Interior electric co-op GVEA scrambling for fuel source


The planned June 1 shutdown of the Flint Hill Resource refinery at North Pole has left Golden Valley Electric Association, the Interior Alaska electric cooperative, scrambling for alternative supplies of fuel.

The refinery provides naphtha and HAGO, a type of fuel oil, to GVEA’s North Pole generation plant.

When the refinery shuts down, GVEA will have to find alternative fuel supplies, according to Lynn Thompson, the co-op’s vice president for fuel supply

PetroStar Inc., which operates a second refinery in North Pole that is smaller than Flint Hills, is talking with GVEA about supplying naphtha although some refinery modifications will be needed, Thompson said.

Doug Chapados, president of PetroStar, confirmed that and said although PetroStar cannot make the HAGO used now by GVEA, it may be able to supply something similar.

Thompson said GVEA is also looking at substituting an ultra-low sulfur diesel or another diesel for the HAGO. Discussions about that are underway with Tesoro Corp., which makes ultra-low sulfur diesel at its refinery near Kenai, he said.

Flint Hills now supplies about 1,700 barrels per day of fuel in winter and about 1,200 barrels per day in summer, most of it naphtha.

The problem is catching the utility at short notice because the alternative supply plan will have to be in place by this summer. The utility’s fuel tanks will be filled before Flint Hills shuts down but those supplies will last only until late summer.

Arranging for the alternative fuel supply is just part of the problem. There are also questions on whether adequate storage capacity will be available for alternative fuel that might be shipped to the Interior.

Some good news, however, is that GVEA is now less dependent on fuel oil for power generation than it once was. Previously about 40 percent of the co-op’s power was generated with oil but with the start of operations at of the Eva Creek wind project, as well as electricity from Southcentral Alaska, has now lowered that dependence to the mid-20 percent range, Thompson said.

Power transmissions from Southcentral will be phased out when the Healy No. 2 coal plant, formerly the Healy Clean Coal Project, begins operation, which is now anticipated in late 2015 or 2016.

The 50-megawatt coal plant will provide a long-term source of low-cost electricity but operation of the North Pole oil-fired plant will still be necessary, Thompson said.

Meanwhile, Chapados said a concern for PetroStar on the Flint Hills closure is the continued operation of the pipeline connection to the Trans-Alaska Pipeline System and the metering equipment that goes with it.

Both Flint Hills and PetroStar take crude oil from TAPS and returned the unused portions of the oil after making fuel products.

The connection was designed for larger flows of crude oil to serve both refineries. PetroStar takes a much lower volume of crude, and Alyeska and GVEA are now working on ways to ensure that the connection and its support equipment can still operate efficiently, Chapados said.

03/05/2014 - 11:08am