An Anchorage-based company has been working on plans to develop a regulated gas utility in Southeast Alaska and other rural communities for about two decades, but a spokesman said this is the year it’ll really get going.
Alaska Intrastate Gas Co. President Frank Avezac said the company first was issued its certificate in 1997. That certificate authorized them to develop gas service for 17 communities — mostly in Southeast — from Metlakatla to Kodiak.
“Our intent back then was to use LNG. LNG won’t work. It’s too expensive to make, too expensive to transport and store,” he said. “So our intent would be to use a propane-air mix or a butane-air mix. Eventually when LNG becomes feasible, we’ll use LNG.”
LNG stands for liquefied natural gas.
Avezac said his company is the developer of the project; California-based AECOM would be the operator.
Alaska Intrastate Gas Co.’s partnership with AECOM was announced almost exactly two years ago, according to an Alaska Business Magazine article. In that article, the companies said they planned to start work that year.
But Avezac said this year they really will get started. The Regulatory Commission of Alaska said they have to.
“The RCA has said to us that they’ll take our certificates away if we don’t start soon,” he said.
So, Avezac said, they’re getting their financing in place to do just that.
In the past, they tried to obtain state and local funding. That didn’t work out, which is one of the reasons for the project’s long delay. Avezac said now is a great time to attract private investors.
“And that’s extremely inexpensive. You’re looking at 4-percent bonding money,” he said. “We certainly would hope the city or the state might reconsider, but we don’t need that to happen. Everybody that we’ve talked to wants gas, but they want us to use our own dollars to put the system in place. We’re OK with that, because the interest rates have dropped significantly.”
To create a gas infrastructure in any of the planned communities, the companies will need to install a system of pipes. Avezac said they want to sell gas, so they’ll also pay for pipes directly into a customer’s home, including switching out the oil gun.
“That’s the thing that makes noise when the system is operating. We will exchange that gun that is in the front of the box, it comes out and a gas gun goes in, which operates on natural gas or propane-air,” he said. “We’ll clean out the furnace, put the gun in place, and now you’ve got gas to the home.”
If a home has a really, really old furnace, though, it might not be compatible. In that case, there would be a cost to a homeowner.
Avezac said the entire project for all 17 communities will require about a $500-million investment. Those 17 communities are: Juneau, Ketchikan, Sitka, Cordova, Kodiak, Valdez, Angoon, Craig, Haines, Kake, Klawock, Klukwan, Metlakatla, Petersburg, Skagway, Wrangell and Yakutat.
About 200 jobs would be created over the entire region during construction, he said. Once built, Avezac said there would be 13 to16 jobs in Ketchikan, specifically, for utility administration, engineering and maintenance crew.
Avezac stressed the environmental and health benefits of gas versus oil. He said it’s a much cleaner and safer fuel source. He said gas also can be used to fuel electric generators at a much lower cost than oil, and even less than hydroelectric power.
He compared a hydro-power price of 10 cents per kilowatt hour to the estimated price of his company’s gas.
“Ten cents times 302 is $32 for a million BTUs,” he said. “Where we’re selling it at $19 or less per million BTUs.”
Ketchikan Public Utilities hydroelectric-generated power currently costs customers about 9.6 cents per kilowatt hour. That’s due to increase by 5 percent this year.
Avezac said they intend to have a 90-day plan to acquire equipment and property sometime after April. The first construction phase is planned for Cordova and Juneau, followed by Valdez and Ketchikan.
They hope to start delivering gas to some of those phase-one communities by the end of this year.
A call to AECOM was not returned at deadline for this report.