New 5.25M gallon LNG storage tank in operation in Fairbanks

Alan Bailey

Petroleum News

A new large-scale liquefied natural gas storage tank has successfully gone into operation in the city of Fairbanks, Fairbanks Natural Gas informed the Regulatory Commission of Alaska on Dec. 20. The new tank, a component of the Alaska Industrial Development and Export Agency sponsored Interior Energy Project, will enable an expanded natural gas supply to Fairbanks residents and businesses. Following the 2018 merger of FNG and Interior Gas Utility, the other Fairbanks gas utility, FNG is now part of IGU, thus constituting a single gas utility for the Fairbanks region. The objective of the IEP is to bring an expanded supply of affordable natural gas to the region, to help address the high cost of energy in the Alaska Interior, and to alleviate severe winter air pollution that results from the widespread use of wood burning stoves for heating buildings.

Key IEP component

The new 5.25 million gallon LNG storage facility forms a key component of the IEP. By enabling the warehousing of LNG during periods of low gas demand, the new tank will make available a reliable gas supply to more Fairbanks customers - as part of the IEP the Fairbanks gas distribution pipeline network has already been expanded in anticipation of an increased gas supply. IGU has also embarked on the construction of new LNG storage facilities at North Pole, to enable a new gas supply to customers in that region. The LNG is produced in a small LNG plant near Point Mackenzie on the Cook Inlet

The new LNG storage tank in central Fairbanks had to go into operation by the end of 2019, to qualify for a state tax credit that forms an important component of the economics of the tank.

The tank will play a key role in supporting planned increases to the capacity of the Point Mackenzie LNG facility. IGU plans staged 100,000 barrels per day expansions to the 50,000 bpd plant, in response to rising gas demand in the Fairbanks region. Front end engineering and design has been in progress for an initial and potentially for a second plant expansion. IGU has anticipated completion of the FEED project by the end of 2019, with a view to making a final investment decision early in 2020 for expanding the LNG plant.

- ALAN BAILEY

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