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GVEA signs contract for North Slope natural gas

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Posted: Tuesday, September 18, 2012 3:44 pm | Updated: 11:23 am, Mon Jan 21, 2013.

FAIRBANKS - Golden Valley Electric Association has reached a North Slope natural gas supply contract with BP Exploration, the utility co-op announced Tuesday.

The contract with BP could mean the purchase of as much as 23 billion cubic feet of natural gas each year for 20 years. In addition to meeting GVEA’s needs for electrical generation, that volume of natural gas is enough to meet the long-term electric generation and space heating needs of nearly 100,000 Interior residents, according to GVEA figures.

“We’re pretty darn excited about this,” said GVEA Interim President and CEO Cory Borgeson.

GVEA could use as much as 3.5 bcf of natural gas for local generation, which would mean as much as 19.5 bcf would be available for other sources. Borgeson said price terms of the contract are confidential because BP considers that information proprietary.

Borgeson said GVEA would be the only local provider of natural gas under the contract with BP, which is the Prudhoe Bay operator.

The gas contract is a key component of a plan to truck liquefied natural gas from the North Slope to Fairbanks. GVEA and Flint Hill Resources, which owns a refinery in North Pole, announced last summer they were working together to pursue the trucking plan. The plan announced by GVEA and Flint Hills last summer would deliver at least 7 bcf of gas to Interior Alaska, allowing both the utility and refinery to cut down on the use of expensive oil-fired energy.

Flint Hills and GVEA still must reach an agreement on how the gas from the BP contract would be shared, Borgeson said. He termed the contract with BP an “essential” component of the trucking plan.

The contract, however, doesn’t make the trucking plan a done deal. Borgeson said work is starting on engineering plans for infrastructure, including a North Slope plant to liquefy the gas, a facility to turn it back to gas in North Pole and storage areas on both ends. A fleet of trucks is also needed to transport the gas between Prudhoe Bay and Fairbanks.

GVEA will only proceed if those costs make the project viable, Borgeson said.

If the other pieces of the trucking plan fall into place, a realistic timeline for gas deliveries to the Interior is 2015, Borgeson said.

Contact staff writer Jeff Richardson at 459-7518.

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