THE LINK: JANUARY 2024 28 Ultra-low sulfur diesel, methanol in the spotlight There may not be as many trucks hauling ultra-low sulfur diesel and methanol up the Dalton Highway in a couple of years. A new company, Alyeschem LLC, plans to build a plant at Prudhoe Bay to make both liquids from natural gas. Alyeschem will produce both methanol and ultra-low sulfur diesel, products that are now transported up the Dalton. While the new Alyeschem plant will reduce truck traffic on the highway, another new plant will be adding to it. Harvest Alaska, Hilcorp Energy’s mid-stream subsidiary, is currently building a liquefied natural gas, or LNG, plant on the same 15-acre gravel pad. That will put trucks carrying LNG headed south from Prudhoe on the highway, carrying the liquefied gas to Fairbanks to Harvest’s customer, the Interior Gas Utility, or IGU, which serves customers with gas for space heating. IGU now trucks liquified gas from a small LNG plant in the Matanuska-Susitna Valley north of Anchorage. Cook Inlet now supplies natural gas to that plant. But with the forecasts for declines in gas production from the Inlet, IGU and Harvest decided to build the North Slope plant to give Fairbanks an alternative supply of gas, and one that is long-term. Harvest’s LNG plant, now under construction, will share a 15-acre pad with Alyeschem’s plant, which will allow for synergy between the two operations. The pad is one half mile south of Flow Station 3 in Prudhoe Bay field and a mile east of Pump Station 1 of the Trans Alaska Pipeline System. Both the LNG and methanol projects have been in the planning stages for several years. There was an earlier plan to build the LNG plant by another company, Spectrum Alaska, to serve Fairbanks but the project did not proceed. However, the gravel pad to be used had meanwhile been secured by AIDEA, the state’s development finance corporation, to assist the LNG project. Harvest ultimately stepped in to build an LNG plant in a deal with the Fairbanks gas utility. But there was also room on the 15-acre pad for Alyeschem’s plant. There has been talk for years of using North Slope natural gas to make liquid products and a lot of work has been done on developing a gas-to-liquids plant using the Fischer-Tropsch process, which is used to make liquid fuels from both gas and coal in South Africa. ExxonMobil and others have studied the idea for the North Slope but did not proceed partly because of the complexity of the process. However, from a technical point of view making methanol is a much easier gas-to-liquids process than Fischer-Tropsch and there is also a local market on the North Slope for the product. Methanol is now used widely on the slope for freeze-protection in producing wells and other facilities. The methanol must now ship to Alaska by sea and trucked to the slope. The expense of the transportation can be avoided by making the product locally. There’s a similar story with ultra-low sulfur diesel, which is now supplied to the slope by truck from PetroStar’s refineries in Valdez and North Pole, and Marathon Petroleum’s refinery at Nikiski, near Kenai. Marathon’s refinery relies on North Slope crude oil for a substantial part of its feedstock, and PetroStar’s rely entirely on North Slope crude, which is an irony of since crude oil to make the diesel is shipped south in TAPS to Valdez and then by shuttle tanker to Nikiski. The finished product, the ULS diesel, is then trucked back north. AIDEA, the state development authority, has stepped in to help both the methanol project and to help IGU get its LNG to Fairbanks. The authority’s board has approved a $7 million line of credit to finance IGU’s acquisition of 15 high-capacity LNG trailers and new construction that would carry the liquefied gas from the new Prudhoe Bay plant to Fairbanks. IGU said the AIDEA financing an option for the new trucks. The authority is also now funding feasibility work on the Alyeschem project, a prelude to helping finance the project. “Alyeschem’s project will reduce CO2 emissions by 93%, or 45,000 tons per year. It will significantly reduce transportation pollution and enable cleaner and cheaper fuel,” AIDEA said in a statement. “By eliminating the long supply chain of importing methanol, the project will also reduce wear and congestion on the Dalton Highway along with environmental impacts,” the authority said. — Tim Bradner Alyeschem plans new plant on North Slope
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