Company could bring natural gas to the area

Alaska Intrastate will solicit investor and bond financing based on results of study

Posted: Thursday, October 30, 2003

Alaska Intrastate Gas Co. is conducting a marketing and feasibility study for bringing natural gas service to Juneau and 16 other communities in Southeast and Central Alaska.

The study aims to establish the potential volume of gas required for the area and the number of customers likely to request service, said Douglas Lee, a project manager with Montana-Dakota Utilities Co., which is conducting the study.

Alaska Intrastate will solicit investor and bond financing for the project based on the results of the study, Lee said.

Juneau would be the first of 17 communities - mainly in Southeast - to receive gas if developers secure financial backing. Sitka and Ketchikan also would be included in the first phase.

Alaska Intrastate would buy gas from Alberta and British Columbia and ship it to Prince Rupert by railcar or pipeline. It then would be barged up to Panhandle communities, held in storage tanks, and distributed to homes and businesses through a network of underground pipelines.

Frank Avezac, chairman of the board for Alaska Intrastate, said the company is working with several underwriters to secure capital bonds that would be backed by private investors. The bond debt would be paid back by gas consumers, Avezac said.

Avezac said Alaska Intrastate Gas Co. has been working to bring the project online since 1986. The company, however, has been unable to secure the bonds necessary to begin construction. He said securing the bonds now is imperative because of low interest rates.

"If interest rates rise, it's harder to find investors," he said.

Avezac said the entire project would cost about $125 million and create about 50 full-time permanent jobs in Southeast.

Avezac said he expects to attract between 9,000 and 10,000 customers in Juneau.

If the study determines there is a sufficient market, and investor backing is secured by the end of the year, construction in Juneau could begin in 2004 and customers could begin receiving gas in fall 2004 or spring 2005, Avezac said.

The first phase would cost about $76 million and take about seven years to complete, Avezac said.

The second phase of the project would include the Southeast communities of Haines, Craig, Kake, Angoon, Klawock, Klukwan, Yakutat, Wrangell, Skagway, Petersburg, Metlakatla, Kodiak, Cordova and Valdez.

The third phase would build a liquefaction plant at Valdez or Haines to produce liquefied natural gas and barge it to Juneau, Lee said.

"We envision that the whole thing will be done in 12 years," Avezac said.

Avezac said consumers could save as much as 25 percent on their heating bill by converting from heating oil. Gas would be about a 50 percent savings over propane and about 75 percent over electricity, he said.

An average home would pay less than $1,000 a year for gas, Lee said.

Aside from being cheaper than diesel fuel, Avezac said gas power also is an environmentally friendly alternative. He said gas would eliminate the need for propane and oil tanks, reducing the risk of oil spills on private property.

"You don't have the risk of spillage or diesel fuel getting into the underground water supply," Avezac said.

Lee said communities included in the project would need to be fitted with the proper infrastructure support for the gas distribution system.

Upgrades would include dock loading facilities, storage facilities and a web of underground pipe to carry the gas to homes and businesses.

Construction teams would have to lay about 100 miles of underground pipe in Juneau to supply energy to homes and business, Lee said.

If the gas project goes online it will be regulated by the Regulatory Commission of Alaska, which will set tariff rates.

"RCA tells us what our profit margin is going to be," Avezac said.

• Timothy Inklebarger can be reached at

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