LNG on a small scale: getting less expensive energy than oil and diesel.

Author:Bradner, Mike
Position:OIL & GAS
 
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The question is whether propane, or LNG for that matter, could economically displace heating oil and diesel for space heating and power generation, and whether it could be used as a fuel for vehicles now powered by diesel or gasoline.

For years Alaskans in communities dependent on fuel oil have hoped to get less expensive energy into their homes. Some regions, like parts of Southeast Alaska, are blessed with inexpensive hydroelectric power. Southcentral Alaska has access to natural gas from the Cook Inlet basin, although that is getting to be less of a bargain.

For much of the state it is diesel and heating oil that fuels power generation and space heating, and these are pricey.

However, there are large reserves of stranded natural gas on the North Slope and it appears these may be tapped by a pipeline in a few years, after years of talk. There could be a natural gas pipeline built by an industry consortium or a state corporation, the Alaska Gas Development Corporation, although neither is a sure thing.

But if a pipeline is built, gas will be made available to the Fairbanks area as well as more gas in Southcentral Alaska and possibly other points along the pipeline.

But what about elsewhere in the state? Many communities would still be oil-dependent. A grid of smaller pipelines radiating out from the big pipeline along the Interior-Southcentral Railbelt corridor would be uneconomic unless there is a big "anchor" customer like a mine.

One spur gas line already in the planning is a twelve-inch line from Southcentral Alaska to the mid-Kuskokwim River, where a large gold mine is planned by Donlin Gold, a joint-venture of Barrick Gold and NovaGold Resources. If the big pipeline is not built, the companies would buy Cook Inlet gas, they said. That assumes the mine, now planned, will go forward.

As for the big pipeline, the plan now is for North Slope gas to be piped to Nikiski, near Kenai, and chilled into liquefied natural gas, or LNG, for export in a large plant.

Improved Technology

Many wonder whether some of the gas, either LNG or propane, a natural gas liquid, could be shipped to communities outside the Interior-Southcentral Railbelt corridor. Would it be less expensive than oil?

Many think it might be. Recent improvements in the technology of containers would now allow the efficient shipment and storage of small quantities of LNG to smaller coastal communities, says Keith Meyer, president of LNG Americas, a Houston-based company working to develop LNG markets in North America, including Alaska.

These ISO containers could be moved by truck, barge, or rail, Meyer says. If shipped by barge they could be deck-loaded along with other freight.

Propane is another liquid fuel available through a gas pipeline. Propane has long been used in Alaska for cooking and in some places heating. It is typically stored in small bottles and refueled at community fueling stations.

Most propane now sold in Alaska is shipped in from Prince Rupert, British Columbia, Canada, according to Mary Ann Pease, an Anchorage-based energy consultant who has worked on an Alaska propane project.

If a gas pipeline is built, large volumes of propane, along with...

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