The Interior Gas Utility’s plan to start trucking liquefied natural gas (LNG) from the North Slope has hit a few technical snags, delaying the expected delivery until July.
IGU General Manager Elena Sudduth shared the update during her quarterly report to the Fairbanks North Star Borough Assembly Finance Committee on Thursday.
IGU signed agreements in 2023 with Harvest Midstream and Hilcorp LLC to secure a North Slope natural gas supply. Harvest has constructed an LNG processing plant near Prudhoe Bay, while Hilcorp will provide the raw gas.
“The facility is looking closer and closer [to being] an LNG facility,” Sudduth said.
IGU sought a new source due to the declining supply of Cook Inlet natural gas. Currently, the utility processes Cook Inlet gas at its Titan II facility in Point Mackenzie and trucks it north via the Parks Highway.
However, Harvest has faced multiple setbacks, including supply chain issues, the need to send a critical piece of equipment to France for refitting, and complications related to gas supply contracts.
Due to these delays, Sudduth said IGU has pushed its expected gas delivery date back to July.
Still, IGU board president Steve Haagenson emphasized the significance of the project.
“This plant is the first commercial gas to come off the North Slope,” Haagenson said. “We’re pretty happy with it.”
IGU plans to begin its summer construction season in May, weather permitting. According to Sudduth, the utility currently has 100 new service agreements lined up to install gas lines.
In addition, IGU will continue expanding mainline infrastructure using about $2.5 million in Targeted Airshed Grant (TAG) funding provided by the Environmental Protection Agency.
“All of that mainline is going into the North Pole area to help incentivize additional conversions in an area that has the worst air quality,” Sudduth said.
The borough and IGU both benefit from TAG funding, which helps reduce fine particulate matter (PM2.5) emissions in areas that exceed federal air quality standards. The EPA has designated the greater Fairbanks and North Pole urban area as a “serious nonattainment area” because its 24-hour average PM2.5 levels exceed Clean Air Act limits.
While IGU uses the EPA funding to build out its gas system, the borough uses TAG dollars for its heating appliance change-out program. That program helps residents switch from solid fuel heating systems to cleaner alternatives such as natural gas or heating oil. The subsidy does not cover the full cost of conversion, but helps reduce the financial burden.
Sudduth said IGU also intends to install smaller mainline extensions for customers who are ready to convert to natural gas. This work will be funded through a $2.5 million state reimbursable grant IGU received in 2024.
IGU’s board of directors recently approved a letter of support for two bills sponsored by Interior lawmakers that would require any Alaska LNG pipeline to include a spur line to Fairbanks. Similar letters were submitted by the borough, Golden Valley Electric Association, the Greater Fairbanks Chamber of Commerce, and the Fairbanks Economic Development Corporation.
House Bill 119, sponsored by Rep. Will Stapp (R-Fairbanks), is currently in the House State Affairs Committee. Senate Bill 114, sponsored by Sens. Mike Cronk and Robb Myers, has advanced to the Senate Finance Committee.
The current Alaska LNG pipeline plan lacks a Fairbanks spur. The Alaska Gasline Development Corporation says a spur is considered a separate project due to federal permitting constraints, but noted that an unnamed Alaska developer has expressed interest in pursuing it.
Interior lawmakers argue that any megaproject intended to benefit Alaskans should include a 32-mile spur to Fairbanks. They argue that the estimated $200 million spur is minor in the context of a $44 billion pipeline.
Contact reporter Jack Barnwell at 907-459-7587 or jbarnwell@newsminer.com.
