INTERIOR ENERGY PROJECT AIDEA UPDATE October 23, 2019 Interior - PowerPoint PPT Presentation

INTERIOR ENERGY PROJECT AIDEA UPDATE October 23, 2019

Interior Energy Project PURPOSE AND GOALS “. . . to bring low-cost energy to as many residents and businesses of Interior Alaska as possible, as quickly as possible ...” Stabilize the Economy Help Improve AirQuality

History  1998 - Fairbanks Natural Gas, LLC (FNG) began operating in Fairbanks; giving Interior residents a natural gas heating option for the first time.  2012 - The Fairbanks North Star Borough (FNSB) acquired its natural gas utility power via transfers from the City of Fairbanks and the City of North Pole and established the Interior Alaska Natural Gas Utility (IGU).  2013 – SB 23 signed into law establishing the Interior Energy Project (IEP), providing AIDEA with the financing package to finance and develop the supply and delivery of natural gas to Interior Alaska.  2015 – HB 105 signed into law, enacted to renew and advance the IEP and requiring the AIDEA Board of Directors to approve, by resolution, a project plan prior to deploying additional financing.  2015 – AIDEA purchases Pentex Alaska Natural Gas Company, LLC (Pentex) to further the goals of the IEP and facilitate consolidation of the Interior gas utilities.  2018 – IGU purchases Pentex from AIDEA and the parties establish a Finance Agreement governing AIDEA’s financing of IGU; utilizing the tools established by the IEP.

Project Scope Liquefaction  Titan 1 - upgrades, Titan 2 and Titan 3 - construction Transportation  High capacity LNG trailers added on pace with demand Storage  Fairbanks LNG Storage - 5.25 million gallons - construction  North Pole LNG Storage – 150,000 gallons - construction Distribution  140 miles of main lines constructed in 2014 and 2015 in Fairbanks and North Pole.  Buildout of North Pole Phases 1-3 Distribution System & Fairbanks Expansion Area  Services and Meters Customer Conversion Program

Project Status - Liquefaction Braemar Technical Services contracted to conduct the front-end engineering and design (FEED) for the expansion (100,000gpd) of the Titan liquefied natural gas facility. Scope includes: • Request for proposals for liquefaction and pretreatment, LNG storage tanks, new truck loading rack and power generation. (Complete) • Power study to determine most economic power supply. (Complete) • Recommendation and selection of preferred equipment vendors. • 65% Engineering design to facilitate development of final project budget to +/- 10% accuracy. • Completion of FEED study scheduled for the end of 2019.

Project Status - Storage Fairbanks  5.25-Million-gallon capacity  Double-walled, double containment design  Const. Commenced: JAN 2018  Completion Date: NOV 2019  Commissioning: DEC 2019

Project Status - Storage Transfer Skid – LNG Loading and Balance of Plant Offloading

Project Status - Storage North Pole  150,000-gallon capacity. (Re-uses two tanks from existing Fairbanks site)  IGU Closed on Purchase of Land (20 acres) from GVEA in September  Ground Improvements Contract Awarded on 9/20/2019  Work Commenced 10/1/2019, Scheduled completion 11/15/2019  Site Infrastructure Engineering Complete and Request for Bids to be issued 10/15/2019, with a target completion date of 9/30/2020

Project Status - Storage

Project Status - Distribution Fairbanks – 140+ Miles of Distribution Piping (1150 Customers)

Project Status - Distribution Fairbanks – New Services IGU has started installing service lines in advance of the storage project completion. We have installed 50 new service lines this season. • Residential - 29 • Commercial - 15 • Interruptible - 6

Project Status - Distribution North Pole – 73+ Miles of Distribution Piping

Project Status - Financing Activities • Original $125MM SETS funds expected to be fully drawn by First Quarter2020. • AIDEA & IGU executed an amendment to the original Finance Agreement increasing the SETS loan by $10MM to $135MM on the same loan terms as the original $125MM. • IGU has completed a credit presentation and site visits with the Fitch rating agency and has received a preliminary rating assessment of Investment Grade on the planned 2019 Power Revenue Bonds ($60MM Par Issuance). • IGU has contracted a Financial Advisor, Underwriters and Bond Counsel in preparation of bond issuance. • Targeting January 30, 2020 Closing

Next Steps: Immediate Term • Natural Gas Conversion Program Advancement • Continue implementation of Combined Utility Integration & Transition Plan • Continue development of Master Schedule • Additional IGU Policy development and implementation • Finalize Titan liquefaction FEED work • Advance Natural Gas feed stock availability and negotiations for future supply • Advance Public Relations and Marketing

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