Houston LNG plant.JPG

Siemens is still working on its plan to build a modular liquefied natural gas plant in the Houston area, on the Parks Highway, company officials said in an interview on Thursday.

The company is in discussions with the Interior Gas Utility (IGU) in Fairbanks, which needs to expand LNG purchases as it builds out a new natural gas distribution system, said Michael Walhof, Global Sales Director for Siemens’ Dresser-Rand business Distributed LNG Solution.

Siemens AG (Berlin and Munich) is active around the globe, focusing on electrification, automation and digitalization, Walhof said. “We are one of the world’s largest producers of energy-efficient, resource-saving technologies. The company supplies power generation and power transmission solutions and is a pioneer in infrastructure solutions as well as automation, drive and software solutions for industry,” Walhof said.

The Dresser-Rand business is part of Siemens Power & Gas subsidiary.

He said a plant in the Houston area, which would be built on lands owned by Knikatnu, Inc., the Native village corporation for Knik, would incorporate modular LNG plant design developed by the Dresser-Rand business that would allow an incremental expansion as demand for LNG grew in the Interior.

“While IGU could be the anchor customer for the LNG from the site, other industrial and commercial customers have expressed interest in the production,” Walhof said.

The Dresser-Rand business now has multiple LNG plants in operation using the new design, which it calls “LNGoTM,” including a new plant at Dawson Creek, British Columbia that was put in commercial operation in Jan.

The customer at Dawson Creek is Altagas, Ltd., which also owns Enstar Natural Gas, the Southcentral Alaska natural gas distributor. Walhof said the LNG made in Dawson Creek is being trucked approximately 870 miles to Whitehorse, Yukon Territory, where it is being used to displace diesel in power generation.

“Dawson Creek is more remote and a harsher, more extreme environment than Southcentral Alaska, so the new plant demonstrates this company’s ability to do these projects,” said Tom Harris, Knikatnu, Inc.’s CEO.

Walhof said two other of the Dresser-Rand business’ micro-plants are on the eastern states including one in Elizabeth, N.J. that is used to supply peak-demand gas for a utility and a second at Mansfield, Pennsylvania, that is used to “debottleneck” a current natural gas gathering system.

A key advantage of the modular micro-LNG approach is the redundancy of the system, in that while one module is taken out of service for maintenance the second unit remains in operation to supply LNG.

This is in contrast to a conventional LNG plant that operates as a single unit, so that an equipment malfunction or maintenance need causes the entire plant to go out of service.

Walhof said the Dawson Creek plant began production with one module, producing 30,000 gallons of LNG per day, and discussions are underway with Atlagas on a second module. The proposed plant would involve two modules at the start, producing 60,000 gallons of LNG per day.

Harris said the Houston site for the plant is closer to Fairbanks on the Parks Highway than is the existing Titan LNG plant that now supplies LNG by truck to Fairbanks but is also on the Alaska Railroad, which recently conducted test shipments of LNG.

IGU will need more LNG than the existing Titan plant can supply, and the alternatives being weighed by the utility include building a new, larger plant at the Titan location, which is off the Knik-Goose Bay road near Port MacKenzie, or entering a service agreement to purchase LNG from the proposed modular plant in the Houston area.

“This type of service agreement would allow IGU to redirect capital dollars to expanding the gas delivery in Fairbanks since they would not own or operate the facility,” Walhof said.

Harris said a key advantage of the Siemens proposal is that a major international company would be able to support the technology after the plant is put into operation.

Walhof said LNG plants using the Dresser-Rand business’ micro-liquefaction systems can typically be built and operational in 12 to18 months, an aggressive schedule for LNG plants. He would not venture a capital cost estimate for a plant at Houston but said it would be in the “tens of millions,” of dollars which is substantially lower cost than other LNG plants.

Knikatnu is the landowner of about 3,000 acres at the Houston site, which has proximity to the Parks Highway, railroad and the nearby Enstar pipeline, and the corporation is anxious to get industrial or commercial development underway, Harris said.

While Knikatnu is not a tribal entity the corporation is affiliated with Knik Tribal Council, which is a recognized tribe. The potential, Harris said, is that Knik Tribal Council could participate with its access to low-cost federal Indian energy project financing.

“This would likely be less expensive than anything the state of Alaska could offer,” through the Alaska Industrial Development and Export Authority, Harris said. AIDEA is the state development corporation.

Meanwhile, the Fairbanks-based IGU must still complete the acquisition of Fairbanks Natural Gas, a small gas utility operating in the core area of the city. IGU’s service area covers parts of the community outside where Fairbanks Natural Gas offers service.

While IGU and AIDEA, which owns Fairbanks Natural Gas, have signed an agreement for IGU to buy the Fairbanks utility the deal has not yet closed. Also, a bill extending a critical state loan guarantee for IGU is still pending in the Legislature.

That is needed for IGU to make commitments on its expansion including a decision on whether to build a new plant at the Titan site or to go with Siemens. While the bill is advancing it has not yet passed.

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