Legislature(2011 - 2012)BARNES 124
03/31/2011 03:00 PM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| Overview: Alaska Propane Project by the Alaska Natural Gas Development Authority (angda | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
March 31, 2011
3:04 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Lance Pruitt, Co-Chair
Representative Bob Lynn
Representative Kurt Olson
Representative Dan Saddler
Representative Pete Petersen
Representative Chris Tuck
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
OVERVIEW: Alaska Propane Project by the Alaska Natural Gas
Development Authority (ANGDA)
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
HAROLD HEINZE, Chief Executive Officer (CEO)
Alaska Natural Gas Development Authority (ANGDA)
Anchorage, Alaska
POSITION STATEMENT: Introduced the Alaska Propane Project to
the committee.
MARY ANN PEASE, Consultant
Alaska Natural Gas Development Authority (ANGDA)
Anchorage, Alaska
POSITION STATEMENT: Testified during the Overview of the Alaska
Propane Project.
PAUL FUHS, Consultant
Alaska Natural Gas Development Authority (ANGDA)
Anchorage, Alaska
POSITION STATEMENT: Testified during the Overview of the Alaska
Propane Project.
ACTION NARRATIVE
3:04:03 PM
CO-CHAIR LANCE PRUITT called the House Special Committee on
Energy meeting to order at 3:04 p.m. Representatives Pruitt,
Lynn, Petersen, and Olson were present at the call to order.
Representatives Saddler, Tuck, and Foster arrived as the meeting
was in progress.
3:04:39 PM
^Overview: Alaska Propane Project by the Alaska Natural Gas
Development Authority (ANGDA
Overview: ALASKA PROPANE PROJECT BY THE ALASKA NATURAL GAS
DEVELOPMENT AUTHORITY (ANGDA
3:04:51 PM
CO-CHAIR PRUITT announced that the only order of business would
be updates on the Alaska Propane Project by the Alaska Natural
Gas Development Authority (ANGDA).
3:05:15 PM
CO-CHAIR PRUITT spoke of his interest in the subject and noted
the Alaska North Slope Propane Conference is underway in
Anchorage.
3:06:49 PM
HAROLD HEINZE, Chief Executive Officer (CEO), Alaska Natural Gas
Development Authority (ANGDA), stressed the importance of ANGDA
weighing in on the subject of the Alaska Propane Project. He
explained that ANGDA is a public corporation formed through the
initiative process in the 2002 election. It has worked on a
wide variety of projects consistent with its mission of bring
North Slope gas to market in a method that benefits Alaskans.
He highlighted that "benefits Alaskans" is the key piece of
delivering gas statewide. He related that ANGDA has worked on
numerous aspects of the issue and given its limited resources
has most recently focused on areas that represent the prime
importance in Alaska. First, ANGDA has participated on behalf
of the electric utilities of Alaska in the open season process
of both of the big pipeline projects: the Denali Pipeline and
the Alaska Pipeline Project. He emphasized that working in this
process has put ANGDA in the position for many electrical
customers to enjoy the benefits of reduced transmission costs
for North Slope gas when the pipeline is built. The pipeline
may affect up to 75 percent of Alaskans. Secondly, ANGDA has
focused its efforts on North Slope propane since a substantial
amount of propane, which is a heavier gas molecule, also exists
in the vast North Slope reserves. Bringing this propane to
market could assist Alaskans who will not directly benefit from
the big pipeline. He attested by working simultaneously on
these issues, ANGDA can assist Alaskan consumers.
MR. FUHS offered his belief that a wholesale propane facility on
the North Slope and actively participating in the big pipeline
process fit in the total picture of providing power for the
state. He acknowledged the uncertainty of when and how the
North Slope gas can be tapped but stressed that both ideas will
be pursued. The North Slope natural gas reserves, in terms of
natural gas and natural gas liquids such as propane, are far
more extensive that Alaska can ever use. He predicted the
reserves are 10 to 20 times greater than Alaska's needs so
Alaska must look for markets outside the state. He said the
market has changed and ANGDA sees opportunities for in-state use
and export to support the economies of scale. Initially ANGDA
considered a small scale facility on the North Slope but the
market did not warrant the investment risk. He related that
currently ANGDA is working with the Prudhoe Bay Unit owners and
ANGDA is poised to better accomplish this project, particularly
given the export opportunities that should provide the economies
of scale. He cautioned that all costs must be considered since
it is not only the cost of purchasing propane and separating the
molecules, but the cost of delivering them that determines
whether this energy source is a bargain or has a high value to
the consumer.
