Expansion of Interior Gas Utility’s Mat-Su liquefied natural gas plant is delayed

Expansion of the Interior Gas Utility’s liquefied natural gas plant near Port MacKenzie has been put on hold because economic uncertainties caused by the COVID-19 virus, the manager of the Fairbanks-based utility said.

“We’re taking a pause to make sure we’re making the right decisions,” on the expansion of the plant, said Dan Britton, general manager for the utility, also known as IGU.

The utility’s board had previously approved the final engineering for the project but Britton has recommended delaying a final investment decision for the construction until future economic trends are more clear in Fairbanks and the nearby community of North Pole, where IGU is expanding its distribution system.

“We are moving ahead with adding capacity and new customers,” in the Interior, Britton said. A five-million-gallon storage tank for Fairbanks has been completed and now holds about 1 million gallons of LNG.

The plan is to continue filling the tank and to have about 4 million gallons in storage by the onset of cold weather in the fall. Meanwhile a separate, smaller LNG storage site is under construction in North Pole to serve that community, Britton said.

IGU has now built 140 miles of gas distribution lines in Fairbanks and 72 miles of lines in North Pole, a total of 210 miles, he said. The utility has about 1,100 customers in its core Fairbanks service area but is now able to add customers with the completion of service lines and the assurance of gas supply with the new large LNG storage tank.

The small LNG plant now operating near Port MacKenzie manufactures liquefied natural gas from gas supplied from regional gas fields. The liquefied gas is trucked to Fairbanks up the Parks Highway.

As the gas system is built out in Fairbanks and North Pole more support infrastructure is needed, first with having more LNG storage capacity in the Interior and secondy with expansion of the LNG plant in the Mat-Su. The plant at Port MacKenzie now has capacity to make 50,000 gallons of LNG daily. IGU’s plan is to increase this to 150,000 gallons per day with a further expansion of an additional 100,000 gallons per day in the future.

Brittton couldn’t say when the LNG project will move forward but when it does it will be a significant construction project in the borough, with costs estimated previously in the $50 million range. The Alaska Industrial Development and Export Authority, the state’s development finance corporation, will issue revenue bonds to pay for the construction when it is given the final go-ahead.