Job boost: AIDEA approves financing package for methanol plant on North Slope

By
Suzanne Downing
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7
Sunrise on the North Slope in January. Photo credit: Rob Bussell

The Alaska Industrial Development and Export Authority Board of Directors an investment through financing construction and long-term operation of a pioneering chemical and fuels plant on the North Slope.

The Alyeschem facility will establish local production of chemicals (methanol) and fuels like ultra-low-sulfur diesel (ULSD), considered an important step to get more value from Alaska’s raw resources within the state, AIDEA said.

Methanol is used on the North Slope to help avoid pipeline corrosion, preserve the functionality of gas compression equipment, and prevent freezing in temporarily shut-in wells and pipelines. Ultra-low-sulphur diesel is also used in several ways as a fuel on the North Slope. The new plantwill use Alaska’s natural gas as a feedstock resource, creating an important internal market for North Slope stranded natural gas resources.

Local production from a new plant on the North Slope using Alaska gas could eventually eliminate the need to import methanol into Alaska using overseas shipping and trucking on the Dalton Highway. Local methanol production may even benefit the State of Alaska with cost savings to the TAPS tariff, creation of jobs, and generation of corporate and other tax revenues, including property taxes for the North Slope Borough, said AIDEA in a press release, adding that the project will also create new jobs.

Alyeschem estimates the plant’s operations will reduce carbon dioxide emissions by 93%, or 45,000 tons annually, by transforming a blend of natural gas and waste CO2 into methanol-reducing emissions associated with current supply methods on the North Slope.

The “up to” $70 million maximum loan financing will support construction by matching a similar investment from private equity investors, AIDEA said. After construction, the financing structure will provide AIDEA with loan payments of principal and interest while also providing AIDEA with a permanent royalty-based on a per-gallon output basis. This is expected to generate a minimum of $2.39 million annually in income and would increase as output increases.

AIDEA is Alaska’s economic development engine, working with private sector, lenders, and other entities to create a private-sector economy in Alaska.

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7 COMMENTS

  1. What a load of crap. If building a methanol plant was a profitable venture in Prudhoe, an oil company would be doing it. This exemplifies the inability of the AIDEA to be able to properly identify a profitable idea from a complete waste of time and money. Another milking of the State of Alaska by some private interest under the guise of “climate change” BS.

    • Actually, this is a very big deal. A methanol plant is a step along the path of getting into the Gas to Liquids (GTL) / synthetic diesel world. Think of it as a proof of concept operation. GTLs are the Plan B to a natural gas pipeline off the slope. They can be batched with crude down the existing TAPS infrastructure and separated with a small topping plant in Valdez. Market for GTLs is the entire Pacific Rim. They can also be tapped from TAPS at any pump station.

      This is a step, a very important step. Cheers –

  2. Don’t we have enough problem with drugs alcohol. Now to fund a plant to make a drink made with meth and alcohol just defies me.

  3. We are not running out of natural gas on the north slope….you are confusing that with Cook Inlet.🤦‍♂️

  4. The unsaid thing is the decrease of tanker traffic on the Dalton and associated spills/accidents. Also decreases that traffic in towns. Some of these are the huge double trailer tankers. Bad for truckers, but it will be profitable. Is this JR Wilcox’s project?

    • Sure is, Brian, with McKinley Alaska Private Investment and BP Energy Partners. Note the “matching a similar investment from private equity investors” part. AIDEA is taking the opportunity to deploy its capital into a project that fits their mandate. Incidentally, the truckers are about to get a new opportunity moving increased (from current Cook Inlet) volumes of LNG from Harvest to Fairbanks, originating on the same pad. 🙂 ‘https://www.cnbc.com/2024/03/15/alaskas-ice-road-oil-truckers-are-in-a-boom-and-causing-a-backlash.html

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