3:14:43 PM
MARY ANN PEASE, Consultant, Alaska Natural Gas Development
Authority (ANGDA), stated she is pleased to be attending the
Alaska North Slope Propane Conference with stakeholders
attending from all over the U.S. All facets of propane
distribution are under discussion, including infrastructure,
transportation opportunities, distribution, and financing.
ROUSCH CleanTech has been active with auto racing has partnered
with Ford Motor Company to develop a protein fuel injection
system for fleet services throughout the world.
MS. PEASE began her presentation "Connecting Alaskans to their
Natural Gas." She referred to a map depicting proposed pipeline
routes [slide 1]. She related that the map depicts all of the
proposed pipeline projects but the proposed pipeline routes do
not reach many parts of the state. ANGDA would fill in the
areas in the state that will never be reached by any pipeline.
The propane project would off-take North Slope propane at
strategic compressor stations once a pipeline is built. The
ANGDA's intent is to develop a market for propane from the North
Slope that would provide an attractive alternative to costly
diesel. The current price of home heating oil in the Northwest
Arctic Borough was reported at the Alaska North Slope Propane
Conference today at $9.85. Resources for in state use and
expanding to Asian markets could provide jobs, industry
development, and opportunities.
MS. PEASE listed propane's benefits and opportunities [slide 2].
The picture for propane changed several years ago with oil at
$144 per barrel. She related her understanding that it was
always envisioned that propane would be transported on the main
pipeline and off-takes would provide propane to other parts of
the state. When oil increased to $144 per barrel North Slope
propane rose as an alternative source for non-discretionary home
heating and lighting. She predicted that the plan to provide
propane to the state could be developed and operational in a
two-year period well ahead of any pipeline completion. The
benefit of using North Slope propane is that it provides an
attractive clean fuel for rural Alaska. Many of the discussion
points at the conference have highlighted the reality that the
transition to ultra-low sulfur diesel is costly and unattainable
to many rural Alaska's communities [slide 3]. It is not
possible to build sufficient storage or get the supply to meet
rural Alaska's requirements. Propane has been used for decades
and the price advantage of North Slope propane saves on
transportation. It is being priced with the North Slope as the
market point rather than transporting it from Prince Rupert via
barge to Whittier and transporting it via rail to Fairbanks and
beyond. To do so, cuts off a huge portion of the logistical
"train." Propane would transcend the natural gas pipeline
route. Even with a natural gas pipeline, there is the
opportunity to provide propane to critical markets in Alaska
beyond Southcentral. She emphasized the volumes of C3 propane
are world class. This opportunity could expand beyond Alaska to
national markets. Today there is no market for North Slope
propane. Currently Prudhoe Bay unit operators have an
operational target for the maximum amount of propane to
facilitate injection to keep oil flowing through the Trans-
Alaska Pipeline System (TAPS).
MS. PEASE offered her belief that in examining the petrochemical
market, the 20,000 billion cubic feet (bcf/d) per day of propane
could be supplied by direct marine export [slide 4]. She
recalled Lt. Governor Mead Treadwell's comments this morning
about arctic transportation corridors beginning to emerge. He
said the reduced extent and thickness of polar ice routes
creates potential transportation opportunities through the
Arctic that will add to the market. She pointed out that ANGDA
is willing to facilitate and bring the stakeholders together.
The project will be a private sector project that will be driven
by markets and business sense. ANGDA is part of an Alaska
Propane Consortium Group that has been meeting in Anchorage.
She stressed the discussions with producers to highlight the
opportunities beyond Alaska. A vibrant business case exists to
open up potential. She discussed the logistics to Asia and U.S.
