FAIRBANKS — The borough-owned Interior Gas Utility is once again working toward an agreement to purchase the Pentex Alaska Natural Gas Corp.
Should a purchase agreement be reached, the Interior Gas Utility would own the Fairbanks Natural Gas company, the Titan LNG natural gas liquefaction facility in Big Lake, and a semi-truck gas hauling operation, which are all under the Pentex umbrella.
In July, the Interior Gas Utility’s work toward the Pentex purchase was put on hold after a dispute arose concerning its expenses and whether or not these expenses were outside the scope of work outlined in the loans the utility received from the Alaska Industrial Development and Export Authority.
The dispute has been resolved, and AIDEA has given the utility the green light to move forward. Interior Energy Project Team Leader Gene Therriault of AIDEA said the board recently approved a grant of as much as $345,000 for the Interior Gas Utility to continue doing its work toward purchasing Pentex.
To purchase Pentex, the Interior Gas Utility has a number of tasks to complete such as an integration study and due diligence.
Interior Gas Utility General Manager Jomo Stewart said he had been in contact with his contractors requesting the time and funding required to complete the work. Stewart said the utility had a unique relationship with AIDEA in that AIDEA was playing both the role of banker and seller in the Pentex deal. AIDEA purchased Pentex in 2015.
Although the Fairbanks North Star Borough is the second-largest market for natural gas in the state, it’s still a relatively small market, Therriault said.
“Natural gas demand is low and combining the customers in one utility will get the appropriate economics of scale,” he said. “Two companies would drive up cost.”
Stewart, who became general manager in April, said the Interior Energy Project is taking more time than many people thought, but he is confident it is headed in the right direction.
“It’s a viable way to stabilize the energy costs in the coldest, darkest metropolitan on the planet,” Stewart said. “The reason remains.”
New storage facility
Fairbanks Natural Gas President Dan Britton said the company already has two storage facilities of 90,000 and 250,000 gallons. With only 1,100 customers in Fairbanks, Britton said a larger facility would be needed if the utility were to add more customers. The Regulatory Commission of Alaska requires the utility to hold enough reserve gas to keep its customers heated for five days in winter.
In its latest board meeting, AIDEA approved an appropriation of up to $1.5 million from its Interior Energy Project budget toward the engineering and design work for a 5.25 million gallon natural gas storage tank in South Fairbanks, Britton said.
“A larger storage would improve liquefaction capacity,” Britton said. “It provides us with a greater level of security supply. Ultimately, as we grow we would need more and more storage. As an economic decision, it makes more sense to build a large storage tank now.”
The goal is to complete the engineering and design so the proposed storage tank’s pilings could be installed this winter. Britton said the tank could be completed as soon as fall or winter of 2019.
Therriault said once the new natural gas storage facility is complete, the smaller existing tanks could possibly be transported to North Pole where the Interior Gas Utility has laid pipe for future natural gas customers.
Contact staff writer Kevin Baird at 459-7575. Follow him on Twitter:@FDNMcity.