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IGU expands gas supply customer base
Fully operational LNG storage facilities in Fairbanks and North Pole are enabling more customers to sign up for gas supplies Alan Bailey for Petroleum News
Interior Gas Utility, the gas utility for the Fairbanks region of the Alaska Interior, has been steadily increasing its customer base in Fairbanks and North Pole, according to a report presented to the IGU board on Sept. 14. As part of the Interior Energy Project, a project sponsored by the Alaska Industrial Development and Export Authority to bring increased supplies of affordable natural gas to the Fairbanks region, in 2020 IGU combined with Fairbanks Natural Gas to form a single gas utility for the Fairbanks region.
Expanded capabilities In 2015, as part of an earlier phase of the IEP, some extensions were made to the gas distribution pipeline networks in Fairbanks and North Pole. At the end of 2019 IGU completed a new 5.25 million gallon liquefied natural gas storage facility in central Fairbanks. And earlier this year the utility completed a smaller LNG storage facility at North Pole. IGU manufactures LNG at its Titan LNG plant near Point Mackenzie on Cook Inlet, for shipment to Fairbanks by road trailer. A front-end engineering and design project for the expansion of the Titan plant has been completed. However, IGU deferred the final investment decision for the plant expansion because of COVID pandemic induced uncertainties over fuel oil prices - fuel oil competes with natural gas as a fuel for heating buildings in the Fairbanks area.
But, with the new upscale LNG storage facilities in Fairbanks and North Pole now in full operation, able to warehouse large volumes of LNG, IGU has been able to move ahead, signing up new customers. Many new customers are conveniently located for connection to the distribution network expanded in 2015. Others require expansions to the existing main gas lines.
496 applications According to the report presented to the IGU board, so far in 2021 IGU has received a total of 496 applications for gas supply services. Requested connections to residential properties accounted for 80% of the applications, with 20% of the applications being for commercial properties: 40% were for North Pole and 60% were for Fairbanks. Of the applicants, 60% were approved for the construction of gas connections - 40% of the applicants did not have immediate access to a main gas distribution line.
IGU general manager Dan Britton told the board that customers without immediate access to a mainline would require some form of mainline extension or would be held for future consideration, as IGU expands the gas distribution network. Knowledge of where there is interest in gas connection would help in planning the network expansion, he said.
A total of 319 customers were approved for connection construction in 2021, with 81 new customers seeing their gas supplies turned on so far this year, the report said.
Market penetration Based on these figures, IGU anticipates a market penetration of 18% of potential customers in Fairbanks and 4% of potential customers in North Pole by the end of this year. Britton explained that this market penetration figure relates to potential customers that are located close to the existing main distribution lines.
So far the utility has received 18 applications for the installation of new gas connections in 2022. Five of these applications require extensions to gas main lines. At this point, seven applications have been approved for construction in 2022, the report to the IGU board says. Britton said that IGU will continue seeking as many applications as possible before entering the 2022 construction season.
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