West Coast [slide 5]. She anticipated the proposed natural gas
pipeline would provide 4.5 bcf/d of gas unless a smaller
diameter pipeline was built. She stressed that 110,250 barrels
per day represents a worldwide opportunity. Alaska's demand has
been estimated at 3,000 to 3,500 barrels per day, which provides
an in state perspective on the magnitude of natural gas.
3:24:37 PM
MS. PEASE stated the volume in the pipeline will create a
worldwide opportunity. She highlighted the "Feedstock Based
Cracker Production Capacities" and noted that the composition of
liquids available has not changed significantly since 2004 when
these figures were developed for the right-of-way application
[slide 6]. She reported that the "Alaska Gas & NGL Potential
Uses" slide garnered attention at the conference [slide 7]. The
rich stream of gas holds many types of gas opportunity for
imports and exports, which is dependent upon the private sector
development and marketing. She commented that many people
attending the conference also participate in the worldwide
Propane Gas Association. Participants at the conference noted
that Hawaii and Asia have insatiable appetites for propane
[slide 8]. Hawaii consumes a million gallons of imported
propane per day on one island alone. They are keenly interested
in obtaining propane from the U.S. rather than Asia. Bringing
together the stakeholders and having industry represented has
been one of the things ANGDA has been working hard to
accomplish. There is a channel to market issue for exports
[slide 9]. She emphasized the opportunity that partnering with
a U.S. company could have to facilitate market development
activities in a sustainable manner. ANGDA is asking the Prudhoe
Bay owners to perform technical evaluation of liquids and to
consider development of a logistical facility [slide 10].
Initially, ANGDA worked solely on the in state market. The in
state market is important to Alaska and its rural communities.
However, it does not rise to a compelling commercial transaction
for the North Slope operators. ANGDA also considers the
worldwide needs, including Asia and the U.S. West Coast.
Additionally, technical work needs to be done on the cost
estimates for modifications and requirements for the central gas
facility. She offered her belief that a minimum investment of
$300,000 will be necessary on technical and feasibility studies.
This would provide a marketing plan from the State of Alaska
that would identify the market opportunity in a clear and
defined manner and a non-unit logistical facility to receive
individual propane sales. That means ANGDA is asking to put in
place a very rich extraction stream of the North Slope propane
at a wholesale facility which makes it available to an
aggregator and other users within the state. She highlighted
the positive nature of doing so. It is possible to develop the
site separate from the Prudhoe Bay unit. She remarked that
this would be a very small volume, about 2,500 barrels in an
extremely high-cost plant estimated to cost $20 million for the
initial development cost. She related her understanding that
these changes could happen for a small investment to the central
gas facility right before the propane extraction plant that
currently exists. She said to do so could result in 20 million
barrels per day which presents a compelling business argument.
3:30:45 PM
MS. PEASE referred to a study done by Northern Economics, Inc.
on the Alaska Pipeline Project In-state Gas Study [slide 11].
This study encompassed the Denali pipeline project as well as
the Alaska Pipeline Project. This study examined the
opportunity for propane once the proposed natural gas pipeline
is built. She pointed out that in zero to five years the demand
will still be about the same, about 3,000 barrels per day.
However, the demand grows to 30,000 barrels per day in years 10-
15. She remarked on the potential for in-state demand for
propane as an alternative energy source at a reasonable price.
She pointed out the need for propane for fleet services.
Currently, hundreds of barrels of ultra low-sulfur diesel are
trucked to the North Slope to provide for fleet services
operation and the cost is extremely high. She anticipated that
a fueling station could provide Alaska's propane on the North
Slope if the fleet were to be converted to propane, which would
avoid spill issues. She highlighted that this idea and
opportunity is beginning to gain traction. Additionally,
propane could be used for exploration and drilling, industrial
applications such as electrical generation, and transitional
development from in-state and North Slope- use to longer-term
export. The best opportunity is for rural community and village
home heating. She pointed out that providing alternatives to
the $9.85 per gallon in Kotzebue and beyond is one thing ANGDA
is focused on and can do today. The "Propane Barging/Tankering
Direct from North Slope" could happen direct from the North
Slope [slide 13]. Ms. Pease concluded that if Alaska had a
propane wholesale facility on the North Slope the propane could
be trucked, barged, or exported directly to mining
opportunities, gas operations in Cook Inlet, to Hawaii, and for
use by petrochemical manufacturer's in-state, as well as to the
Lower 48 and West Coast for seasonal demand. She emphasized
that this opportunity could so easily be accomplished and
embraces the private sector and development of Alaska's
resources in a sustainable and opportunistic manner going
forward.
