New Hilcorp contract pushes Interior Energy Project along

IEP logo (Credit Alaska Industrial Development and Export Authority)

The Interior Energy Project has achieved a major milestone. On Thursday, the Alaska Industrial Development and Export Authority Board approved a plan advancing the state effort to increase availability of natural gas in Fairbanks. The board action hinged on a recently secured Cook Inlet gas supply contract with Hilcorp. AIDEA Interior Energy Project team leader Gene Therriault said the gas supply is a key plan component required by enabling legislation.

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”It basically means that now the project has access to all of the financial tools that were provided by the legislature,” Therriault said.

Therriault points to a $300 million mix of capital, loan and bonding capacity to help pay for project expenses, including Cook Inlet LNG processing plant expansion and additional gas storage in Fairbanks. The Interior Energy Project targets a consumer gas price equivalent to $2 a gallon heating. Therriault said the current contract alone does not get there, but projections indicate it’s achievable as new customers sign up for service.

”To spread these fixed costs, bring the costs down and make the delivered cost that much more attractive to businesses and more attractive to residential customers too,” Therriault said.

Still at issue for advancing the project is whether the Fairbanks North Star Borough’s Interior Gas Utility will buy and merge operation with Fairbanks Natural Gas. AIDEA bought the private company, which currently serves over a thousand local customers. The plan calls incorporating its infrastructure into a single public utility to serve Fairbanks and North Pole.