Tweets of the day: Walker talks energy in Fairbanks as LNG trucking project stumbles

Gov. Bill Walker spoke to the Fairbanks Chamber of Commerce on Tuesday, where according to Fairbanks Daily News-Miner reporter Matt Buxton, he said this:

If there is one bright spot in the tumbling price of oil, it’s that low oil prices will bring down the cost of heating fuel in Fairbanks. So, in this area at least, Walker doesn’t really have to do much.

However, he will have to do a lot if he’s serious about this:

Walker said this before it was announced that the LNG project that then Gov. Sean Parnell pushed, and the Legislature passed in 2013 to provide $362.5 million to help finance the project, is stumbling. The AIDEA picked private contractor is now saying that costs might be more than what the community can pay for. From the News-Miner:

Costs under MWH have creeped up throughout the year, driving the price of delivered gas well above the $15 per thousand cubic feet of natural gas community leaders say is necessary for a final project. The timeline for delivery of gas to the Interior has also slipped from late 2015 to mid to late 2016.The latest cost estimates, including the cost to distribute gas locally, was reaching past $19 per thousand cubic feet. The equivalent in $4 per gallon heating oil is about $30.

All of this should come as no surprise to the many legislators who supported the project and the bill– which passed unanimously–but privately expressed serious doubts that it would actually pencil out.

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10 thoughts on “Tweets of the day: Walker talks energy in Fairbanks as LNG trucking project stumbles

  1. Orwell Was An Optimist

    Remember that the gas trucking idea originated with the Port Authority and was just as ludicrous then. The current governor and his chief of staff had a bit to do with the port authority as you may recall. Tossing out ideas is fine but when they don’t pass the red face test and a little objective thinking they should be discarded.

  2. Garand Fellow

    So where is the evidence that planning by any government is any better than a hit or miss proposition (and most often much worse)?

    We keep expecting government to have the answers to the big questions but it is so seldom government gets it right. And remember, our current short-term crisis is caused by a cartel of governments called OPEC. I think that the free market is much more able to get it right. With a free market approach, if one company badly misses the mark another company will come in to hit the target. We keep wanting government to take responsibility and save us but we are the grownups.

  3. Lynn Willis

    While you correctly observe what has happened in our history regarding domestic energy, I don’t think you can conclude what might have happened (or will happen) in the absence of a comprehensive energy plan that provides focus to the effort over time.
    Absent this “mission plan”, “blueprint”, “strategic vision”, or whatever else you might call it, the scenario you describe is bound to happen when all you can do is react to the next immediate crisis. As you point out, that seems to be the method of choice for the Alaska State Government apparently because that grants them the maximum flexibility. I can appreciate that they don’t have to expend either effort or, perhaps more importantly, additional dollars when the problem appears to be self correcting. Our legislature is like water flowing downhill – it follows the path of least resistance.
    As far as I know the official state energy policy still consists of about 65 lines of text in HB306 “An Act declaring a state energy policy.” passed by the Legislature in 2010. I would suggest that such a limited document can hardly describe a meaningful state energy policy from which you can formulate a viable plan.
    I appreciate your remembering the discussion of importing LNG. Also, do you remember when Dan Fauske stated that if his efforts on the then “bullet line” resulted in gas more expensive than the cost of imported gas, he would be on “a fool’s errand”. I wonder if he still feels that way now as the head of the AGDC/ASAP project attempting to generate a customer base for North Slope gas. The “Fauske standard” should not be forgotten.
    I am suggesting that we simply cannot afford to do business as usual and our historical approach must now end.

  4. Amanda Post author

    Lynn: What has happened over and over again is that plan or no plan, the state begins to act when energy prices are high and Fairbanks is on the verge of collapse. Then oil prices pummel, heating fuel drops–the state runs out of money to finish initiatives–a few years pass and everyone, including apparently Fairbanks leaders, forget there’s been a crisis. To be fair to the Legislature, they were, in large part, following the lead of the governor and of the Fairbanks delegation when they went down the LNG trucking rabbit hole. One of the other options was to import gas from Canada, which, I’ve heard, would have been a much less costly solution, at least in the short term. There was a study done, I’m told, and shoved in a drawer. Nobody, particularly the governor and Fairbanks legislators, wanted that around their necks.

  5. Crude is Rude, Gas is Groovy

    Did you say “bulletline” ??
    I tried to talk seriously about flexpipe in Fairbanks in 1974…
    but got the bulletline message way back then…
    17 bullet holes in the back of my van…
    if you want to get a quick smallbore multi-product light-alkane gasline built to Fairbanks from three/four different directions,
    click on my nickname..
    many of us in Fairbanks already know how to plow 1500psi flexpipe for under $200/ft..
    ten-times cheaper than any “expert” in Anchorage will quote

  6. Crude is Rude, Gas is Groovy

    Andy; IMHO, nukepower is a dilemma wrapped in a paradox……..

    For many decades I have have been an anti-nuke activist,
    and lately have been experiencing a paradigm-shift.

    …that said, a funny thing happened on the way to a safe economical permanent nukewaste repository>>
    >> Hanford, then TMI, then Chernobyl, then Fukushima, and most recently the St.Valentines Day disaster at WIPP,Carlsbad.

    Alaskans can be smart enough to lead the way when talking turkey with the Canucks…
    rather than letting TransCanada bend us over an oilbarrel and do weird things with their pipe wielding lawyers…
    We should remind BC-Premier Christy Clark that her blind support for the BC-Hydro Site-C megaproject on the peace River is a $10-20billion blunder.

    ….the best energy poolshot on the table now is to make good use of all of the deadly toxic hi-risk stockpiles of nukewaste we have scattered everywhere across N.America & worldwide.