3:34:54 PM
REPRESENTATIVE SADDLER asked whether the propane is
compressible.
MS. PEASE answered that it is a liquid, but air can be added to
it so it can be injected. She offered to provide technical
applications.
3:36:09 PM
REPRESENTATIVE SADDLER referred to the cost of the propane
separation facility on the North Slope and asked for
clarification on whether it would be incorporated just above the
gas treatment facility.
MS. PEASE answered yes, that would be the unoptimized plant that
would produce about 2,500 barrels per day. She explained that
if the North Slope owners changed the central gas system, the
result would reduce the cost and increase the volume to
approximately 20,000 barrels of propane per day. She related
that the goal is to reduce the overall cost and bring it back to
the Prudhoe Bay unit to see if the producers and owners would be
willing to consider this as a business market opportunity. If
not, there is a backup plan that this project is viable over a
period of time.
3:37:14 PM
REPRESENTATIVE SADDLER related his understanding $200 million
would provide a stand-alone facility that would produce 2,500
barrels per day.
MS. PEASE agreed noting that it is so expensive since it would
take a full-gas stream with the CO2 still needing to be removed
and the plant would not be located in the optimal place on the
North Slope. She explained the goal is to work with the North
Slope owners and producers to work to develop a propane
wholesale facility that would utilize the more optimized richer
stream of propane ahead of the propane extraction facility that
exists today prior to injection. In further response to
Representative Saddler, she agreed that it would take
approximately $300,000 for a study. She remarked that she is
encouraged by the preliminary discussions and work. The
preliminary findings indicate the opportunity is so incredible
the producers and owners should embrace it since it would likely
pan out.
3:38:25 PM
REPRESENTATIVE PETERSEN recalled the British Thermal Units (BTU)
values of propane are two-thirds of diesel. He asked what the
cost would be in Kotzebue to outline the potential savings.
MS. PEASE answered that the BTU for propane equals 91,600 per
gallon and on fuel oil is 145,000 per gallon. She offered to
provide a slide she developed for the conference which puts it
on a one million BTU (MMBtu) equivalent basis. Thus, basically
a customer paying $2.90 for fuel oil would pay $1.83 for propane
under the MMBtu basis. She explained the premise is that
communities currently use propane so if it could be sourced from
the North Slope instead of transporting it from Prince Rupert,
Alaska can ensure the product would be cheaper from North Slope
and would use existing equipment.
3:40:16 PM
CO-CHAIR PRUITT recalled the propane distribution map at the
ANGDA office. He also recalled the Lt. Governor's comments at
the conference. He inquired as to the feasibility and potential
to transport propane directly from North Slope. He further
inquired as to whether as to the infrastructure needed and if
any special equipment would be needed to transport propane via
rivers and the Arctic Ocean.
MS. PEASE offered one presentation at the conference was on
"steel intermodal containers" known as ISO containers that can
be stacked and placed on barges and transported via rivers to
rural Alaska's communities. She recalled that ISO containers
are stacked eight or nine high on vessels for transport to
Hawaii, and other places. She related that the ice opening up
on the North Slope presents an opportunity to expand the length
of time annually to reach communities. She stated that barges
have a lower draft. More importantly, the technology is
changing including a truck with a crane built into it that could
be loaded on a barge and used in towns and villages to off-take
the ISO containers as well as transport the containers to other
locations. She recalled one consideration mentioned would be to
load the ISO on a sled facility to transport during the winter.
She noted that many of the villages are more isolated in the
winter and access is by snow machine or sled.
