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Interior Energy Project Overview

High transportation costs, challenging environmental conditions, logistical problems and punishingly cold winters all contribute to high energy costs in Interior Alaska.

The Interior Energy Project (IEP) is a joint project between the Alaska Industrial Development and Export Authority (AIDEA), Alaska Energy Authority, the Department of Commerce, Community, and Economic Development, the Department of Revenue and the Department of Natural Resources to find a solution to poor air quality and high energy costs common to Interior Alaska.

The IEP provides the financial tools needed to bring natural gas to Interior Alaskans. Legislation passed in 2013 authorizes AIDEA to provide the financing package to partner with the private sector to bring affordable, clean-burning natural gas to Interior Alaska. AIDEA has been working diligently on the IEP goal of getting natural gas to as many Interior Alaska customers as possible, at the lowest cost possible, as soon as possible.

Clean-burning natural gas will help substantially improve Fairbanks and North Pole air quality by providing an affordable substitute to wood and oil-burning heating systems. This will help the region once again meet federal Environmental Protection Agency standards. A new source of affordable natural gas will also provide the community relief to high-energy costs.

AIDEA is working to advance the IEP through the following actions:

  • Full supply chain integration. AIDEA continues to work with the Interior Utilities (Golden Valley Electric Association, Fairbanks Natural Gas and the Interior Gas Utility) to plan the build out and coordination of transportation, storage, regasification and distribution of natural gas in the Interior.
  • Negotiate on behalf of the Interior Utilities. AIDEA will negotiate commercial liquefied natural gas (LNG) sales and purchase agreement terms on behalf of the Interior Utilities.
  • Financing liquefaction capacity. AIDEA intends to work with a private partner to develop LNG capacity for the Interior market. AIDEA currently has the ability to provide low interest rate financing to reduce the cost and risk of LNG production on the North Slope. Legislation proposed in February 2015 would extend AIDEA’s authority to finance LNG capacity anywhere in the state, including Cook Inlet.
  • LNG Transport. In order to help lower the cost of transportation, AIDEA is working diligently on evaluating railroad and road alternatives. The logistics and cost of transporting LNG are the driving considerations in AIDEA’s due diligence process.
  • Finance natural gas distribution system planning, design and construction. As of March 2015, AIDEA has authorized $37.8 million for development of the Interior Gas Utility distribution system and another $15 million for expansion of the Fairbanks Natural Gas distribution system. These projects add up to an additional (approximately) 140 miles of installed natural gas distribution pipe within the Fairbanks North Star Borough by fall 2015.

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