News last week that a Texas-based company is looking to ship natural gas north from Cook Inlet to the Interior likely came as a surprise to many Fairbanks residents. After all, the state and Interior municipal governments are already well down the path toward commitment to a natural gas trucking plan that would require a liquefaction plant on the North Slope and trucking to Fairbanks — plans and financing for the plant are already underway.
Still, WesPac Midstream told residents Sept. 22 that they can deliver gas to the “city gate” — that is, to whatever storage and distribution that local utilities build as part of the Interior Energy Project — for an estimated $14.50 per thousand cubic feet. That’s only slightly more than the estimated delivered cost for gas via the trucking project, and considerable work and investment must be done to firm up those costs. If construction, trucking or distribution costs come in higher than expected, the trucking project’s estimated gas cost could well rise above that of WesPac.
News that Cook Inlet gas may be available for the Interior might well be frustrating for those trying to figure out the best plan. On the one hand, why bother with the considerable expense of constructing the North Slope liquefaction plant and burning through a lot of state funds and loan guarantees if there’s an easier option with access by both a higher-quality road and the Alaska Railroad? On the other, if Cook Inlet really has so much extra gas that they’re looking to ship it to the Interior, how come no one approached local leaders to apprise them of that option before now?
In fact, though, having competing proposals for gas is good news for the Interior, and the community would be wise to keep moving forward with eyes open toward either solution being the ultimate vehicle for gas delivery. After all, having two options means that if costs from the North Slope creep upward, or if Cook Inlet supply dwindles and WesPac can’t secure a contract for guaranteed gas, the Interior will still have the other proposal as a means to guarantee a lower-cost supply of natural gas for area-wide distribution.
While construction efforts for distribution are already well underway, as evidenced by crews working at locations around town, there are still plenty of moving pieces left to be locked down in determining the best and most cost-effective solution for Interior energy relief. From financing for the plant construction, trucking options, as well as a program to help residents with the cost of changing over to gas heat, many factors could still influence the final cost of gas when it’s delivered to residents, now forecast for late 2016.
For that reason, it’s good to have multiple supply options. There’s a reason why the old saying warns against having all your eggs in one basket.
— Fairbanks Daily News-Miner,