Forward-thinking on LNG paying off for Talkeetna Lodge

  • By ELWOOD BREHMER
  • Sunday, October 19, 2014 10:15pm
  • News

Could the Talkeetna Alaskan Lodge be a model for other businesses in other areas of the state without coveted natural gas infrastructure?

The liquefied natural gas supplier to CIRI Alaska Tourism’s expansive luxury resort thinks so.

“When you have a location that has enough energy usage that you can justify the capital expense and results in a savings compared to the alternative then there’s a potential for that to take place,” Fairbanks Natural Gas President and CEO Dan Britton said.

The Cook Inlet Region Inc. subsidiary built the 212-room lodge in 1999 and installed LNG heating infrastructure at a time when fuel oil was relatively inexpensive. Today, the common heating fuel outside of the urban areas of Southcentral often costs $4 per gallon on the road system and more across the rest of Alaska.

CIRI Alaska Tourism Chief Operating Officer Gideon Garcia said LNG figured to be a more efficient, safer and risk-averse long-term business proposition when compared to fuel oil.

“The rationale (for using LNG) was a real careful review of all the options out there and obviously running electrical for a hotel that size would’ve been just prohibitive in terms of cost and with the reliability of things, if the heat goes out you can’t have your entire property go down because of a single point of failure,” Garcia said.

The forward thinking paid off.

In 2013, the Talkeetna Alaskan Lodge used 9,550 thousand cubic feet, or mcf, of natural gas. At FNG’s advertised price of about $23 per mcf, the tourism company spent about $228,000 to heat the lodge, which it keeps warm while business is closed during winter. Burning fuel oil while customers are absent would be “ferociously expensive,” Garcia said.

At $4 per gallon, the energy equivalent for fuel oil is roughly $30 per mcf, meaning the lodge operators saved more than 23 percent on their heating bill, when $4 per gallon fuel oil would have cost them $286,000.

Garcia said the original plan for the lodge was to be ready to hook up to even lower-cost natural gas.

“The long-term hope of course was thinking that there might be a pipeline coming down the Parks Highway so we were pre-deployed and ready to tap into that if need be,” he said.

The lodge’s location just outside of Talkeetna gives it the opportunity to purchase gas from Fairbanks Natural Gas, which operates a small gas liquefaction facility near Point MacKenzie with its sister company Titan Alaska LNG. Most of FNG’s LNG goes farther north by truck to heat customers in the core of Fairbanks, but running a shipment up the Talkeetna Road every couple weeks is not an issue, Britton said.

Similar offshoot LNG operations could become more common across Alaska if the Interior Energy Project — the state-subsidized plan to develop a North Slope LNG supply chain down the Dalton Highway to Fairbanks — comes to fruition.

Likewise if a commercial or state gas pipeline from the Slope to Southcentral is built, LNG could be trucked to communities outside a pipeline corridor already struggling to survive because of exorbitant energy costs.

Alaska Industrial Development and Export Authority officials leading the Interior Energy Project have said they’ve been approached by prospective mine developers about LNG for remote mine power if excess gas becomes available.

Elwood Brehmer can be reached at elwood.brehmer@alaskajournal.com.

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