3:43:57 PM
MR. HEINZE elaborated on the Arctic ice conditions. He stated
that ANGDA is looking at a direct shipment from Prudhoe Bay
through the Beaufort Sea and ice for a number of decades. The
"game changer" that has occurred the past few years has been
that the Arctic ice cap has withdrawn hundreds of miles from the
coastline. Thus, when the ice freezes each year it is referred
to as "one-year ice" which is thinner and can be broken in the
winter by tankers and other ships not considered "icebreakers."
Smaller ocean-going tankers can be strengthened and could obtain
access 8-9 months of the year. He described possible port
facilities for Arctic conditions including necessary water depth
of 30-40 feet. He stated some ice related technologies that may
allow a protected atoll, loading facilities below the ice
surface. Major concerns surrounding tankers have related to
oil. Propane tankers are pressure tanks, double hulled, and
spilled propane evaporates so it does not represent traditional
types of contamination. He related that ANGDA has been working
to identify interested partners who are willing to help
investigate issues to gain access to a world class supply of
natural gas. He offered his belief that some partners exist.
3:47:27 PM
REPRESENTATIVE SADDLER inquired as to the capital transition
cost from fuel oil to propane. He further inquired as to
whether the burners work the same and if it is possible to
convert from one fuel source to another.
MS. PEASE answered that the conversion cost would be low, well
under $2,000. Conversion of appliances would be paid for by
savings in one year. Also, there are rebates available for
clean-burning fuel. She offered her belief that rural Alaska
would embrace propane and the issue is just obtaining the lower
cost propane source instead of importing the propane.
MR. HEINZE added that in terms of home heating that homeowners
would likely add propane heaters in addition to their existing
diesel fuel source. Thus, he did not envision that homeowners
would remove existing equipment, but would add to their systems
to provide alternatives for homeowners. He stated that in many
conditions in rural Alaska it is important to have redundancies
and alternatives. The cost of adding another heater is small in
comparison to the annual heating bill. Additionally, ANGDA did
not anticipate an instant conversion of everyone in Alaska. He
thought it could take a full generation for that to happen.
Some residents, such as in the Northwest Arctic Borough have
difficult logistics so the motive isn't so much as price, but
the logistics.
3:51:33 PM
PAUL FUHS, Consultant, Alaska Natural Gas Development Authority
(ANGDA), stated that he contracted with ANGDA to perform a
logistics study. It began with water-related logistics but
extended to rail, trucking, pipeline production and other
facets. He suggested that a high degree of uncertainty exists
with respect to the natural gas pipeline, the Susitna Dam, or
for any major project. He offered his belief that with any
scenario propane could play a role. He said the propane project
would fit in with any natural gas pipeline project. Currently,
propane could be developed in the short term on the North Slope
or for the long term, off-takes could be placed at points along
a natural gas pipeline. He offered to discuss the logistics.
Thus, propane is a good project to invest in since it has long-
term impacts in terms of energy policy. He stated differences
in propane versus natural gas. Generally, propane represents
about two percent of the gas steam in the North Slope. It is
not efficient since it requires processing 98 percent to obtain
two percent propane. He answered an earlier question noting
that the North Slope propane works out to about $2 per gallon.
However, if one could get to the point in the central gas
processing plant with the highest concentration of propane it
would reach 35 percent of propane within the stream. That would
vastly reduce the processing costs so he calculated that that
would reduce costs to about $.50 per gallon. The original ANGDA
contract with one of the suppliers used the two percent gas
stream. Currently, the central gas processing plant requires
all three Prudhoe Bay operating unit operators to agree which is
a more complicated process that he characterized as "three
moving parts." He did not think that this aspect mattered much
overall to the oil companies but it would make a different to
Alaska. He suggested this could be a talking point during
discussions with the operators since it could be important to
Alaska. He said if any pipeline was built that a straddle plant
could be added to any location on a pipeline. He related that
the Yukon River was reviewed as a potential plant location since
the Yukon River is the best place for river access to Western
Alaska. Additionally, the Yukon River has the deepest water so
the larger barges cost efficient barges can be used. He stated
that natural gas would be processed at Fairbanks into methane so
the propane would also be pulled off. Whether a bullet line or
other pipeline is built it would make sense to have a plant
located in Fairbanks and make deliveries to Tok or other places
by truck. A bullet line or other pipeline that presents access
to tidewater also makes it feasible to deliver to areas that do
not freeze up. This would provide the advantage of periodic
deliveries to communities and could significantly reduce or
eliminate storage facilities that are necessary in Western
Alaska. He reviewed pricing issues, pointed out that propane
has 2/3 the BTU value of diesel. He related a scenario in which
the value of diesel was $4. This would require $6 worth of
propane to be equivalent. He pointed out that propane would
need to be sold at $6.50 per gallon to be equivalent to $9.85.
