Purchase refinery to ease energy costs
Published Wednesday, August 6, 2008
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Stumble It!We have a multitude of suggestions as to how best to alleviate our state’s energy crisis. The governor’s plan to offer $1,200 cash to most residents, plus a moratorium on the state’s 8 percent gasoline tax, at best provides a small Band-Aid to cover a very large wound. However, it shows Alaskans that the administration recognizes our plight and intends to pursue additional mid- and long-range solutions.
In order to hasten the process, I suggest the state purchase the Flint Hills Refinery and sell the refined products at cost, plus a small margin, while using a portion of our state’s royalty oil. Recently, the refinery owners indicated that a sale of the facility might occur and requested the state lower the cost of crude and let them off the hook regarding pending retroactive transportation costs. All told, it would appear that the administration is in an excellent position to bargain for a reasonable price. So, let’s do it before it hits 50 below this winter. As I see it, none of the other options can provide significant relief within a shorter time frame.
It is unfortunate that an in-state bullet line became a victim of political posturing. The administration’s proposal to build a bullet line from Cook Inlet via the Glenn Highway, up the Richardson to the North Slope is counterproductive to the interests of the Interior.
If the Cook Inlet producers have sufficient gas to provide service to Fairbanks, why was the urea plant at Nikiski shut down for lack of a gas contract? Why has Enstar had to provide for substantial storage to cover winter peaks and secure several different relatively short-term supply contracts in order to accommodate its daily requirements? I believe the governor’s pipeline proposal, in particular the routing thereof, must be an effort to provide people at the Alaska Natural Gas Development Authority an opportunity to do something other than clip coupons.
On the other hand, it might be a misguided attempt to stimulate exploration in Cook Inlet and, at the same time, convey a message to North Slope producers that there is another game in town. Now that’s playing poker with the big boys, who have yet to show all their cards.
Enstar is in negotiations with Anadarko for a gas supply from the Gubik gas fields. Anadarko must have found a supply of gas adequate to provide Enstar with the incentive to begin preliminary negotiations with Agrium regarding reopening the urea plant at Nikiski.
With the Interior region as a customer, in addition to solving Southcentral supply problems, one would guess a feasibility analysis would be quite favorable. An Enstar 690-mile line from Gubik down the Dalton to Fairbanks and on down the Parks to Southcentral Alaska could indeed be a bullet line compared to the Glenn/Richardson route proposed by the administration. The proposed Enstar route may be one of the best mid-term, four- to five-year projects on the horizon for meaningful relief to Fairbanks and the Interior.
For the long term, the Devil Canyon Susitna hydroelectric project no doubt is the best solution. It also would require the largest capital outlay of all the projects under consideration. If we take a shotgun approach and pledge substantial money to numerous other projects that are in the feasibility/planning stages, we may find a significant shortfall regarding Devil Canyon. If we are going to see this hydroelectric project online, now is the time for a firm commitment. With the present surplus in the state treasury, we can update the mountain of data available and go for it.
We look forward to the results of the Synthetic Fuel Biomass Feasibility Study sponsored by the borough and Fairbanks Economic Development Corp. Synthetic fuels from coal have been in existence for many years. Sasol, a South African company, is the world’s leading producer of synthetic fuels from coal and natural gas. In a press release from April 9, the company announced it had become the first organization worldwide to receive international approval for its 100-percent-synthetic jet fuel to be used in commercial aircraft. Approval of Sasol’s fuel for commercial aviation also is a milestone in efforts to secure a domestic energy supply for countries with significant coal and natural gas reserves. That criteria quoted by a Sasol representative appears to be a good fit for Alaska. It may be advantages for those involved in our local study to contact them if they have not already done so. Sasol could provide valuable insight regarding our preliminary study and evaluation. At any rate, synthetic fuel options are certainly worth pursuing.
In closing, let’s all support the Enstar bullet line from Gubik down the Dalton and Parks highways to Southcentral. Contact your local officials and state representatives for their assistance in changing the administration’s proposed routing over the Glenn/Richardson highways. This preferred route has a better chance at an adequate gas supply and is 100 miles shorter.
Robert L. Hufman is a retired general manager of Golden Valley Electric Association; past president of Fairbanks Industrial Development Corp.; and served as director of the Alaska Power Authority and Alaska Energy Authority.
Community Discussion
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Some good comments by Mr. Hufman, particularly on the hydroelectric issues. The problem is most legislators have ZERO strategic vision. They simply do not have the experience or education to think long term. The best evidence of this might be found in their simple inability to build roads in the state that has the least roads- and the most land in the USA. Only Rep. Kelly has demonstrated much leadership on that issue with his pushing for the road to Nome. An idea first brought forward in 1948.
