State and local leaders are trying to determine if natural gas from Cook Inlet gas is viable option for Interior’s need for a lower cost, cleaner energy source. At issue are some of the same costs that derailed an earlier focus to bring in North Slope gas.
The state lead Interior Energy Project is aimed at getting natural gas to Fairbanks consumers at a price equivalent to $2 a gallon heating oil.
The Fairbanks Economic Development Corporation is helping vet potential suppliers, and the governor’s office recently re-focused the project on Cook Inlet gas. FEDCO president and CEO Jim Dodson says current Cook Inlet production is committed to south central area customers.
“We’ve got to convince somebody that we’re willing to pay a price high enough so that they’re able to have an investor come in and invest at least $10 million or more, probably, into Cook Inlet and go down and drill a well that has we don’t know what probability it has of success, but it’s not 100%,we heard that,” Dodson said.
Dodson heard that from Cook Inlet Energy Commercial Manager Mark Slaughter, who met with FEDCO and other local leaders this week, to talk about supplying Fairbanks. Slaughter refers to the Interior Energy Project targeted gas price as a starting point.
“It’s a commercial negotiation, so it just will depend between the parties how everything works out and it’ll depend realistically on financing and what level of government involvement is involved,” Slaughter said.
The state is backing the Interior energy project with an over $340 million financing package, but that’s for a range of needed infrastructure including getting liquefied gas north, something FEDCO Dodson lists options for.
“[It] could be a pipeline, it could be a rail car, it could be a truck, all of those things are in play,” Dodson said.
Governor Bill Walker is pushing the option of moving Cook Inlet LNG north on the Alaska Railroad. The Interior Energy project originally proposed trucking in gas from the North Slope, but the ballooning cost of a LNG processing facility there, pushed the estimated consumer gas price too high. Upping Cook Inlet production to meet broad demand in Fairbanks would also require expanded processing capacity.