Story last updated at 8:48 PM on Wednesday, March 25, 2009

Enstar targeting natural gas bullet line

By Phil Hermanek
Morris News Service - Alaska

An Enstar Natural Gas company representative speaking in Kenai last week said the company continues to target 2015 for the startup of its proposed bullet line to bring gas from the Brooks Range foothills to Fairbanks and Southcentral Alaska.

Addressing oil industry support members of Alliance, Enstar spokesman Curtis Thayer did not specify a date for pipeline construction to begin, but said aerial photography of potential routes has been completed already.

Enstar's preferred route for getting gas from Gubik would be through Toolik to Fairbanks and along the Parks Highway to Anchorage.

Thayer said the pipeline would be a 24-inch line "about 700 miles" long with a flow of about a half-billion cubic feet of gas a day.

Describing what he called "pinch points," he said the route faces several challenges including getting over Atigun Pass, crossing the Yukon River and getting across 6 miles of Denali National Park land through Nenana Canyon.

He also said plans are under consideration to have 53 wood bison released into the wild in Alaska, "in exactly the areas where we're looking to put the pipeline."

He said Enstar has asked that the government take another look at where the bison are to be released.

"Oh, and by the way, they're endangered," he said.

The need for additional natural gas in Alaska has reached a critical point, Thayer said.

"Enstar runs into a (supply contract) shortfall in 2011," he said. "Enstar has all of its gas requirements under contract only through 2010. We want to see 2016 or beyond."

He said this is year 21 of a 30-year contract for gas from Marathon Oil Company, and because of unpredictable market conditions and prices, Enstar is now negotiating one- and two-year contracts at a time.

Although Thayer said Cook Inlet gas is not drying up, the gas that is present in the ground is not deliverable. Exploration needs to be done, wells need to be drilled and reserves need to be proved up before any additional gas can be brought to market on the Kenai Peninsula.

All involved in the gas supply business agree "gas has to come from the North Slope," he said, adding Enstar has to have an industrial user such as Agrium or the Conoco-Phillips LNG plant to make a bullet line economical.

"We need to be sure 3 trillion cubic feet of gas is available for us to build the line," he said.

Another factor weighing on Enstar's decision to proceed with the bullet line is a preliminary estimate of needing a tariff of $2.50 per thousand cubic feet of gas in order for the project to be economic.

"Fair market prices are important to securing future gas supplies, because paying those prices supports necessary capital expenditures," Thayer said.

"Natural gas consumption is vitally important to continued economic growth," Thayer said.

"The government should set sound public policy that allows private enterprises to invest capital to find gas and build needed storage and pipeline facilities," he said.

The 2015 startup date "takes all rowing in the same direction," Thayer said.

During a question and answer period following his formal remarks, Thayer said Enstar has talked with TransCanada and Denali the Alaska Gas Pipeline -- those proposing a 48-inch trans-Alaska gas pipeline -- and "they're OK with us building a pipeline to serve Alaska's in-state needs."

Phil Hermanek is a reporter for the Peninsula Clarion.