The Devil's Canyon dam was designed and submitted to the Interior Department in the early 1960's- I read the proposal. They budgeted about 500 million for the project, but the politicians were led by the nose by the coal interests and the project was killed.
The problem with a bullet line is that it would give us very expensive gas. The tariffs would be exorbitant. Bullet lines have high costs and low volumes. Gas from a bullet line would be about as expensive as $4.00 per gallon fuel oil. We could do much better with a real gas line. But hey, that takes strategic vision. (See the first paragraph). That is why we have only been talking about a gas line for 50 years.
They are now talking about $90 a barrel oil, $118 as of yesterday. This could change the whole outlook for gas and money into the State. It appears that nothing is predictable in this game. It won't take long for people to forget this oil crisis if the drop in price remains in a comfort zone. Then watch all the gas and oil projects fall off the drawing board. Renewable energy projects for the diversity of Alaskan communities and the future.
I would support a non-profit state run refinery in a second. We would no longer have to wonder why we are paying 75 cents per gallon more than the US average when everything is in our own backyard. There is another good argument for this at http://allalaskanrefinery.blogspot.com/
I also have promoted the idea of the State of Alaska purchasing the Flint Hills refinery either from capital funds or PFD funds and sell product to Alaskans at cost plus a small profit margin to take care of estimated replacement and repair costs. This is the quickest short term solution to our high energy costs!! and yes, hydroelectricity should be on our long term agenda.
http://www.chemexinc.com/minirefineries....
About small gaslines-->
YES THEY CAN BE A VERY HOT HOT HOT INVESTMENT !!!
The AGIA gasline is an Edsel.
If you very carefully study the slideshow JP was so kind to hotlink at www.fairbanksgas.com you'll see that gaslines in Alaska don't have to cost as if they're made out of platinum plated monopoly pipe.
Alaskans can buy HDPE gasline-grade thermoplastic pellets for $1.50-$2.00 per pound.
A 4" HDPE 260psi propane or CNG rated gasline weighs about 4lbs/ft.
..on the high-end calculation the material cost of the pipe for a gasline that runs from Prudhoe to the south side of Atigun Pass will be $6.5million CHEAP!
If raw field-gas is pumped through that little gasline a gas-turbine powerplant could be located at Chandalar Shelf, and the propaneðane NGL's can be easily separated out there. The electric power generated there would dramatically reduce the cost of electricity to all existing customers along the Haulroad to YukonCrossing, and eventually Stevens Village and Bettles. The extracted propane would supply the basic energy needs for 20,000 off-grid customers currently using small diesel generators for minimal power use. This propane would provide fuel for many propane cookstoves, gas-lamps, catalytic heaters.
The project could still make enough profit to payback the investment in 5years and provide the local market with $2/gallon propane.
15% of raw Prudhoe gas is NGL's.
For many reasons the HenryHub gas index is falling off fast, and is expected to stay at adjusted 1980's prices for a long time.
http://www.carbonrecovery.com/Engineerin...
...this turns the AGIA gasline into an Edsel.
It's time for spendaholics like Juneau and BigOil to take off the beer-goggles and quit ordering expensive champagne.
We can no longer afford the Rich.
Or.. the 4"HDPE gasline can be filled with just propane/LPG at Prudhoe, this will pump easily 100,000+ gallons/day of LPG-propane to the Upper Koyukuk, supplying a fleet of 100 LPG-tanktrucks for delivery to all points south.
If Alaskans would muster the courage to formally show me your letter of intent [this means you tip over your grandmas couch and make a piggy-bank]... then I'll issue you a professional cost estimate and delivery contract for the machinery and materials for this project.
This includes an HDPE-pipe extrusion machine, and FastFusion pipe-welding equipment, etc.
It will be much cheaper than you're programmed to think.
....flash/rumble
Making NS-gas directly available to Alaskans ASAP using many mini-gaslines is much better than waiting 10years for TC to deliver it to us in a platinum plated Edsel.
Gas prices are falling fast and are likely to stay that way for a long time.
http://www.oilnergy.com/1gnymex.htm
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http://www.carbonrecovery.com/Engineerin...
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There's more gas in the Lower48 garbage dumps than there is in Prudhoe.
Does anybody care to venture a guess as to why hydrocarbon prices went to the stratosphere during the reign of KingGeorgeV ?
[Grand Theft Nation]
http://www.google.com/search?num=100&...
.....smash/mumble
Fairbanks doesn't need a gas line. If gas were available from Cook Inlet we could truck it or bring it by rail as early as tomorrow. There are fewer than 1200 gas customers in Fairbanks. There are perhaps 40,000 customers that need fuel.
