AIDEA, AEA approve $75 million-plus for statewide energy


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More than $75 million in financing for energy projects from the North Slope to Prince of Wales Island in far Southeast was approved Thursday by the joint Alaska Industrial Development and Export Authority and Alaska Energy Authority board.

A $50 million direct investment by AIDEA into the North Slope Mustang Field processing facility highlighted the nearly eight-hour board meeting. With the investment, AIDEA entered into an agreement with CES Oil Services Pte. Ltd. to form Mustang Operations Center 1 LLC. The $200 million-plus facility will be operated by independent Brooks Range Petroleum and owned by AIDEA and CES Oil.

The Mustang Field has 24 million barrels of potential resources and production at the field could peak at about 15,000 barrels per day, Brooks Range has said.

AIDEA already had $20 million invested in late 2012 in a well pad and road to the field that was completed this spring.

AIDEA estimates its investments could help spur more than half a billion dollars of private investment in the Mustang Field and help generate up to 525 jobs through design, construction and operation of the processing facility.

On the Interior Energy Project, the state’s push to truck liquefied Slope gas to the Fairbanks area, AIDEA spent $6.3 million. Of that, $1.8 million is to purchase Spectrum Alaska LLC, the North Slope holdings of Oklahoma-based Spectrum LNG.

In acquiring Spectrum Alaska, AIDEA secured a pad site for its North Slope gas liquefaction plant.

Spectrum previously submitted a bid to AIDEA to partner with the state authority on its Slope LNG plant, a contract that was awarded to the Colorado-based engineering and technical firm MWH Global Inc. in January.

AIDEA also approved $4.5 million for early works contracts with Northern Lights Energy LLC, the venture formed to control the North Slope gas that will be trucked to utilities and potentially other users in the Interior. That money will go towards arriving at a cost estimate for the 9 billion cubic feet per year LNG plant and contracting to place gravel on the formerly Spectrum pad.

A wetlands permit for a 10-acre pad had been approved by U.S. Army Corps of Engineers; the AIDEA-MWH plan will require a modified permit for a 17-acre pad.

In its role to lead the Alaska Energy Authority, the seven-member board approved a $20 million loan for Haida Energy to finance construction of a five-megawatt hydropower plant on Prince of Wales Island.

Haida Energy is a joint venture between Alaska Power and Telephone and the Haida Corp. Alaska Native village corporation.

The loan was approved with a 4.6 percent fixed interest rate, a term Haida Energy officials objected to because it does not match what AEA had previously agreed to.

In January 2013, AEA staff and Haida energy agreed to a term sheet with a variable interest rate loan to protect the utility and its current ratepayers from high initial costs associated with Reynolds Creek hydropower.

Under those terms, the loan would be interest free until production from the 5-megawatt plant hit 7,300-megawatt hours annually. From there, the interest rate would scale up to 4.84 percent when about 20,000 megawatt hours of power was produced.

The resolution that approved the loan included a late amendment by board member and Department of Revenue Deputy Commissioner Mike Pawlowski that allows Haida Energy to reject the terms and requires AEA to reenter negotiations with the utility over more agreeable loan terms within the next 30 days.

The board members emphasized their understanding about the impact high energy costs continue to have on the region, where the burning diesel fuel is often the primary means of generating power.

“The board’s push is to make something work and come back to us,” board member and Commerce Department Commissioner Susan Bell said.

Grimm told the board that the fixed loan terms could push the cost of Reynolds Creek power above the cost of diesel-generated electricity and because of that a purchase agreement for the hydropower would likely not be approved by the Regulatory Commission of Alaska.

The board also moved its next meeting to Wednesday, June 4; it was originally scheduled for Monday, June 2.

 

Elwood Brehmer can be reached at elwood.brehmer@alaskajournal.com.

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