Thus, any cost under $6.50 per gallon would represent a savings
to consumers. He pointed out that propane is 2.5 times the BTU
value of methane. He stated that it is concentrated but
consumers are familiar with its use. He compared it to
liquefied natural gas which is cryogenic and transported at
minus 270 degrees and must be transported in specialized
containers or the metal will crystallize and break at the lower
temperatures. Currently, the competition between distributors
keeps the cost competitive. In areas without competition, the
utilities have banded together to make aggregated purchases to
reduce competition costs. When the utilities distribute fuel
the Regulatory Commission of Alaska (RCA) requires them to pass
on distribution savings to consumers. He noted that sometimes
the distribution charges create the highest cost. He suggested
an electric coop might bring in fuel at a reasonable price and
turn it over to the village corporation or local government who
must then store it and pay storage costs. Additionally, the
fuel is marked up by communities short of funds since it
provides the only source of income. He characterized it as a
tough situation since the parties charge a high price to locals
in order to survive financially.
3:59:51 PM
MR. FUHS referred to potential uses. He said that even if the
electric issues are solved the home energy cost problem is not
solved despite the work that has been done with wind power and
other alternative power. He related that Southcentral Alaska
pays about the same for home heating as electricity. In
Fairbanks home heating costs twice as much whereas rural
Alaskans pay four times as much for home heating. He pointed
out that this is where propane can assist homeowners. He
recalled that the cost of a tank and unit, including fuel for a
month cost $3,000 to convert a home to propane. He referred to
a chart titled, AEA Regional Energy Cost, August 2008, page 5 of
his report, titled "Propane Production, Transportation and
Utilization in Rural and Urban Alaska." He compared the costs
between Southeast Alaska, Anchorage, Fairbanks, and Rural
Alaska. The lowest costs were in Southeast Alaska at $5,000 per
year, Anchorage at $8,000, Fairbanks at $9,000 and Rural Alaska
at $12,000. He stated that 20.2 percent of total household
income is spent on energy in rural Alaska. He highlighted the
need to have a comprehensive program if the overall goal is to
lower household energy costs to make it affordable. Some areas
of the urban part of the state are not served because of low
density housing. He stated that even if the natural gas
pipeline were to be built to Fairbanks approximately 60,000
people would not be served by a natural gas pipeline. Propane
can fill the gap. Propane would be an ideal fuel for electrical
generation because the motors do not wear out as fast as diesel.
He reported that diesel engines can be retrofitted by installing
an input orifice on the intake manifold to inject propane in a
mixture of up to 25 percent without further modifications to the
unit which will burn cleaner. Additionally, propane generators
operate on a much lower maintenance schedule than diesel
generators, he said. He stated in areas in which wind
generators are used the diesel generator will still run unless
the wind generators are continuously operating which makes them
less efficient. However, using propane generators allows
scalability so the generator works in conjunction with the wind
generator according to the wind. He characterized it as a
better fit with wind energy in addition to better air quality.
He stated that the Donlin Creek mine is installing generators
that can burn diesel, methane or propane. He touched on
conditions that can trigger necessity to add scrubbers which
illustrated that propane may work well for mining operations.
