LNG storage supports more gas consumers

Alan Bailey

for PetThe operation of new liquefied natural gas storage facilities in the Fairbanks North Star Borough is enabling Interior Gas Utility to provide gas supply services to new customers in the region, according to the latest Interior Energy Project quarterly report to the state Legislature. Construction of a new 5.25 million gallon LNG storage tank in central Fairbanks was completed in December 2019. The utility then completed a 150,000 gallon capacity LNG storage and vaporization facility in North Pole in February of this year, the quarterly report says.

The IEP is an Alaska Industrial Development and Export Authority sponsored project with the objective of bringing increased supplies of affordable natural gas to the Fairbanks regions, to reduce the cost of energy while improving air quality in the region. As part of the IEP some extensions to the gas distribution pipeline network were installed in 2015, in anticipation of increased gas supplies.

Following the completion of the large storage tank in Fairbanks IGU installed approximately 200 new service lines in 2020 - the utility is accepting applications for the 2021 construction season. And the full operation of the storage facility at North Pole has facilitated the gasification of more than 70 miles of the extended distribution system, the quarterly report says.

IGU has been planning to expand the existing Titan LNG plant near Point Mackenzie on the Cook Inlet, to increase the supply of LNG for Fairbanks. However, after completion of the front-end engineering and design for the plant expansion, major uncertainty over the future price of fuel oil following the onset of the COVID-19 pandemic in 2020 caused IGU to defer a final investment decision for proceeding with the expansion until economic conditions stabilize - natural gas has to compete on cost with fuel oil as a fuel for the space heating of buildings.

But the major expansion of LNG storage capacity now available in Fairbanks is enabling the warehousing of LNG produced when gas demand is low - this warehousing of gas provides capacity to sign up more gas customers, even although the Titan plant has not yet been expanded.

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