Golden Valley Electric Association (GVEA) and Flint Hills Resources Alaska are working on a plan to construct a natural gas liquefaction facility on the North Slope and truck its liquefied natural gas (LNG) output to the state’s Interior by the first quarter of 2014.

As two of the largest users of liquid fuels in the Interior, GVEA and Flint Hills are natural ‘anchor tenants’ for any natural gas project, the partners said.

The project would be a measure to supply Alaska’s Interior with gas while a pipeline solution is developed. The state currently is weighing a plan for an in-state gasline that would allow the commercialization of North Slope gas and feed Alaska’s gas-thirsty Southcentral region (see Daily GPI, Aug. 2). A long-haul pipeline project to serve Canada and the Lower 48 is still on the boards (see Daily GPI, April 21).

“Our members need relief sooner rather than later,” GVEA said. “The soonest the legislature could approve a gas line is 2012, and the most optimistic estimates put a bullet line at least eight years away. Our members can’t wait that long for price relief.”

GVEA said it would use the LNG to fuel its newest turbine at the North Pole Power Plant. At today’s oil prices, switching to natural gas would save GVEA a little more than $1 million per month in fuel costs, it said. “That means the average GVEA member would see a 5% savings on a monthly bill (based on a $100 barrel of oil). If oil prices continue to rise, the savings would be greater.”

Flint Hills would use the gas to fuel operations at its North Pole refinery. Member customers of GVEA would be expected to benefit from a lower-cost fuel supply under the plan, which also would enhance the competitiveness of Flint Hills, the partners said.

“This project would partially eliminate the competitive disadvantage for our refinery due to high energy costs, and provide an environmental benefit to Fairbanks and Interior Alaska,” said Mike Brose, Flint Hills plant manager. “We are also excited about additional opportunities such as propane production and LNG diesel production to provide more competitive clean fuel for Alaska’s trucking and transportation industry.”

Engineering for the project is under way. LNG could also be made available to other users and distributors of LNG in Fairbanks and Interior Alaska. Depending upon the size of each tanker, 40 to 50 trucks would be needed to transport LNG cargoes. At any given time, about 20 laden trucks would be headed south, and 20 empty trucks would be headed north, according to the partners’ plan.

“We are excited about this bridging project,” said GVEA CEO Brian Newton. “GVEA and Flint Hills are customers of each other and this is a continuation of our ongoing relationship. While GVEA supports a gas pipeline to Fairbanks [AK], trucking LNG would lessen our dependence on high-priced oil, thereby bringing energy cost relief sooner than other proposed projects.”

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