Fairbanks utility says new natural gas storage tank will support system expansion

A crane maneuvers the lid of the IGU’s 5.25-million-gallon tank into place in 2018. Work on the tank project is expected to be completed next month. (Photo credit KUAC)

Construction of a big natural gas storage tank in Fairbanks is nearing completion. And officials with the utility that’s been trying to persuade people in the Fairbanks area to convert to gas for home heating say the tank will help them attract those customers.

The chief executive of the Interior Gas Utility’s says when the IGU’s big 5.25 million-gallon LNG storage tank is completed next month, the utility that provides natural gas to Fairbanks will finally be able to resume expanding its customer base.

“We’ve not been able to add customers for years because of our supply constraints,” General Manager Dan Britton said in an interview Tuesday. “And so, with this new tank, it’s the first time in a long time that we’ll be able add firm customers again.”

Britton says the tank on the city’s south side will hold enough LNG to serve its existing customers for about 80 days. He says that timeframe will shrink as the IGU adds more customers — a process he says will resume once the big tank is filled by a steady stream of big tanker trucks hauling LNG from facilities in Southcentral. But he says utility officials are still considering transporting some gas in railroad tankers.

“Long-term,” he said, “we’ll continue to evaluate the opportunity for moving some of the product by rail, but at this time we’re moving by truck.”

Britton says completion of the tank will qualify the utility for $15 million storage tax credit, which would come in the form of a payment if approved by the Legislature and governor. He says the IGU also will now begin building more service lines to bring gas from the bigger main lines that the utility installed a few years ago around Fairbanks, although that work will stop once the ground freezes hard and then resume when it warms back up next summer.

“In 2014 and ’15,” he said. “Both in Fairbanks and North Pole, we added a substantial amount of distribution mains, approximately 140 miles, between the two. And so the main lines are just waiting for the service lines to new customers.”

Britton says the IGU installed service lines to about 50 Fairbanks customers over the summer. And he says the utility will begin installing them in North Pole once it completes work on a 150,000-gallon storage facility near the old North Pole refinery. He says site work at that facility will begin soon, and if all goes well the facility should be completed within a year.

The Fairbanks North Star Borough launched the IGU in 2012 with loans and grants from the state and other assistance from the Alaska Industrial Development Authority. It’s intended to provide a cheaper, cleaner-burning replacement for fuel oil as the main source of heat for Fairbanks-area residents’ homes and businesses.