Here we go, again

  • By Pat Reilly
  • Monday, December 4, 2017 7:09am
  • Opinion

Here we go again: Alaska is about to embark on another financial boondoggle.

On Dec. 5, Fairbanks’ Interior Gas Utility is set to commit $60 million to purchase Pentex Alaska Natural Gas, including its Southcentral Alaska facilities from the Alaska Industrial Development and Export Authority (AIDEA).

The money for the deal and expansion would come from a $330 million package of grants, bonds and loans approved by the Alaska Legislature in 2013. The project would liquefy natural gas at Point McKenzie, truck it to Fairbanks and distribute it to households throughout the city. This project is not economically viable and could raise the cost of energy in Fairbanks by $1,000 per household or more.

The Alaska Legislature funded this project with good intentions in 2013 when energy prices were high. At that time the cost estimate of the project was expected to be less than $15 per MCF. The current estimate is $22 and has high potential to climb higher.

There are some other considerations today that did not exist when the funding was legislated.

The large gas line project now has a high level of interest from China and could become an economic reality soon. Furthermore, Doyon is continuing its efforts to find a local source of gas by drilling in the Nenana Basin this winter. If either of the projects is successful, there would be no need for building a large LNG system and trucking gas from Cook Inlet.

Why not postpone this decision long enough to see what happens with these projects? Why proceed with a project with negative economic impacts on Fairbanks, at this time, when Alaska is in desperate need of operating capital?

Why put good money after bad now, when Alaska, specifically AIDEA, has a history of supporting uneconomic projects?

The legislature could extend the time for availability of funding until we have answers to these two gas projects and the economic benefits of the project can be assured. Throwing money away in the hopes that Fairbanks consumers will convert to gas when it clearly isn’t economic is the ultimate waste of state money.


• Pat Reilly of Anchorage is CEO of Rain Proof Roofing, a family-owned business founded in 1962, and past-president of Associated General Contractors. He stays actively involved in securing a successful economic future for Alaska. My Turns and Letters to the Editor represent the view of the author, not the view of the Juneau Empire.


More in Opinion

Opinion: Stop pushing timber-first policies

Alaska’s Congressional Delegation is once again showing how out of touch they are with the realities of the Tongass.

Opinion: How Facebook hurt my feelings

I admit I am a Facebook junkie.

A section of the subport subdivision, pictured on Wednesday, Aug. 23, 2017. (Michael Penn | Juneau Empire File)
Opinion: The Alaska Mental Health Trust and Juneau

The Alaska Mental Health Trust owns a three-acre Juneau waterfront tract, commonly… Continue reading

Opinion: A prioritized agenda for suicide in Alaska

Alaska is consistently among states with the highest rate of suicide in the country.

Opinion: DEC Cruise Ship Program protects Alaska’s air and water

Each year over a million visitors travel to Alaska on cruise ships,… Continue reading

Opinion: The coming of age of Alaska’s 529 College Savings Plan

The significance of owning a college savings plan account for a child cannot be understated.

Opinion: A reasonable suspicion

Eight months have passed since Cody Dalton Eyre died from multiple gunshot… Continue reading

Opinion: Your life matters

When I was a kid I always thought drugs were stupid.

Opinion: The progressive revolution is here

Things have to change and we have to have the courage to change them.

Most Read