absent was the annual panic attack over heating fuel prices in Fairbanks. Why? The weather warmed up and the price of heating oil dropped. Fairbanks became nearly affordable.
That is putting some potential customers’ conversion to natural gas on the back burner. “The significant change in the price of heating fuel required a fresh look at the ‘willingness to convert’ with specific attention paid to the closing of the cost gap between heating fuel and the IEP natural gas price targets,” the July, 2016 report notes. Check out the whole report here.
FAIRBANKS PILOT PROJECT
Hitachi and Alaska Railroad have agreed to bring two 40-foot liquefied natural gas shipping containers from Japan to Anchorage in September. They will be used for a demonstration project to provide transportation of LNG from the Titan plant at Point MacKenzie to Fairbanks, in a pilot project that will take place in October and November, before the containers are returned to Japan in December. The project is to test safe rail transportation of LNG from Cook Inlet North.
LNG truck trailers in Alaska have a capacity of 10,500 gallons. In order to improve the economics of the trucking option, the Alaska Industrial Development and Export Authority undertook a study involving several hauls from Cook Inlet.
Salix, Inc. was chosen last year as the preferred liquefied natural gas (LNG) plant respondent. The project will source gas from Cook Inlet and now must find a reliable way to ship it north. Fairbanks Natural Gas owns Titan LNG, LCC, which has a gas supply contract with Hilcorp to provide natural gas to the Titan facility through early 2018.
After 2018, additional supply will be needed, and contract negotiations have begun with Cook Inlet gas suppliers. North Slope gas was always one of the options with a gasline off take point near Fairbanks, but with the gasline now in the category of pipe dream, finding more gas in Cook Inlet for the Fairbanks market will be key.