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Project - Natural Gas Distribution System

A critical element for a successful LNG delivery project is the build-out of a natural gas distribution system, connecting customers to this new and expanded energy source. Once the LNG is transported to Interior Alaska, it will be stored and then warmed back to a gaseous state prior to being distributed to customers by a network of pipes. The storage tanks will also help to meet peak demand during winter months. As envisioned the storage tanks will be eligible for existing State of Alaska support that will cover a portion of their construction costs.

In order to move the gas to homes and businesses, natural gas distribution lines, or “mains” will be installed in the medium and high-density areas of the Fairbanks North Star Borough (FNSB). Natural gas runs from the main to a home or business through a small-diameter pipe called a service line.  Although the distribution company is anticipated to cover a portion of the cost of each customer hook up, there may be a modest fee to extend the service line to individual properties. The cost of converting the existing heating system and other appliances to natural gas will be the responsibility of the individual property owner. However, since the typical home heating savings are anticipated to be as high as $3,000 per year, the payback for investments made to convert to natural gas will take just a few years.  This payback period is largely dependent on factors like a home’s existing heating use, potential savings and the necessary conversions of home appliances to gas. Click here for conversion analysis information.

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The gas distribution system is critical for building demand and reducing the cost the customer pays for natural gas.  As the number of customers purchasing natural gas increases, the fixed operating cost will be spread more broadly and the unit price will be reduced. Although details of the costs and commercial structure are still being refined, the estimated delivered price of trucked LNG to the Interior will result in 40 to 50 percent savings to ratepayers. The full distribution build-out for the high and medium density areas of the FNSB may take six years to complete.

The IEP is not only compatible with a natural gas pipeline, but complements a pipeline by creating greater initial demand. Trucking LNG provides an affordable energy option for the FNSB and incentivizes residents and businesses to convert to natural gas, supporting the construction of a distribution system well before a natural gas pipeline arrives.

Link to Conversion Analysis PDF and Area Distribution Map PDF IEP Conversion Analysis Area Distribution Map