Propane from the North Slope: Could It Reduce Energy Costs in the Interior?

Abstract

Could propane from the North Slope cut energy costs in Fairbanks and other Interior communities that heat buildings or generate electricity with fuel oil or naphtha? The Alaska Natural Gas Development Authority (ANGDA) thinks it could....We analyzed how fuel prices in Fairbanks might compare, under those assumptions and at different crude oil prices. We estimated the price of propane delivered to Fairbanks, the wholesale price of fuel oil in Fairbanks, and the price of the naphtha that Golden Valley Electric Association (the Fairbanks utility) burns to generate electricity. These aren’t prices residential customers would pay. The propane price doesn’t include costs of storing and distributing propane in Fairbanks, and we tried to make the fuel oil price comparable to that. This analysis is intended just to show relative fuel prices, given ANGDA’s assumptions.