Fair board hears pitch for power

July 13, 2007

By John R. Moses/Frontiersman

PALMER - Two proposals to turn parts of the Alaska State Fairgrounds into power and gas-generating moneymakers are under serious consideration by the state fair board.

Any action on the proposals isn't likely to happen until at least the fall because information must be collected before the governing board can study them, the fair's general manager said Thursday.

The firm behind a coal bed methane gas well project on Bogard Road wants to pay the fair royalties for a fairgrounds well. In addition, a trio that controls the Knik Arm Power Plant wants to re-tool that old, coal-fired plant to burn natural gas and build a 70-megawatt natural gas-fired cogeneration plant.

Ray Ritari the fair's general manager, said it's too early to get excited about either project as the fair's baord directors has a state fair to oversee before it can start planning power generation sessions, probably no sooner than October.

&#8220We're still at the point of legal review on both projects,” Ritari said.

An attorney reviewed the power plant proposal this week and Rateri said he was still awaiting that information hours before a Thursday board meeting. He called the process &#8220due diligence” and said the board can't begin to assess the value of those projects to the fair without expert consultants.

Last night's agenda item about the power plant was for discussion, not action. The item wasn't added to the agenda until a television newscast Wednesday erroneously stated the fair's board would discuss the project, Ritari said.

&#8220No one's even had time to review the facts,” fair board president John Harkey said. &#8220Both the proposals seem promising. The fair is in need of some fixing. Maybe this is the way to fix it.”

Harkey said that between taxes and other concerns the fair board has to think creatively to avoid disaster.

&#8220Fairs are shutting down,” he said. &#8220Obviously, our nonprofit is looking for ways to generate revenue.”

The fair board Thursday sent all reports on letters of intent for the projects to a three-member subcommittee for review and recommendations by the August meeting.

Gassing up and

filling the budget

Bob Fowler of Las Vegas-based Fowler Oil and Gas Corp. asked the board in April to consider letting his firm drill a coal bed methane well on fairgrounds property and pay royalties in the neighborhood of 7 percent for the well's surface output and 12 percent for subsurface output, according to fair board meeting minutes.

Fowler said Thursday he looks forward to working with the Alaska State Fair, but hasn't heard back from the board yet. His other local coal bed methane gas well project on Bogard Road, which is expected to get a Borough permit next month, is Fowler's top priority.

&#8220They signed up for doing a unit like the one on Bogard Road,” Fowler said. &#8220We won't start on the project until the other project is up and running and up to specs,” he said.

Fowler Oil and Gas is staking its future in Alaska's resources.

&#8220With the U.S government's current agenda on the Alaskan energy resources, we're confident that we will succeed in procuring the financing needed to take these projects forward and develop the Fowler Oil and Gas Corp. properties,” the copany reports on its Web site for investors. &#8220&#8220Fowler Oil and Gas Corp. plans to participate in the tremendous growth potential of the oil and gas industry in Alaska, USA. Alaska now accounts for 22 percent of the total U.S. oil reserves, 19 percent of the total U.S. gas reserves and 19 percent of the total U.S. oil production.”

Power to the people

Tiquin Energy Inc. Vice President Randy Hobbs of Sutton expects a favorable reaction to his group's proposal to build a 70-megawatt natural gas power plant that also channels what would otherwise be wasted heat to other uses. He has lived in the area for more than 20 years.

Hobbs also presented the power plant idea to the fair board in April and followed-up on a list of board concerns in May. The board declined to release that list. Fair board meeting minutes states that Tiquin wants land on the southeast corner of the fairgrounds and proposed to pay up to $750,000 and give the fair the benefit of using &#8220waste heat” generated by the plant for fair operations.

The new power plants haven't been welcomed by existing power providers. Chugach Electric Association fought against having to negotiate with Tiqun. Matanuska Electric Association, which is trying to build two new power plants, is a customer of Chugach until 2014. Neither Chugach nor MEA offered specific comments on the Tiquin plan Thursday, although spokespersons for both electric associations have previously expressed misgivings about doing business with the new group.

Concerns that have been raised about Tiquin's ability to finance the new plant are baseless, Hobbs said. He controls the old Knik Arm plant. If the new firm is eventually armed with a power purchase agreement with Chugach Electric it would have all the tools needed to line up the estimated $240 million the new project would cost.

Tiquin, a native Alaskan word meaning wolf, on Tuesday won a Chugach Electric appeal of an Alaska Regulatory Commission ruling that the power provider start to negotiate purchase agreements with Tiquin.

Hobbs said General Electric is already behind the power generation plan and several power provides from Outside would be ready to become partners if necessary.

Tiquin's proposal wades into an ongoing debate in the Mat-Su Valley over MEA's $350 million plan to build two 100-megawatt electric generation plants, one gas-fired and one coal-fired. Hobbs said MEA and Chugach should look at Tiqun as a way to help meet future electricity needs while they decide on their future plans.

&#8220What we're doing is what's done in the Lower 48,” he said. &#8220Once we have purchase agreements there are numerous financial institutions willing to finance them.”

Anchorage-based developer Marc Marlow, a partner of Hobbs along with developer Randy Kaer, said the plant makes good sense, could help local agriculture and industry, and would be energy-efficient. Among other uses for heat generated by the plant, Marlow said new greenhouses could be built nearby and the heat could be used to help develop the nearby Palmer Industrial Park north of the fairgrounds.

&#8220Growers are really feeling the pinch of rising natural gas prices,” he said.

If utilities like MEA do not support the construction of such plants, Marlow said they are &#8220not necessarily looking after the interests of their ratepayers.”

If built, the new plant would fall under the proposed Mat-Su Borough ordinance regulating new power plants that generate more than 50 megawatts, said Borough spokesperson Patty Sullivan.

Contact John R. Moses at 352-2270 or e-mail john.moses-@frontiersman.com.