IGU Plans To Bring Natural Gas To Outlying Areas Around Fairbanks

May 30, 2014

The Interior Gas Utility has laid out a plan for getting natural gas to thousands of homes in North Pole and other outlying areas of Fairbanks. As KUAC’s Dan Bross reports, the non-profit public utilities plan covers more than 2 hundred million dollars of work, spread over six years.

The Fairbanks North Star Borough owned Interior Gas Utility (IGU) plans to lay distribution pipe through neighborhoods outside the core area of Fairbanks, where gas isn’t currently available.  IGU Board Chairman Bob Shefchick lists a yearly progression that calls for installing distribution lines from North Pole to Fox. "Predominantly residential heating areas and about 12,000 to 13,000 homes in the outlying areas of the borough," he said. 

Things will start with design work and right of way acquisition in North Pole this summer, with the actual laying of pipe beginning there in 2016.  The entire IGU distribution system is estimated to cost between 230 and 260 million dollars. It’s one part of the state lead Interior Energy Project, which also includes construction of a gas processing plant on the North Slope, and trucks to move the gas south and local storage facilities.  

Shefchick says the utility will primarily rely on state financing to get started. "We expect that will cover at least the first three years of the build out program, and in years four, five and six we would have to look at revenue bonds or some other financing mechanism," he said. 

Last fall, the IGU and Fairbanks Natural Gas (FNG) competed for state certification to serve neighborhoods outside FNG’s existing service area in the core area of town.  The IGU won, and FNG is focused on expanding distribution to more neighborhoods within its own area, but Shefchick says IGU could contract with the private company to run its gas distribution system.

"Oh, certainly. And we have talked to them. We expect to put out an RFP, and they're busy right now because they're building out the core of town, but we would hope that they propose as a potential operator," Shefchick said. 

IGU anticipates having a 3 person staff, and hiring others to largely run the utility. It’s already contracted out business operations to MWH, the same energy company the state is partnering with on the North Slope gas processing plant. First gas is expected to reach Fairbanks by late 2015 or early 2016, at nearly half the cost per BTU of heating oil.