AIDEA may extend deadline for LNG trucking project

  • Thursday, December 18, 2014 10:59pm
  • News

FAIRBANKS, Alaska (AP) — The Alaska Industrial Development and Export Authority may extend an agreement it signed with the firm that wants to build a North Slope liquefied natural gas plant for trucking gas to interior Alaska.

AIDEA and MWH Global in September signed a concession agreement creating a legal framework for ownership, development, financing, construction and operation of an LNG plant. The agreement, AIDEA said at the time, allowed the parties to design a plant and gather financial information.

The agreement expires at the end of the year, but contracts expected to be signed for future work remain up in the air and were not presented at an AIDEA board meeting Tuesday, the Fairbanks Daily News-Miner reported.

One problem is the revised estimate of the LNG plant cost. MWH projected the facility as a $185 million project earlier this year. Bob Shefchik, chairman of the board of Interior Gas Utility, said the estimate has increased to $228 million with an additional $20 million for cost overruns, higher than what’s acceptable to produce affordable gas for interior Alaska.

Two of the three Fairbanks utilities expected to be gas customers, Golden Valley Electric Association and Fairbanks Natural Gas, requested that AIDEA extend the agreement to give MWH a chance to bring down the plant’s projected cost.

AIDEA board member Gary Wilken, a former Fairbanks state senator, said after the meeting an extension for a short period is in the works.

“We don’t want to throw the baby out with the bathwater,” he said. “Let’s press on for a limited amount of time with a new set of rules.”

The board of AIDEA, a quasi-state agency with the mission of encouraging Alaska economic growth, has ongoing concerns with the plant costs and other aspects of natural gas delivery such as trucking contracts, Wilken said.

He remains optimistic that a deal can be reached to reduce the energy costs in
Fairbanks.

“You can’t throw up your hands and can’t say this can’t happen, because it has to happen,” he said. “We’re going to make this happen in some manner.”

 

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