The Alaska Industrial Development and Export Authority board expressed support Tuesday for a proposed purchase of a Fairbanks natural gas company but held off on making a final decision until a sales agreement is finished.
The AIDEA board postponed action on the $54 million purchase until a meeting May 27. The plan calls for AIDEA to purchase Pentex and sell a liquefaction plant in Cook Inlet and other assets for $15 million to Hilcorp. In addition, AIDEA would work to consolidate Fairbanks Natural Gas, formerly owned by Pentex, with a public utility that is just starting to take shape.
In about two years, AIDEA would "exit the investment" and the Fairbanks utility would make use of state grants and other financial tools to purchase the infrastructure from AIDEA and transfer it to the reconfigured public utility.
The transaction is related to the parallel state efforts by the governor and Legislature to promote an expanded natural gas supply in Fairbanks.
Fairbanks North Star Borough Mayor Luke Hopkins said the purchase is an important step that would immediately lower the price of energy in Fairbanks, helping the economy and improving air quality. Shifting to a "cost of service model" utility that does not depend on generating as much profit as possible will help with the transition, he said.
"The purchase of Pentex is of course just the first step," he said, adding that other pieces have to be put into place by the community and by AIDEA. "The positions that AIDEA has taken in acquiring these components from the Cook Inlet area are what's going to deliver gas to our community as fast as possible."
The AIDEA board made the decision to postpone after reviewing aspects of the plan in an executive session. The agency completed a due diligence study that recommended approval of the purchase.
AIDEA board member Gary Wilken, a former state senator from Fairbanks, praised Hopkins and the Fairbanks North Star Borough Assembly, along with the mayors of Fairbanks and North Pole, for showing the leadership needed to advance the project. He said it's too soon to be "popping champagne corks," but it will happen because Hopkins and others "stepped up and said it has to happen."