Legislators pleased at ExxonMobil’s gas sales contract to Fairbanks

By Bradners’ Alaska Legislative Digest

ExxonMobil’s announcement last week that it will supply gas to Fairbanks Natural Gas LLC was well received by legislators as the first commercial gas sale for use off the North Slope (gas has been sold for use by contractors in Deadhorse industrial area for several years). What was missing in the announcement was the sales price, and since Fairbanks Natural Gas is not under Regulatory Commission of Alaska rate regulation, for now at least, the price will not be known. Department of Revenue officials said the latest “prevailing value” reported for inter-company sales of gas on the Slope is $3.59 per thousand cubic feet. That was in 2005 and 2006. Whether Fairbanks Natural Gas buys gas from ExxonMobil at that or some other price, the company must also pay costs of liquefying the gas in a small LNG plant it will build in Deadhorse and then trucking the LNG to Fairbanks. The company now trucks LNG from a small plant it operates in the Matanuska-Susitna Valley. Gas is purchased from Enstar Natural Gas utility for that plant.