Home / Energy / In response to customers, Crowley takes step to import Canadian LNG to Alaska

In response to customers, Crowley takes step to import Canadian LNG to Alaska

A shipping company that has long delivered freight and diesel fuel to rural Alaska is positioning itself to import Canadian liquefied natural gas to Alaska, following what it says is interest in the fuel from several Alaska companies.

A Crowley official would not name those companies or say where the Canadian LNG would come from.

The Jacksonville, Florida-based Crowley said it recently won a two-year license from the U.S. Department of Energy and Canada’s National Energy Board that will allow it to import what it calls the “fuel of the future” to Alaska and the Pacific Northwest.

It appears to be the first time a company has received permits to import LNG to Alaska, said Larry Persily, former federal gas line coordinator.

At first blush, the proposed imports seem ironic in a state known for its vast quantities of North Slope natural gas, a resource that state leaders have unsuccessfully sought to produce and sell for decades, if only a pipeline were built to carry the gas to tidewater in Southcentral Alaska.

Utilities in Southcentral a few years ago were looking to import large amounts of LNG, causing a stir among those who worried about paying more for power and heat when the state had plenty of natural gas in its own backyard.

Since then, new gas resources have been discovered in Cook Inlet, helping ease concerns of a supply shortage. Also, ConocoPhillips gas-liquefaction plant and terminal in Nikiski has resumed limited overseas exports, another signal of the basin’s improved fortunes.

The amounts Crowley can move under its permit is a relatively small, 2.12 billion cubic feet over two years, or an average of about 3 million cubic feet of natural gas a day, said Larry Persily, former federal pipeline coordinator.

That’s far less than would be needed in Fairbanks, where the state is working with the private sector on a plan to bring affordable natural gas to that Interior city, he said.

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It’s also far less than the 200 million cubic feet used daily in Southcentral, from Homer to the Matanuska Valley.

“I’m assuming (Crowley is) looking at transport companies,” said Persily, noting that trucking and oceangoing companies are increasingly turning to LNG to fuel vehicles and ships.

Persily said Crowley also may be positioning itself to take advantage of future LNG opportunities and growing demand. “Maybe it’s just a good business decision that shows itself over time,” he said.

Crowley is now working to prolong its plans by securing a 25-year license from the Energy Department and Canada’s National Energy Board, the company said in a press statement.

It’s also monitoring “Alaska LNG supply projects” that would be a closer source of gas to Interior Alaska than Canadian gas. The biggest of those Alaska projects, the $55 billion Alaska LNG pipeline, isn’t scheduled to move gas until at least 2024, if the complex project involving the state and three oil giants doesn’t fizzle altogether. That project calls for several off-take points so gas can be delivered to areas around the state.

Amelia Smith, Crowley’s manager of corporate communications, said the company plans to move LNG in 10,700-gallon ISO tanks, super-insulated containers that are each like a giant “thermos on wheels,” holding the gas at 260 degrees below zero to maintain its liquid state. The DOE permit also allows Crowley to deliver the fuel in bulk on oceangoing vessels.

The company is developing its LNG business in Alaska following “many inquiries from customers” who want to use the fuel, she said.

Asked which companies wanted LNG and where it would come from, Smith said the company is “not in a position to outline details of those discussions.”

Persily said LNG is trucked to Whitehorse and Inuvik in northern Canada from a gas-liquefaction plant near Vancouver that is currently being expanded. Other gas-liquefaction plants and export terminals are also in the works in Canada.

In Southeast Alaska in another sign of the growing reach of LNG, Avista Corp., the new owner of Alaska Electric Light and Power, is working to import LNG to help heat homes and buildings in the city and borough of Juneau. The fuel would also be shipped from Canada near Vancouver, with shipping on Alaska Marine Lines, according to the Juneau Empire. Avista in September received a two-year license from DOE allowing it to import Canadian gas into the United States.

Crowley has recently entered the LNG market in the Caribbean, delivering the fuel from Florida to Puerto Rico.

“We have a lot of industrial and commercial customers switching to LNG,” Smith said. LNG helps relieve high costs associated with diesel fuel and electric grids in the Caribbean.

Kevin Frantz, an LNG engineer for Crowley, said customers who switch from diesel to LNG see a 20 percent reduction in facility costs.

“What it’s going to enable our customers to do is have lower emissions and higher efficiencies,” he said.

This article was written by Alex Demarban from Alaska Dispatch News, Anchorage and was legally licensed through the NewsCred publisher network.

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