Utility officials: Test project shows LNG could help reduce cost of generating electricity in Tok

Nov 4, 2016

The utility that provides power to Tok is looking into using liquefied natural gas as a way to reduce the cost of generating electricity for the Alaska Highway community. KUAC’s Tim Ellis reports.


Alaska Power and Telephone President Bob Grimm says he’s optimistic that using LNG to help generate electricity in the Tok area could save money for the company and ratepayers. That’s based on preliminary results of testing AP&T conducted in late September and early October.

James Nelson, a generation technician, with AP&T's Tok Division, pulls maintenance on the LNG mixed-fuel injection system set up inside the Tok electrical-generating facility.
Credit AP&T

“It’s proven itself, that it probably is a potential fuel opportunity in the future,” Grimm said. “And our next step is to look at it a lot closer, and see if we can dissect every one of those issues that we ran in to, and make it better.”

The testing involved setting up and operating equipment to store and use LNG, including systems to enable the company’s diesel-fueled generators to burn a LNG and diesel blend. Grimm says a mix of 65 percent LNG, 35 percent diesel worked well during the tests. He says savings would come from using less diesel that would be displaced by LNG during internal combustion.

Grimm concedes today’s low diesel prices make that unlikely – “Diesel is probably a better buy right now,” he said – but he expects prices to begin rising in the near future, which should make the economics of bi-fueled electricity more attractive.

AP&T President Bob Grimm in Tok during bi-fuel testing: “It’s proven itself ... (as) a potential fuel opportunity in the future.”
Credit AP&T

“If it was cheaper than diesel at some point in the future, when we started to run it on a routine basis, any of those fuel savings would be passed down to our customers in Tok,” he said.

That would be welcome news to AP&T’s Tok-area residents, who pay about twice as much as ratepayers in Fairbanks. Like, Dave Callos, who says he thinks it’s a great idea to use LNG to help generate power, but is unlikely to happen until diesel prices go back up and the economies of scale make the cost of transporting LNG go down.

“Liquified natural gas is a great thing,” Callos said. “We have so much of it in this state. But until the price of trucking it down here goes down, we’re not going to be able to afford it.”

Grimm says that’s true, but the company wanted to test the technology and have it ready for when and if the company decides to use it when the price of diesel rises. Crowley LNG Alaska would provide the gas through a contract with AP&T, although the LNG used during testing came from Fairbanks Natural Gas.

Crowley officials said in a news release they’ve been working with AP&T for more than a year now on the project, providing engineering and other assistance.

But Tok resident Ashley Sawyer says she didn’t know anything about the test until she and many of her neighbors read about it on Facebook a couple of weeks ago – after testing had concluded.

“The general public didn’t know,” Sawyer said. “Nobody I know here knew. It was like, when it concluded, everybody knew – we all found out.”

Grimm says using LNG to help AP&T avoid exceeding emissions limits set by its state air-quality permit, because LNG burns more cleanly than diesel. And he says it would enable AP&T to expand and provide service to more customers at less cost.

“If we were to get any sizeable load growth, we would have to start operating cleaner machines, more expensive machines, (and) different things to make sure that we remain below the limit,” he said.

Grimm says AP&T will likely conduct more tests on the bi-fueled generator project. But he says it’ll have to wait until spring, when Fairbanks Natural Gas won’t be so busy serving its winter fuel customers – and will have equipment and personnel available for the 200-mile trip to Tok.