4:05:50 PM
MR. FUHS discussed marine transportation costs. In the Lower
48, the medium and smaller sized trucks run on propane. He
related that the cost is $.50 per gallon to truck a single bulk
tank of 10,000 gallons or two 20 foot ISOs. These limits are
consistent with weight restrictions on the Dalton Highway. He
compared barge costs for shipping 100 pounds from Nenana to
Tanana at $.65 per gallon, Nenana to Galena at $.80 per gallon,
and Nenana to St. Marys at $1.57 per gallon. He projected costs
for North Slope propane at $2, plus transportation costs of $2,
would total $4, which would be equivalent to $6 for diesel
costs. He referred to the ISO containers previously mentioned
noting the many attributes such as stacking on barges,
portability, and that they can also serve as storage in a
village. Additionally, wheels can be added, he said.
4:07:32 PM
REPRESENTATIVE SADDLER inquired as to whether there are special
hazardous restrictions on transporting propane tanks.
MR. FUHS answered no. He pointed out that restrictions do not
apply even on bulk barge. He commented that the propane
requires more storage than diesel, but a propane tank farm does
not require any berm or liners since the fuel is a "green" fuel.
He recalled the Denali Commission still has about $200 million
in outstanding tank replacements in villages. He related that
if cost savings can be shown that the Denali Commission would
substitute propane tanks instead of diesel fuel tanks.
4:08:55 PM
REPRESENTATIVE SADDLER inquired as to the amount of propane that
could be carried in one tank truck.
MR. FUHS answered that approximately 2,500 barrels could be
transported per tank truck. He projected that a bullet line
would produce 12,000 barrels of propane per day. He related
that shipment to tidewater in Southcentral Alaska is the easiest
to serve and the hardest is in Western Alaska. He stated that
he considered direct shipments from the North Slope which would
pose some additional issues. The ocean depths on the North
Slope are shallow so a berthing facility would be required.
While an existing dock exists the facility is extensively used.
The most likely customers would be the Red Dog Mine and regional
fuel hubs like Nome or Bethel. He discussed some technical
issues including 50 percent more storage. Since propane does
not vaporize below minus 45 degrees modifications would need to
be made for extreme cold. One solution is to create an Arctic
grade of propane by adding additional ethane. Another solution
may be to bury the tank. The University of Alaska Cold Regional
Research Facility in Fairbanks studied this and the temperatures
did not exceed minus 19 degrees. He pointed out that an
alternative supply is necessary in case of any disruption of
supply, which could be handled by shipping on rail. Finally,
training is required to ensure safe operations.
4:14:58 PM
CO-CHAIR FOSTER commented that this is an exciting prospect for
rural Alaska. He offered his belief that the Bush will be
interested.
CO-CHAIR PRUITT agreed propane represents great potential for
rural areas.
REPRESENTATIVE SADDLER also commented by referring to a quote on
whether there is anything that cannot be done.
REPRESENTATIVE PETERSEN has used propane for many years. He
pointed out that propane creates a value-added product for the
state.
CO-CHAIR PRUITT agreed that propane may serve as a bridge until
new technology is developed.
CO-CHAIR FOSTER related that some propane is being used in Nome
so making the transition seemed feasible.
4:19:13 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 4:19 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 01 - Alaska North Slope Propane Conference Presentation by Mary Ann Pease.pdf |
HENE 3/31/2011 3:00:00 PM |
ANGDA Presentation |
| 03 - Propane Production, Transportation And Utilization In Rural And Urban Alaska, paper by Paul Fuhs, December 2010.pdf |
HENE 3/31/2011 3:00:00 PM |
ANGDA Presentation |
| 02 - Propane Production, Transportation, and Utilization in Rural and Urban Alaska by Paul Fuhs.pdf |
HENE 3/31/2011 3:00:00 PM |
ANGDA Presentation |
| 04 - Alaska North Slope Propane Conference Agenda.pdf |
HENE 3/31/2011 3:00:00 PM |
ANGDA Conference Agenda |
| 05 - ISER October 2009 Energy Analysis, Propane from the North Slope, Could It Reduce Energy Costs for the Interior.pdf |
HENE 3/31/2011 3:00:00 PM |
ISER Energy Analysis |