City of Tanana to experiment with propane as primary fuel

Posted: Friday, September 14, 2007

FAIRBANKS - The city of Tanana is teaming with the state on an ambitious demonstration project to use propane from the North Slope for heating, hot water, electricity and more.

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"We're looking at converting the whole community over to propane," said Bear Ketzler, the city's manager. "This is the ultimate goal."

Under the terms of the project, the Alaska Natural Gas Development Authority, a public corporation of the state, will pay a contractor up to $100,000 to secure a propane supply, help residents switch to the new fuel, and analyze and document the conversion process. The contractor and the city will be responsible for seeking grants and loans to help fund the project, which Ketzler said could cost up to $4 million altogether.

Harold Heinze, ANGDA's chief executive officer, said the Yukon-Kuskokwim Propane Demonstration Project is aimed at assessing the feasibility of using propane in river communities across the state. When a natural gas pipeline is built from the North Slope, propane will be available in large supply, he said, and could be removed from the gas stream fairly easily at plants along the pipeline, then shipped to villages.

"It offers an opportunity for a lot of Alaskans to share in the energy inherent in the North Slope gas," he said.

ANGDA's preliminary estimates suggest communities could save money by using propane instead of other fossil fuels, Heinze said, but the corporation wanted to use a "guinea pig" to get a better sense of conversion costs and economic viability of the fuel.

"The city of Tanana - Lord love 'em - raised their hand right away," he said. "They took one look and said, 'This is great."'

Ketzler said his community, located along the Yukon River 130 miles west of Fairbanks, was one of many hit hard by high fuel prices. The question all over Alaska, he said, is "Can we afford to buy the No. 2 diesel to keep things going?"

In Tanana, the school alone pays $12,000 a month for electricity and nearly that again for heating fuel, which runs about $4 to $4.50 a gallon delivered, he said. The washeteria could have to shut down if energy costs aren't lowered.

Tanana's City Council passed a resolution in July authorizing the city to move forward with the project. According to the resolution, the project would determine the feasibility of converting existing appliances, testing small co-generation systems, and converting heavy equipment and vehicles to run on propane.

If the project works, Ketzler said, it will likely set the stage for a small propane plant built at Yukon Crossing, where the trans-Alaska oil pipeline spans the river.

ANGDA and Tanana recently signed a memorandum of agreement, and ANGDA put out a request for bids from contractors last week.

The project was set up as an experiment, but Ketzler said he hopes the switch to propane will be permanent. Under the agreement, propane will be subsidized to reflect the cost expected with a natural gas pipeline in place and a propane plant at Yukon Crossing.

Ketzler said the city is hoping to secure grant funding, and to develop a long-term relationship with a North Slope propane supplier to carry the city over until a pipeline is built.

ANGDA is accepting proposals through the end of the month and anticipates issuing a contract in mid-October.

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