I live just four miles from the city and I can't even get cable TV. I have little hope of ever getting gas.
I do have electricity and I would be happy to heat my home for pennies per kilowatt hour from clean, renewable, hydro power from the Susitna Dam.
The State invested $150 million in the 80's in the Susitna Dam project. The environmental work was done and an application was made to FERC. The application was later withdrawn. The project was cancelled by then Gov. Bill Sheffield because the price of oil dropped from $28 to $14 per barrel between 1984 and 1986. It became uneconomic. Now that oil is over $100 it makes good sense again.
The State and Feds have also invested $295 million in the Healy Clean Coal Project. It's a waste to have it sit there gathering coal dust. Put politics and law suits aside. Get HCCP running ASAP to offset the expensive North Pole oil fired power production.
A State owned refinery is crazy. They couldn't even run the Matanuska Maid Dairy.
If Flint Hills can't run it why do you think the State can do any better ?
If the State were to buy it. They would be in unfair competition with Petro Star and Tessoro.
Do you suppose the reason our prices are higher than national average is that the refiners charge what the market will bare. Do you suppose Flint Hills wants to sell the refinery because that have long term fuel supply contracts at $2 per gallon ?
I remember reading recently that the Air Force only paid $2.20/gal for fuel in Alaska.
The synfuels is worth looking into, but I suspect others can do it better and cheaper. Our coal has relatively low heat content. The market would compete with world oil. It would raise domestic oil production. But I suspect that synfuel will sell at world oil prices. Providing little relief to Fairbanks from high oil prices.
Leave the gaslines, refinery and synfuels to those that think they can make a profit from them. These project are tied to world market prices and will not provide relief for Fairbanks.
Let's think electricity, finish the HCCP and Susitna Dam. We have already spent a pile of money on them.
The State of Alaska does not need to be involved in operating a refinery, especially one that produces mostly jet fuel and very little else.
The title to this "community perspective" was a tad misleading, as it barely touched on the refinery and went right into the susitna dam and gas lines; two topics I'll leave to Fairbanksgas and DistantThunder to pontificate on.
He did not mention the HCCP which can be producing electricity in less than a year. Will gas be cheaper to ship via rail to fuel the power plants? If so, start converting them tomorrow. Then we'll talk about a dam.
ONAPA:
Your right. HCCP in less than a year.
If cheap gas were available from Cook Inlet. GVEA could buy power generated from gas at Beluga and bring it up the existing intertie at the speed of light (in the transmission line). But it's not. The 70 MW line is only carrying 20MW from Bradley Lake. Leaving plenty of capacity to bring gas generated power north.
5-6 sentences that talked about the refinery for an op-ed entitled "Purchase refinery to ease energy cost." Are you kidding me? Get back to me when you actually have something of substance. These calls for the state to buy the refinery are interesting but give me a decent argument with facts and figures as to why it makes economic sense.
If food prices go up and we are not happy, will the state buy Fred Meyers and Sams Club too?
What would be the cost differential to build a high tension line from the Slope to Fairbanks? Use the gas on site to run a power plant in the giga-watt range. Would it be cheaper to send electricity instead of gas to the Interior?
Ask the Mexican and Venezulan people how well "state-owned" refineries work. Business only works when profit is an incentive. If not, you end up with a mess like just about anything else the government does.
Here note that: Compact-Fluorescent light bulbs CAN BE VERY DANGEROUS!!!
Read: Mercury leaks found as new bulbs break (The Boston Globe).
...Even cleaning-up the dust from a broken bulb is very dangerous...!!!
Q: What would be the cost differential to build a high tension line from the Slope to Fairbanks? Use the gas on site to run a power plant in the giga-watt range. Would it be cheaper to send electricity instead of gas to the Interior?
A: Remember the huge tundra fire last year 2007? It burned 350 square miles faster than you can run away from it, and it burned right over the top of the shallow Gubik gasfield. Alaska narrowly dodged a "natural"-disaster there. The soil temperatures of the N-Slope have been steadily increasing causing 100tcf of methane-hydrates to begin thawing at a potentially dangerous rate, causing the tundra to get loaded with methane ready to spark-off from lightning under the right conditions.
Try flying over Prudhoe wearing infrared-goggles, you'll immediately get the picture about excess heat polution. Building a big electric powerplant on the N-Slope will make the thermal balance much worse.
http://www.youtube.com/watch?v=B36EoEuKj...
It's much better to ship most of the N-Slope gas southward through all of the passes in the Brooks range using many large and small HDPE-gaslines..