    The same league of corporate geniuses that designed the AK-LNG Project also are responsible for all of the other megaprojects including 60-years of Boiling Water Reactors scattered everywhere.
    These BWR’s only use 3% of the available energy in the nukefuel-rods…
    …97% is wasted and deadly-toxic.

    How much energy is in our worldwide stockpile of nukewaste ??
    …enough energy to provide baseline power to global civilization for the next 1000 years,
    if properly managed.

    This can be accomplished by carefully using Beam Activated Molten Salt Reactors built 10,000′ deep in tunnels under the most stable bedrock in N.America located halfway between Yellowknife & HudsonsBay.

    Click on my Nickname ^above^ for a link to more info on Molten Salt Reactors ^^^

    For those of you in the energy biz, this is the best opportunity for you to make a $trillion,
    and be lauded as a hero/genius at the same time.

    …in the meantime, look for an old guy with a long grey beard riding a motorcycle powered with a Brillouin Boiler.

  7. Garand Fellow

    First, Alaskans need to learn to do for themselves, without government. The best that state government can now do is get out of the way. Depending upon government to be pushed this way and pulled that way to provide what Alaskans consume, including energy, is how we got here. Now that the state revenue outlook is so stark we are stupid of we look to government to solve our daily problem. Government should not subsidize our energy any more than it should subsidize the price of toilet paper.

  8. Lynn Willis

    Soon enough some objective individuals are going to have to get involved in this energy crisis in Alaska. This problem should no longer be the domain of only those with a primary political motive to remain in office, a primary motive to remain hired as a government employee/appointee, or a purely financial motive, as a consultant, to simply tell the state government what they want to hear. I am hoping Governor Walker will continue his efforts to involve more Alaskans in the decision process. Meanwhile, you can rest assured that the those elected officials who favor the secretive caucus form of state government, and those who fund them, will want none of that.
    With a population of about 700,000 spread out over an area twice a large as Texas, Alaska cannot depend on the “silent hand of the market” to provide this critical commodity of energy. That is not a new observation as much of the United States was (and is) provided energy by use of co-operatives and other government created entities. The down side of that approach locally is the formation of what you aptly describe as “a plethora of electrical fiefdoms” and the Fairbanks situation. That said, the legislature could solve some problems with a serious discussion of the “fiefdoms” situation and the future viability of an approach to utility regulation that includes the current methods of the Regulatory Commission of Alaska (RCA). The RCA apparently cannot do a thing absent a request from a regulated utility and that is a the perfect mechanism to maintain the status quo because if you don’t want to see a change then simply don’t ask for one.
    I am weary (and wary) of a legislature that refuses to do anything other than throw money at immediate problems and/or promise a solution “guaranteed” to solve our problems immediately after the next election (e.g. multiple gas line funding and LNG trucking schemes).
    I have argued for some time that Alaska needs a comprehensive state energy plan identifying the primary source of energy for each region of Alaska to provide energy for electrical generation, mobility, space heating, local manufacturing and revenue from sales of that energy source. If 50% of that energy must be from “renewable” sources then our “leaders” need to periodically justify that requirement from an economic standpoint not just use that requirement as a weapon to stem alternatives or justify a project that has no serious economic viability (like a certain dam). This energy plan would certainly be subject to review and update; however, it would indicate to all where we are going to pursue our goals. For example if “clean coal” or nuclear power is a viable option then why not pursue either source using our federal delegation to remove the hurdles; otherwise, finally abandon those efforts. However, if electricity from these or other sources would become a viable source of energy for say space heating then we would commit to a program to “wean” Fairbanks and other locations from stove oil. The same process could be used to evaluate and encourage production of mobility fuels from coal or using CNG (Compressed Natural Gas) for freight trucks and railroad locomotives.
    We continue to embark on this “energy journey” without a map and the result is what we are seeing. Of course that “fog” serves some who profit from the status quo. How can we formulate long term solutions when we continue to chase the “next best idea”? What will kill an effort faster than anything is the presence of a “good idea fairy” who offers nothing but alternate solutions.
    We need commitment to a plan now.

  9. Twig

    The Fairbanks LNG trucking project makes about as much sense as the AIDEA funded fish plant that now houses a church. This project wasn’t driven by economics. It was driven by politicians. While the Fairbanks legislative delegation may have been well meaning, they actually did little with this project except waste public dollars without meaningfully lowering the price of energy.
    If only our state leaders would just build a bullet line to move gas. Merry Christmas.

  10. Andy

    Energy is energy, it comes in all sorts of forms. The easiest and cheapest is low cost electricity,
    which can run everything, including vehicles. The Fairbanks area is suffering from high energy costs and air problems. This is a result of local burning of fuel oil and wood, primarily for heat.
    These could be easily converted to electricity and solve both problems.

    The challenge is cheap. The most economical electrical power is obtained form nuclear, which we all know is a no starter. The next in line is coal. We have clean coal technology that
    produces EPA approved emissions. Given the fact that Alaska is blessed with a gargantuan
    amount of low sulfur, high BTU coal, it is a shame that the interior cannot benefit from this.
    The Healy plant, capable of 175 megawatts ( I think ), would produce electricity to power
    175,000 homes. That’s a big chunk of Fairbanks.

    Take the big bucks going to LNG, and you could get Healy up an running, and build another plant as well. Tie these two plants to a common statewide grid and voila, problem solved. Alaskan coal would be a stable , predictable fuel cost, and provide cheap electricity for generations. Why we continue to pump money into oddball energy schemes is bizarre.

    Walker et al need to get serious about an energy plan and stop pussyfooting around with these fantasies. Clean coal technology for those on the grid, and LNG for the bush via
    barges, makes sense. The plethora of electrical fiefdoms needs to be addressed as well.
    An energy policy may help that problem as well, and don’t forget to drop the crazy renewable mandate.

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