| ANCHORAGE, Alaska, July 25
ANCHORAGE, Alaska, July 25 A proposal to truck
liquefied natural gas from Alaska's North Slope 400 miles south
(640 km) to Fairbanks is economically and technically feasible
and an improvement for the environment, according to a report
issued on Thursday by a state agency.
The proposal, already embraced by Governor Sean Parnell and
endorsed by the state legislature, is to build a $207.5 million
liquefaction plant at Prudhoe Bay and truck the LNG to Alaska's
Prudhoe Bay and other North Slope fields hold vast amounts
of gas, with 35 trillion cubic feet already proven and much more
believed to be above the oil layers. But the gas is stranded for
lack of an export market that would justify a costly pipeline.
A report from the Alaska Industrial Development and Export
Authority (AIDEA) found the project made sense, as long as the
state makes good on intentions to subsidize it and private
investors chip in at least $37.5 million for the plant and
provide the trucks.
The plan envisions LNG deliveries to Fairbanks by late 2015.
Lawmakers this spring approved measures that would provide $57.5
million in direct grants and $125 million in low-interest loans.
Volumes are predicted to be relatively small, at just 9
billion cubic feet a year. Still, it would be the first ever
commercial delivery of natural gas from the North Slope oil
fields to any area outside that oil-producing region.
While the Fairbanks North Star Borough, with about 99,000
residents, is much smaller than most markets considered in the
past for North Slope gas, the area's customers would be
well-served by the trucking project, the AIDEA report said.
Residents now depend on costly fuel oil or wood-fired stoves
to provide heat over the bitterly cold winters. Apart from the
cost - fuel oil is about $4 per gallon, equivalent to $30 per
thousand cubic feet of natural gas - those energy sources cause
air pollution, the report noted. Wood-smoke pollution has
prompted alerts about unhealthy air in and around Fairbanks.
Trucked LNG would likely cost Fairbanks consumers $14.09 to
$17.09 per thousand cubic feet, the report said.
Plans to develop much-larger North Slope natural gas
projects have languished. Since the 1970s, Alaska officials have
sought to entice industry to build an overland pipeline to bring
North Slope gas to other parts of the United States.
State officials are now eyeing the alternative of an
800-mile pipeline from Prudhoe Bay to a new liquefaction plant
at a southern Alaska port, from where tankers could ship 2
billion cubic feet a day of LNG to Asian markets. That idea also
dates back to the 70s, but has gained support from Parnell and
others who note the United States is now saturated with shale
But oil companies have estimated the cost of building the
overland pipeline to be as much as $41 billion, and the LNG
project plus the pipeline to be as much as $65 billion.