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. That’s because a North Slope producer has agreed to sell ANGDA propane for considerably less than what it might otherwise cost, if there were a natural gas pipeline. Propane is a component of North Slope natural gas—and right now there’s no way to get that gas to market.* Naphtha and fuel oil, by comparison, are refined from oil—so their prices are closely tied to the volatile price of crude oil. ANGDA hopes getting a price break on propane could make it cheaper, at least until a pipeline is built—and it asked ISER to analyze the potential effects of one idea.