HDPE-gaslines on the N-Slope deployed first as a GAS-GATHERING-NETWORK, then extended into a GAS-DISTRIBUTION-NETWORK into the Yukon-Koyukuk, then in the Y/K-Basin process the gas into value added products and burn some of it in electric powerplants where the maximum efficiency of thermal co-generation can be utilized for heating villages.
http://www.youtube.com/watch?v=gPe2rXTte...
This architecture can be built much quicker and cheaper than a Big-Steel-Pipeline
study this slideshow carefully
www.fairbanksgas.com
HDPE-Reinforced Thermoplastic gaslines have made steel-gaslines obsolete.
========================
When someone said there were only 1200 NG customers now, they might want to take a look at who they are. Seems to me if I remember correctly, FNG installed gas lines to most of the big box stores on the east side, and two or three years ago they were installing by the airport. Also, every ssummer you can watch more and more gasline being installed by FNG. I don't think they are doing this just to spend money! DistantThunder is right on target on what we should be doing, and we need to start now!
Venezuela had a very effective oil production and refining system prior to Chavez taking it over and siphoning off all the profit. They ran it like the business it was and made good business decisions. A public utility refinery could do the same thing once we had gas to use as a feed-stock. Until then we could continue to make due with a smaller profit margin. The reason that our local refinery keeps getting sold is that it does not make the kind of profit that is generally made by larger gas fed refineries. If the purpose of the refinery was to produce home heating fuel for Alaskans at cost plus maintenance and upgrade charges then it would serve its collective owners very well. Unfortunately it would be a socialist enterprise and therefore considered bad by those who believe that any public utility should be sold to a corporation and run for a profit. Golden Heart Utility and our local phone service come to mind. Personally I support the idea of state owned corporations set up like the Alaska Railroad. The refinery could be run in a similar fashion if it were possible to do so without raising the hackles of the anti-socialist crowd.
Come now the state has a great record of running business ventures!Fish hatcheries, meat packing plants, & dairies etc. etc. So how well could they run an oil refinery? I could only guess!
Thanks for the recognition and support Alaskan59...
...there's some big opportunity here for those who jump onboard the Sourdough Gaspassers CoOp train.
The slideshow has received over 12,000 page views, but it still seems like everybody is still standing in my headlights like drunken moose while I'm sitting here blowing my horn.
http://www.youtube.com/watch?v=1dPrwKekR...
The interesting thing about this project is it doesn't require as much as 10% of the capital of any of the other energy-project proposals.
Even if a bunch of interested individuals scratched together $2million we could get started doing something productive with HDPE-pipe, even if it meant just buying a good used extrusion machine and started making pipe for small-hydropower projects.
[ I've got a golden little small-hydropower project in mind that will scratch up enough glitter to fund the N-slope project ]
http://www.youtube.com/watch?v=npnUFqEsX...
N-slope gas is 10%ethane [C2H6].. this is the best stuff to make polyethelyne plastic with-- ethane--> ethylene--> polyethylene thermoplastic pellets--
A really great export product made from Alaska Gas.
...if Alaska made stuff with the gas here,then we wouldn't need to blow $30+^^billion on a pipeline, and Alaska would be making 10times the profit.
Alaskan plastic kayaks, made from Alaskan Ethane, by Alaskans.
Alaskan plastic fish-totes, made from Alaskan Ethane, by Alaskans.
Alaskan plastic pipe, made from Alaskan Ethane, by Alaskans.
http://www.youtube.com/watch?v=jSobPhQGq...
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http://www.youtube.com/watch?v=uZmQbNznL...
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http://www.youtube.com/watch?v=jaZxV0miA...
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http://www.youtube.com/watch?v=ydrxxtzkb...
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http://www.youtube.com/watch?v=nqIzI2R1k...
"Plastics, young man...PLASTICS !!"
why dont we get golden valley of fuel
oil and invest in steam turbines run off of coal from healy,and turn on that power plant in healy that was just built
to run on coal.
The state cannot run a dairy. What makes anyone think the state can manage a refinery?
We must take care of ourselves as Alaskans!
refine our fuel here and burn it here!
Ask the Mexican and Venezulan people how well "state-owned" refineries work.
I dont know much about the politics of Mexico or Venzula, but I do now live in Mexico, gas is $2.35 a gallon and my electric bill is between $15.00 and $30.00 a month depending on how much I use the air conditioners. My property taxes are about $150.00 on a $200,000, house. Yes I know I can not vote, but what difference would it make.
Wisechief...
Yes, we can do it on our own without help from Juneau.
www.fairbanksgas.com
study the slideshow carefully..
we can do it, the old way is also the new way.
http://www.youtube.com/watch?v=FNyy8SlrY...
..there's lots of gas all over Alaska
http://www.youtube.com/watch?v=B36EoEuKj...
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