State would rather not import gas

PALMER — For as long as he has been in charge at Matanuska Electric Association, Joe Griffith has taken every opportunity possible to say publicly that importation of natural gas might be on the horizon.

Lately, he’s gotten rid of the qualifier — gas importation is on the horizon.

But if Griffith or any of the other Alaska utilities that rely on natural gas to fire power plants want help from the state in making importation happen, the state is by no means on board.

“Maybe we will have to import. But we’re going to look at options that use Alaska gas, Alaska workers, Alaska trucks,” Dan Sullivan, commissioner of the state Department of Natural Resources, said in an editorial board meeting with the Frontiersman Dec. 7.

The state outlined its preferred option later that day in a press release from Sullivan’s boss, Gov. Sean Parnell.

“In a move to make Alaska’s gas available to Alaskans, Gov. Sean Parnell today proposed a $355 million financial package to jump-start construction of a natural gas liquefaction plant on Alaska’s North Slope and a Fairbanks-area natural gas distribution system through the private sector, and an area-wide utility,” the press release says.

While that sounds like it’s only talking about Fairbanks, Sullivan said there’s no reason the program can’t extend to Southcentral. The idea, after all, is to liquefy the gas and put it on trucks to Fairbanks. Trucks could keep going, tying in somewhere in the Southcentral network to feed those lines. Rail is also an option for that leg.

“That’s a no-brainer if you can make them (a) similar situation in terms of price and timing,” Sullivan said.

Timing, of course, is a big “if.”

“We’ve been trying to get all the different players together,” Sullivan said. “Nobody wants to have the lights go out in frickin’ 2015, right?”

Parnell wrote that trucking might be the right bridge between anticipated shortfalls in current gas resources and future ones delivered via pipeline.

“While we continue to aggressively pursue a gas pipeline to get Alaska’s gas to Alaskans, that project is, at minimum, some years away. In the meantime, trucking gas from the North Slope is the best alternative — with the added benefit of preparing communities for an eventual connection to a pipeline,” he says in the press release.

The proposal also envisions sending gas to communities in the Bush and along the Yukon River. In a lot of ways it is similar to a plan the Alaska Natural Gas Development Authority had pushed over the last couple of years. That plan involved a plant to pull propane out of gas supplies rather than liquefy natural gas. But the idea was similar — trucking or barging gas to communities currently underserved by natural gas distribution.

Harold Heinze, then head of ANGDA and now a consultant for MEA, said at the time that ANGDA looked at energy costs facing Fairbanks and realized it just couldn’t wait any longer.

Griffith’s predictions, outlined in MEA press releases, all involve gas shortfalls coming before 2014. Sullivan is aware that time is of the essence, but he notes that the state was able to fast-track permits when Buccaneer Energy found gas in Cook Inlet. That project came online in eight months, he said.

The state would need a lot of convincing on the import question for a couple of reasons, Sullivan said. First is that the closest gas supply is in Canada. Canadians want to prove they can export gas. Exporting to Alaska could give Canada credibility on the world market.

But Canada is also Alaska’s biggest competitor on that market.

The second reason is tied into the first — nobody is going to want to export to the state without long-term contracts. If major customers are tied up with Canadian contracts, Sullivan reasoned, who is going to want to bring new gas supplies online in Alaska?

Contact reporter Andrew Wellner at andrew.wellner@frontiersman.com or 352-2270.