Propane could be boon for Alaska

Posted: Thursday, April 28, 2011

The Alaska Natural Gas Development Authority (ANGDA), was created by voter Initiative in 2002. ANGDA, under State Statute 41.41, is still working to bring natural gas to Alaskans and the world's markets. ANGDA is also empowered to acquire and condition gas, construct, design, and operate a pipeline system or other facilities, which includes propane.

In our natural gas are other hydrocarbons, referred to as Natural Gas Liquids (NGLs). One of the most beneficial components of natural gas is propane (C3H8). Propane has the unique characteristics of being readily available in the near term, is clean burning, and an attractive alternative to diesel for so many communities in Alaska where a gas pipeline will never reach. Every day, approximately 8 bcfd of natural gas is re-injected into the ground at the Prudhoe Bay Unit (PBU). Included in that staggering daily gas volume is 100,000 barrels per day of propane. Statewide, Alaskans use about 2,000 barrels of propane per day. Much of this is imported from Canada. Perhaps one-third of Alaskan residents will never see natural gas come to their homes. Enter Propane.

ANGDA has been working with the producers and the private sector stakeholders for over two years now to bring this abundant, cheaper propane off the North Slope for both export (generating new state revenues) and most importantly for statewide distribution to rural and urban Alaskan consumers via existing coastal, river, road, air and rail systems. Autos, buses, businesses, homes, service vehicles, and trucks would all benefit from propane, a clean fuel.

ANGDA's challenge is getting the Prudhoe Bay Unit Owners to aggressively work with us to examine the feasibility of a commercial wholesale "off-take point" for propane before the gas is re-injected. This off-take point would hold the highest possible concentration of propane, thus reducing end user costs within our state and establishing a greater potential export opportunity. The larger scale project (that includes outside of Alaska distribution) would probably be in the 20,000 barrels a day range. From this wholesale plant, the propane can be moved by truck or barge (utilizing rivers/seas) off the Slope to other distribution points such as the Aleutians, Bethel, Fairbanks, Kodiak, Nome, SouthCentral (via both rail and road), Southeast, and the Yukon/Kuskokwim River (reaching hundreds of villages).

One can easily visualize this new connected distribution system as it expands to service more Alaskans and integrate this cheaper new energy source into their homes and businesses, lowering your energy costs statewide.

ANGDA recently hosted the Alaska North Slope Propane Conference at University of Alaska Anchorage. The stakeholders on the business side were all there: AmeriGas, BP, CleanFuel, Crowley, FirstSouthWest, NPGA, NANA, PERC, ROUSH, WESTERN CASCADE and others. Two new ROUSH Ford F250's powered by fuel-injected propane are currently being tested in Fairbanks and Anchorage today.

The private sector is here and ready to move forward with this project. ANGDA is ready. The economics appear reasonable. The benefits to our state are huge. This is an energy project which could be delivering propane statewide by 2013. Not in six or 10 years. All Alaskans need is the North Slope's commercially viable off-take point and the Propane. Let's do it.

Scott Heyworth is chairman of the Alaska Natural Gas Development Authority.

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