IGU board approves purchase of Pentex for Fairbanks gas supply

On Dec. 12 by a five-to-two majority the board of the Interior Gas Utility approved terms for the purchase of Pentex Alaska Natural Gas Co, the owner of the Titan liquefied natural gas plant near Point Mackenzie and Fairbanks Natural Gas, a gas utility operating in central Fairbanks. The purchase comes as part of the Alaska Industrial Development and Export Authority’s Interior Energy Project. AIDEA had previously approved the Pentex sale but some modifications were subsequently made to the sale documents before the IGU board would agree to the purchase. The AIDEA board was scheduled to decide on whether to approve the revised sale terms on Dec. 7, after Petroleum News went to press.

Assuming that AIDEA approves the revised terms of the sale, IGU and AIDEA will proceed to conduct various actions needed to close the deal. Closure is to take place by May 31.

The concept behind the deal is that, through the Pentex purchase, IGU will be able to combine with FNG as a single gas utility, supplying natural gas to consumers in the Fairbanks region. The gas will be delivered to Fairbanks by truck as LNG from the Cook Inlet basin. The objective of the IEP is to facilitate a supply of clean, affordable energy for the Fairbanks region. IGU is purchasing Pentex using long-term AIDEA financing, with the payment from IGU returning into a revolving fund that AIDEA used to purchase Pentex in 2015.

AIDEA has expressed its satisfaction with the IGU decision.

“After more than 11 months of in-depth due diligence and negotiations, we are now much closer to fulfilling the goals of the Interior Energy Project,” said AIDEA Board Chairman Dana Pruhs. “The AIDEA Board looks forward to final consideration of the financing package that will create a unified gas utility under local control.”

- ALAN BAILEY