Interior Energy Project is one step closer to bringing more natural gas to Fairbanks

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ANCHORAGE (KTUU) The Alaska Industrial Development and Export Authority and Fairbanks based Interior Gas Utility have moved one step closer to increasing natural gas shipments and lowering energy costs for those living Fairbanks.

On Wednesday, AIDEA approved a memorandum of understanding to create a single natural gas sourcing and distribution utility in Fairbanks, essentially consolidating state owned Pentex Alaska Natural Gas, which includes Fairbanks Natural Gas, with IGU.

AIDEA External Affairs Officer Karsten Rodvik, says this is part the Interior Energy Project that has been in moving forward for several years. He says the goal of IEP is to address air quality and bring affordable natural gas to as many interior Alaska residents as quickly, and cheaply as possible.

"This action this week is a major milestone in the project and gets us much closer to the finish line," said Rodvik. "What would happen in 2017 if this indeed is executed, is we would see work commence on the expansion of the storage facilities, the large capacity storage facility in Fairbanks and in the LNG plant at Point Mackenzie."

"Currently there's about 1,100 existing Fairbanks natural gas customers," Rodvik said. "The intent, or the projections are, lets say by 2025, if the conversion goes as we expect, we would hope to achieve 7 to 8,000 new gas customers in Fairbanks."

Currently Fairbanks residents are paying about $2.40 per gallon for heating fuel, once complete, the target price for would be $15.50 per MCF or square thousand feet, which is equivalent to $2 per gallon of heating fuel.

Rodvik says customers would be required to foot the bill to convert their heating system.

AIDEA says the target for completion and execution of these documents is set for no later than March 31, with final execution is contingent upon IGU securing a natural gas supply contract.