Alaska Gov. Sean Parnell on Friday proposed a $355 million package intended to speed construction of a natural gas liquefaction plant on the state’s North Slope and a gas distribution system in the Fairbanks area. The projects are intended to be a bridge until the time when the state can complete an in-state gasline to carry North Slope gas.

The output of a North Slope liquefied natural gas (LNG) plant could be trucked to Fairbanks and provide gas for road and river communities, as well as Southcentral Alaska, where utilities are facing supply shortfalls starting in the winter of 2014-2015 (see Daily GPI, Nov. 21). The target for first delivery is the latter part of 2015.

Longer term, the state, oil/gas producers and TransCanada Corp. want to develop an in-state gas pipeline and LNG liquefaction and export facility to serve in-state and Asian markets (see Daily GPI, Oct. 5).

Parnell’s $355 million financial package includes $30 million in existing gas storage tax credits. The governor said he would also introduce legislation to provide financial support for the infrastructure, up to $275 million, through Alaska Industrial Development and Export Authority (AIDEA) loans and bonding authorization, and $50 million in general fund dollars.

“The state has stepped up with a financial package that will lead to lower heating and electric costs. And, it can be a springboard for cheaper energy for Alaskans in other communities,” Parnell said.

“While we continue to aggressively pursue a gas pipeline to get Alaska’s gas to Alaskans, that project is, at minimum, some years away. In the meantime, trucking gas from the North Slope is the best alternative — with the added benefit of preparing communities for an eventual connection to a pipeline.”

AIDEA, in collaboration with the Alaska Energy Authority, is seeking interested parties to participate in the financing, development and operation of an LNG facility. An added benefit of the LNG plant is the potential for propane and gas to be distributed to Interior and river system communities, as well as for transport to Southcentral Alaska to supplement gas from Cook Inlet, Parnell said.

The project would consist of interconnections with existing gas pipelines; pipelines to a gas conditioning plant and the plant itself; the gas liquefaction facility; system control and safety facilities; an LNG storage facility and LNG offtake facilities, including truck weigh stations.

“The [liquefaction] project would be modular in design, capable of being moved to the North Slope either on tractor-trailer or on a sea lift barge,” AIDEA said in its solicitation for letters of interest in the project. “The initial phases of development will be coordinated with the realization of demand from customers.

“Initial development of the plant will be with adequate gas conditioning and liquefaction of 7 to 9 Bcf/year of LNG which is utility grade, with CO2, water, sulfur and natural gas liquids removed. The plant is to be expandable up to 20 Bcf/year to respond to projected demand.”

Some of the plan is to be included in the governor’s budget, to be released Friday. The state’s legislative session begins Jan. 15.

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