Mat-Su, Fairbanks partner on $100 million federal grant for rail extension, Titan LNG plant

The Matanuska Susitna Borough and three partners including the Fairbanks North Star Borough have teamed up on an application for $100 million in federal infrastructure funding to complete a railroad spur from the Alaska Railroad at Houston to the small Titan liquefied natural gas plant now operating near Port MacKenzie.

The Interior Gas Utility, which distributes natural gas in the Interior city, and the state-owned Alaska Railroad two other participants in the initiative.

Completion of 18 miles of railroad track to the Titan plant from a junction with the existing Alaska Railroad main line would be coupled with a tripling of the Titan plant capacity from its current production of 50,000 gallons of LNG per day to 150,000 gallons per day.

The rail connection would allow the LNG to be shipped to the IGU’s liquefied gas storage in Fairbanks as well as a smaller LNG storage facility at North Pole, east of the city. A rail spur to the North Pole storage site is part of the overall project.

Total costs of the project are estimated at $203.9 million but if the $100 million federal grant is approved the remaining costs can be covered with bonds issued by the IGU, which is a public entity and part of the Fairbanks North Star Borough.

The state of Alaska could also help cover costs to complete the project, if funds are available. The state has already invested $184 million in the rail extension project through capital budget appropriations over several years.

LNG is now trucked from the Titan plant to Fairbanks on the Parks Highway. If the rail link is established it would allow the Alaska Railroad to ship the liquefied gas, taking the trucks off the Parks Highway along with the Knik Goose Bay road.

The borough and the Alaska Railroad are still committed to completing the entire 33-mile rail link to Port Mackenzie, beyond the 18 miles that would be built to the Titan plant.

The railroad embankment and bridges for the entire rail linka re complete, and federal permits have been secured. Port MacKenzie is the only natural deep-draft port in upper Cook Inlet The Port of Alaska, across Knik Arm in Anchorage, is not deep-draft and requires dredging.

Port MacKenzie is also a strategic asset for the state, particularly if it is connected by rail, because the port serves as an alternative if Anchorage’s port is closed by a natural disaster such as an earthquake.

Fairbanks borough mayor Bryce Ward told the borough assembly in the Interior city that a completed rail link to the Mat-Su port would benefit the entire state.

“For Interior shippers, the new rail link shortens the distance to tidewater; and increased rail freight activity, and development activity stimulated by the rail link will benefit communities through increased employment, contributions to the state and community tax base, and overall economic health.”

The application, for the “Alaska Railbelt Clean Energy Transportation Infrastructure Project,” was submitted to the federal Economic Development Administration’s Build Back Better Regional Challenge program.

A billion dollars was made available to the EDA in the American Recovery Project Act passed by Congress earlier this year. Mat-Su and its partners will be in competition against other applicants for money, but Mat-Su borough manager Mike Brown thinks the Alaska application has a good chance.

That’s because the project is already well advanced. Half of the rail extension project is essentially built; engineering and design work on the Titan plant are done, and the Alaska Railroad, under a special federal authorization, has already demonstrated that LNG can be moved safely by rail, Brown said.

A strong case can also be made for public benefits because more efficient transportation of LNG to Fairbanks by rail rather than truck will lower energy costs in the Interior city and allow for further expansion.

That will result in improved public health because harmful winter air pollution caused by the use of wood and fuel oil for heating will be reduced because natural gas is a cleaner fuel.

Mat-Su Borough Manager, Mike Brown said he believes strategic partnerships like the one formed around the infrastructure initiative yield successful projects.

“This coalition is a great example of partnering to develop infrastructure, advance economic development, and propose solutions to meet Alaska’s needs regionally. This project meets various needs for both the Fairbanks North Star and Mat-Su Boroughs and their many communities,” Brown said in a statement.

“It is not too often we have an opportunity like this to address the need for a cleaner, more sustainable energy source for interior Alaska; provide economic benefit and improve resiliency through improved rail infrastructure with access to tidewater; and improve air quality and reduce carbon gas emissions with more efficient rail transportation,” he said.