AG denies LNG plant sale to Hilcorp

Alaska Attorney General Craig Richards has rejected the proposed purchase by Harvest Alaska of a small liquefied natural gas plant at Port MacKenzie.

In a July 7 letter to Harvest, a subsidiary of Hilcorp Energy, Richards proposed changes in the LNG sales contract reached in November 2014 with Fairbanks Natural Gas, the existing plant owner that also operates a small gas utility serving about 1,100 business and residential customers in Fairbanks.

Hilcorp rejected the proposed changes in a July 17 letter, telling the attorney general it wanted to stick to the original contract terms because the purchase already had a small profit margin.

Based on that, Richards informed Harvest in an Aug. 3 letter that he would not approve the sale of the plant. In an Aug. 6 statement, Hilcorp said it was disappointed in the attorney general’s decision.

“We believe the purchase and sale agreement originally struck in November 2014 (with Fairbanks Natural Gas) was both reasonable and fair,” Harvest Alaska president Sean Kolassa said.

The Alaska Industrial Development and Export Authority, or AIDEA, board of directors has approved a $53-million purchase of Pentex, the parent company of Fairbanks Natural Gas Co., in order to supply natural gas to the Interior after a previous attempt tied to North Slope gas turned out to be uneconomic.

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