Siemens: LNG to Fairbanks

Siemens and a joint-venture of two Mat-Su Alaska Native organizations, the Knik village corporation, Knikatnu Inc. and its tribal partner, Knik Tribe, have made an offer to supply liquefied natural gas to the Interior Gas Utility at a price of $12.60 per thousand cubic feet, or mcf, which would be about $15.50/ mcf once gas is delivered through IGU’s distribution system to customers. If the IGU makes the decision to proceed, the plant could be built and operating by December, 2019, Siemens and its partners say. The total project cost, including connections from the plant to nearby Alaska Railroad tracks and an Enstar Natural Gas Pipeline, is estimated at $100 million.

Details were made available Monday from a presentation made by Siemens and its Knik partners to IGU’s board in Fairbanks on May 15. The IGU was not available to comment on the proposal. The $15.50/mcf cost to consumers compares favorably to a $22.91/mcf price now charged to customers by Fairbanks Natural Gas, the small utility now serv- ing the community, according to the Siemens/Knik presentation.

Fairbanks Natural Gas is now trucking LNG to the Interior from a small LNG plant near Point MacKenzie, in the Mat-Su Borough. The plan is for FNG, which serves a core downtown Fairbanks market, to be merged with the newer Interior Gas Utility, which is building a distribution system near North Pole, east of the city. Under the proposal two Knik entities would own the project. Siemens, an international energy company, would provide its proprietary modular micro-LNG technology, manage construction and operation and help with financing and training for tribal members and Knikatnu shareholders who would work at the plant. This is similar to the structure of business Siemens has developed with other tribal entities in the U.S. A key part of the plan is that Knikatnu and Knik Tribe will have access to low-cost financing for tribal energy projects avail- able through the U.S. Department of Agriculture. Knikatnu owns 40 acres at Houston that is available for the project. The proposal is to start with two of Siemen’s LNG production modules to produce 60,000 gallons of LNG per day, enough to meet IGU’s need, and to expand to four units to produce 120,000 gallons per day to serve other customers.

IGU has an alternative to the Siemens/Knik proposal in that it can build a new, larger LNG plant at the site of its existing small plant near Port MacKenzie. The existing plant is not large enough to supply the growing gas demand in Fairbanks as the IGU builds its distribution system, so a larger new plant is needed in any event. An aspect of the Siemens/Knik plan is that the Siemens technology would allow a plant to be sized to meet existing demand and then expanded to meet growth through the installation of additional modules.

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Railbelt utilities, on coordination

Railbelt utilities are making progress toward a coordinated power transmission system for the
grid. Utilities told the Regulatory Commission of Alaska May 23 they plan to have a framework for
a jointly-owned transmission entity to nance and build new transmission capacity by the end of the year. Meanwhile, the utilities are moving toward establishing a Railbelt Reliability Council, which would oversee grid operation and reliability stan- dards for transmission of power. GDS Associates
is under contract to the utilities on operations and reliability and will have recommendations soon. The initiatives are aimed at overcoming a past lack of coordination among the utilities. Chugach Electric, Municipal Light & Power and Matanuska Electric, are already coordinating dispatch of power among themselves of the most ef cient generation capacity.