Alaskan Gas Group Pushes Propane in the Far North

The sun sets on the oil fields in Prudhoe Bay, Alaska. (image: Reuters)

The plan: Tap into the propane reserves from the far north of Alaska.

For the last two years, the Alaska Natural Gas Development Authority (ANGDA) has pitched a project to bring propane production to the far north of the state. The Prudhoe Bay oil fields produce huge quantities of natural gas and byproduct liquids, which haven’t been tapped to their potential. And so ANGDA is lining up the pieces on the plan, seeing Alaskan propane flowing into local homes and onto the export market.

The wrinkle: ANGDA needs to find an oil company to build or renovate a propane processing plant there.

The gas group is ready and the economics appear reasonable, ANGDA President Scott Heyworth wrote in an opinion piece to the Fairbanks Daily News-Miner yesterday. “ANGDA’s challenge is getting the Prudhoe Bay Unit owners to work with us to examine the feasibility of a commercial wholesale ‘off-take point’ for propane,” he said.

What’s to like in the ANGDA plan? A propane facility would offer new revenue to the state and a greener, low-cost heat source for rural state residents — many of whom rely on diesel generators. Locally-sourced propane would be a cheaper choice than propane from Outside.

What’s not to like? Money. The cost of building a refinery and then moving propane around the state would be in the tens of millions of dollars.

More reading: See last month’s story on the North Slope propane proposal here.