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North Slope LNG, Nenana exploration plans aired

Two companies are launching efforts to liquefy Alaska North Slope natural gas and truck it to the state’s interior while a Native regional corporation plans to press gas exploration in the nonproducing Nenana basin west of Fairbanks.

Golden Valley Electric Association, Fairbanks, and Flint Hills Resources Alaska, Wichita, Kan., have begun engineering a liquefaction facility for the North Slope. The companies will exclusively negotiate agreements to build and operate the facility, which would enable liquefied natural gas to be trucked to the interior by 2014.

GVEA would use the gas to power its newest turbine at the North Pole power plant near Fairbanks, and Flint Hills would consume the gas at its North Pole refinery near Fairbanks, backing out crude oil it now burns. Gas would be delivered to each company at cost.

Meanwhile, Doyon Ltd. will shoot 120 line-miles of 2D seismic in the northern Nenana basin before drilling its second wildcat on an extensive land holding about 60 miles west of Fairbanks. Doyon holds 483,000 acres of general state lands and 9,500 acres of Alaska Mental Health Trust Authority lands.

Doyon’s first well, drilled in mid-2009 in the southern part of the basin, was geologically encouraging but noncommercial.

The state has been pursuing plans to lay a 24-in., 500 MMcfd pipeline to bring North Slope gas south, and such a conduit would traverse the Nenana basin.

GVEA, which supports a gas pipeline to Fairbanks, said trucking LNG would reduce its dependence on higher-priced oil and deliver that cost relief sooner than other proposed projects.

Flint Hills said the LNG project would partly eliminate the competitive disadvantage for its refinery and that the cleaner fuel would be environmentally better for Fairbanks and Interior Alaska. Flint Hills said it sees “additional opportunities such as propane production and LNG diesel production to provide more competitive clean fuel for Alaska’s trucking and transportation industry.”

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