LNG trucks now roll down the Dalton Highway from North Slope to Fairbanks; Titan plant in Mat-Su kept on standby for emergencies

Mat-Su will soon no longer be the main source of natural gas for Interior Alaska communities. The Interior Gas Utility, or IGU, the natural gas utility serving Interior Alaska, will be scaling down its use of the small Titan liquefied natural gas plant near Port MacKenzie, in the Matanuska Susitna Borough.

Deliveries from the Titan plant to Fairbanks are made now by truck on the Parks Highway. Those will soon be reduced with IGU starting to receive deliveries of liquefied gas by truck on the Dalton Highway, according to Elena Sudduth, the Fairbanks utility’s general manager. However, the Titan plant will be kept on standby for emergency use, she said.

The 414-mile Dalton Highway is the state highway connecting the North Slope with Interior Alaska. Harvest Midstream, a Hilcorp Energy affiliate, began producing LNG at a new plant on the North Slope Oct. 9.

Harvest CEO Jason C. Rebrook said this begins first-ever commercial sale of North Slope natural gas to communities beyond the Arctic region. "For the first time in history, North Slope gas isn't just staying on the Slope — it's reaching beyond to power Alaska's future,” Rebrook said.

"This project unlocks clean, reliable energy for Interior families and businesses and shows what's possible when we work together to build Alaska's energy security," he said.

Harvest's North Slope LNG facility near Deadhorse will produce up to 150,000 gallons per day, triple the capacity of IGU's current Titan plant. The facility is designed for future expansion if market demand grows beyond current capacity. Deliveries to Fairbanks are projected to exceed 8 million cubic feet of gas per day as IGU expands infrastructure and converts more customers in the Fairbanks area to natural gas service.

Converting homes and businesses from fuel oil or wood over to natural gas service will have a significant improvement to air quality in the Fairbanks and North Pole areas. Harvest's LNG facility is capable of reducing fuel oil and wood smoke emissions by up to 2,000 tons per year, a large component of which is particulate matter harmful to human health.

"Bringing North Slope natural gas into Fairbanks is a historic step for Interior Alaska but also for our state as a whole," said Sudduth, of IGU. "This project gives our community access to a new, virtually unlimited, source of gas, strengthening our resilience and ensuring our customers have access to reliable service as Alaska's energy landscape continues to evolve."

The Harvest plant will be able to produce 150,000 gallons on LNG per day or approximately 4.5 billion cubic feet of natural gas per year, and IGU will need approximately 1.5 BCF this fiscal year, she said. The utility has a minimum volume commitment with Harvest that goes up slightly every year until it reaches a level slightly over 3 BCF/yr.

There is significant additional capacity that IGU can market to others. “We have first call on all the LNG. Hilcorp could sell to others, but they would have to be interruptible contracts because of IGU’s first call,” or priority on the LNG. “IGU is, however, able to market the extra LNG to anyone on firm basis,” Sudduth said,

Currently, IGU's Titan plant near Port MacKenzie, in the Matanuska-Susitna Borough, produces up to 50,000 gallons per day, one third of the planned capacity of the Harvest plant on the North Slope. “The Titan plant’s actual liquefaction capacity varies depending on the ambient temperature. The colder it is, the more efficient the LNG plant is. In mid-October the plant was producing about 42,000 gallons of LNG,” Sudduth said.

The transition from the Mat-Su to the North Slope as Fairbanks’ main source of gas will be rather abrupt when it happens, she said. Once the Harvest facility has completed its commissioning and steady operations begin, the IGU-Hilcorp contract in the Cook Inlet will terminate. However, “IGU will have, for a period of up to 12 months, access to (Cook Inlet) gas supply for Titan on an emergency basis, but not for baseload production,” Sudduth said.

IGU now has a staff of six, all IGU employees, at the Titan plant. “We intend to keep Titan in ‘warm’ (operational) status and available in case it is needed. There are tasks that need to be performed periodically on a plant kept in warm status, but more importantly there are staffing needs for when and if we have to run the plant and use its production in Fairbanks,” Sudduth said.

“We do not have a definitive timeline (for the transition) until we gain full confidence in the Harvest North Slope plant. This goes beyond simply ensuring the plant is capable of producing LNG, and we anticipate that taking a while,” she said.

In the Fairbanks and North Pole areas IGU is currently serves a little under 3,500 customers. “This is up quite a bit from the 1,200 customers pre-2019 when we commissioned the 5.25 million gallon LNG storage tank that allowed us to take on new customers,” Sudduth said. “With the combination of new supply, storage and vaporization, and ability to extend mainlines as needed, we are ready to take on new customers,” she said.

This could include Fort Wainright, the major U.S. Army installation at Fairbanks. The Army post is now heated with steam heat generated by coal, but an Environmental Impact Statement on future power supply done by the Army envisions a switch to natural gas. The Army has yet to issue a final Record of Decision on the EIS, however, so the matter is on hold for now.

Interior Gas Utility is a publicly owned and part of the Fairbanks North Star Borough. It operates more than 150 miles of mainline gas distribution in Fairbanks and 85 miles in North Pole. IGU’ service is supported by 5.5 million gallons of LNG storage at three storage sites in Fairbanks and North Pole, east of the Interior city.

The utility, which is public, was formed following the purchase of privately-owned Fairbanks Natural Gas, which had also developed the small Titan LNG plant in the Mat-Su had been trucking liquefied gas from the Mat-Su to Fairbanks. Gas distribution lines were first built to serve a downtown core area of the Interior city. Service was limited to the availability of LNG supply and storage, and financing.

The state Legislature stepped in to help finance construction of larger LNG storage tanks though state capital appropriations and the state development finance agency, the Alaska Industrial Development and Export Authority, or AIDEA, helped finance IGU’s expansion and additional storage after the public utility was formed.

The idea of an LNG plant on the North Slope with liquefied gas trucked to Fairbanks is not new. Ray Latchem, CEO of Tulsa, Okla.-based Spectrum LNG, had formed a small local gas distribution system to serve contractors and support companies at Deadhorse, at Prudhoe Bay, and also proposed an LNG plant to serve Fairbanks.

At the time the project was not economically feasible as a private venture with the limited customer base of the Fairbanks gas service area. It was only after the Legislature and AIDEA extended assistance and Harvest Midstream agreed to build the LNG plant as a separate, private venture, that the overall project took shape.

The LNG plant was not without its technical complexity. Natural gas for the new Harvest plant is produced from the Prudhoe Bay field and has a high 12% carbon dioxide content. Almost all of the CO2 must be removed for the gas to be converted to LNG, however, and this presented challenges for Harvest. The difficulties were overcome, however.

Now that the plant is built and operating there are new opportunities. Although IGU has first call on the LNG from Harvest there will eventually be liquefied gas available for other customers on the North Slope and in Interior Alaska.

LNG trucked from Prudhoe Bay could solve the energy challenges, for example, of a major copper mine proposed in the Ambler Mining District, for example. AIDEA, the state authority, is proposing to build a 211-mile industrial road from the Dalton Highway west to the area where mining companies are exploring copper discoveries.

If the road is built, and a mine in the Ambler District is feasible, LNG from Prudhoe Bay could be trucked to the road juncture, which is about half-way to Fairbanks on the Dalton, and then west to Ambler. The total trucking distance from Prudhoe to Ambler would be about the same as the distance from Prudhoe to Fairbanks.

While hypothetical at this point, this illustrates the potential for LNG newly available to provide energy for new economic development, such as mines, in Interior Alaska. On a closer timeframe, contractors on the North Slope would be able to substitute liquefied gas for diesel in providing fuel for new oil and gas projects.