Natural gas: No silver bullet for Interior Alaska’s home heating problems

40 below
by Mike Knoche

The cost of heating Interior Alaska’s homes continues to rise while many of our elected officials cheer an energy alternative with questionable viability as a long term solution. The Fairbanks North Star Borough (FNSB) would like to expand the use of Liquefied Natural Gas (LNG) beyond the current 1,100 customers and reported in June that proposed spur lines would carry LNG from Fairbanks to many outlying areas and save residents between $4500-6300/yr. The same report puts the average cost of retrofitting your home from heating fuel to gas at ~$8000. The study estimates the local pipeline to cost ~$230-600M, but Borough Mayor Luke Hopkins said the plan considered only local infrastructure, not the LNG source or funding.

Given the current price differential and unpredictable prices in the future, the estimated savings are not realistic. As of today, the cost differential between LNG at $3.08/gallon (converted equivalents of LNG BTU’s) and #2 heating oil (diesel) at $3.70/gallon is 17%. On the surface this sounds like a nice break, but what about start up costs? Besides retrofitting your home and the lack of local infrastructure, the state has proposed a multitude of expensive ideas that use public funds. Also, consider that the price of natural gas is not stable and could increase, the price of oil could come down, and the futures markets may begin to manipulate the price of natural gas as they have with petroleum. These points beg the question: Is there a real long-term tradeoff in replacing diesel fuel with LNG?

Concerning the LNG sources proposed by state government, there is the “bullet line” from the North Slope to Fairbanks at $8B (though some at the state say, due to additional infrastructure requirements on the North Slope,more like $15-20B), liquefying and trucking gas from the slope, and another gas line from Anchorage that died with voter redistricting.  Since 1959, the gas pipeline proposal (aka: the bullet line) has essentially remained unchanged.  It’s expensive and not economically viable.  If it were viable, it would have been built already, but instead, serves as a bully pulpit for many of our elected officials.  The proposed liquefaction plant currently has no interested private investors. Flint Hills and GVEA talked about it but walked away. Big industry does not invest in unprofitable projects. Besides that, trucking gas to town increases the traffic and maintenance requirements for the Dalton Highway and transportation requires copious amounts of diesel fuel, the very fuel the plan aims to replace. These added costs have not been addressed.

The predictions about savings by both the FNSB and Governor Parnell are shots in the dark when you look at the means to arrive at their estimates.  Parnell’s assessment that this local source will bring down the cost of LNG is more so because we are not isolated from world markets. The FNSB plan does not consider an LNG source so the cost of tying the proposed local lines to whatever LNG source surfaces is unknown.

Add it up.  From the source on the North Slope pipelines to a bullet line or a liquefaction plant is big money and trucking it to Fairbanks requires diesel fuel. If gas makes it to Fairbanks and the infrastructure arrives at your door, do you spend $8000 hard earned dollars retrofitting your home to use a fuel source whose price is as unpredictable as the current source (oil)? Or do you come up with another plan?

I overheard someone say “this town (Fairbanks) is gonna die if we don’t get gas…”. No it’s not, it has been here for over 100 years. In that hundred years humans have gone from harnessing energy by burning coal and lumber to learning to refine fuels, then looking towards the sun,wind, and tide. Industry has told us the status quo is good enough. The politicians followed suit. Progressive thinkers looked the other way and worked to develop technologies that just a few years ago seemed out of reach. There are people in Fairbanks now heating their homes with solar energy and geothermal technology. True, alternative energy is often expensive, but the long-term net benefit leaves this gas business out in the cold. It isn’t likely that “alternative energy” is going be available to everyone right away but the gas line project is no silver bullet. It’s not a long term solution. Interior Alaskan’s need advocates of long term community planning.

Thank you for reading my perspective please feel free to leave any questions or remarks here or on Facebook if you don’t subscribe to WordPress.

A link to my previous article about fuel prices in Alaska.

Cheers,

Mike Knoche

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About Mike Knoche

Straight Ahead Construction is a licensed, bonded, and insured general contractor, construction company based in Fairbanks, Alaska with a great reputation for honest, good work. View all posts by Mike Knoche

13 responses to “Natural gas: No silver bullet for Interior Alaska’s home heating problems

  • petit4chocolatier

    Alternative energy is expensive and I am unsure how we can make it happen for everyone. I wish I had the answer to that question. Hopefully someone will come in and revamp the current situation in Alaska.

    • Interior Builder

      I am unsure as well but the current plans are not a solution. It’s embarrassing.

    • Interior Builder

      And I try to make it clear here that I don’t have the solution. However, so much money has gone into researching all these gas line alternatives over the years and none consider other resources. I fthe state is going to throw $8B at a pipeline and expect people to put $8K out of pocket into their houses it just seems like you could spend that money in a different, more sustainable way.

      • petit4chocolatier

        Sustainability was the hot subject only a few years ago and has slowly dissipated; very sad. Yes, I agree; we need to throw money at sustainability for a future and not a band aid measure solution.

      • Interior Builder

        It’s still a hot topic here among a certain crowd. This perspective is going to be in this Sunday’s paper. I am sure to draw widespread criticism. I am fine with that though. I think it’s good for people to be reminded that there are other solutions to problems. We got ourselves into this mess, we can surely get out if it. I am building a new house next year and looking into using solar energy to heat a mass energy storage system. I will surely be babbling about what I learn here…Happy solstice (a whopping 3h41m of day here today at 38 below. Weeeeeeeeeeee!)

  • continuousdrawing

    I am happy to read your thoughtful consideration of the consequences of all these fuels. We all need to think it over…and find ways to depend less on fossil fuels – the problem is that the world is focused on short term gains. We all need to invest for the long term. You have beautiful country in Alaska, I’ve been as far as the Artic Circle and I know the trade offs all Alaskans make…but the whole country needs to join together and think long term, for the bigger picture, the world, humankind and all forms of life that have supported us from our very beginnings.

  • Bosartis

    Hi,
    As a matter of interest I’ve been using Calor Gas (liquified Petroleum Gas or LPG) via a holding tank for many years. We use it as we’re not close enough to any natural gas pipelines. I have a stone built 3 bedroom cottage home and cost-wise it’s around £4500 per year for heating alone.
    It is certainly NOT an economical situation, but IS easy to use and very reliable in over 30 years. I would hope that LNG is cheaper!

  • fbxkindling

    Adding up the cost of bringing in gas isn’t easy and the numbers get big fast. Thanks for putting costs into the discussion.
    Did you mean to say “just as *un*predictable”?

  • judyinalaska

    Great down-to-earth assessment. You are so right to question this. What kind of response did you get after the article ran?

    • Mike Knoche

      The usual suspects either slammed it or gave it props. Overall it seemed like people said it was a thoughtful article. I write the articles when I am trying to get a better understanding for myself. Writing makes it concise for me so I figure I should share it with everyone else who has busy lives and families and struggles to keep up with information.

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