Story last updated at 7:37 PM on Wednesday, November 19, 2008

Gas soon may be flowing to Homer



By Aaron Selbig
Staff Writer

Homer's long wait for a consistent supply of natural gas may finally be nearing an end as two gas companies -- Armstrong Cook Inlet LLC, a subsidiary of Denver-based Armstrong Oil and Gas, and Anchorage-based Enstar Natural Gas Co. -- have agreed in principle to build a pipeline to ship the commodity from wells in the North Fork area.

"They have positive results," said Enstar spokesman Curtis Thayer of Armstrong's two North Fork wells after a Nov. 13 meeting between the two companies. "They have gas they would like to sell and it is commercially viable. From the preliminary discussion, it looks like Homer is the best opportunity for that gas."

Ed Kerr, vice president of land and business development for Armstrong, said both wells have viable amounts of gas and now need a pipeline to carry it to market. Kerr cautioned that no formal agreement has yet been reached between his company and Enstar on where that pipeline might end up, but said Homer represented a stable base of potential customers.

"As long as were getting a fair and reasonable price, we want the gas to go where it is needed," said Kerr.

Homer businesses and residents who presently rely on heating oil would stand to save a third of their heating expenses with a supply of natural gas, said Thayer, but he cautioned that many hurdles still stand in the way.

"We probably wont see anything until 2010 but this is a great first step," he said.

In July, Armstrong completed a 9,000-foot well at North Fork, located about six miles east of Anchor Point off North Fork Road, and has been testing it since Oct. 6. Before last week's talks, the company faced two choices for delivering potential gas to market -- connecting it via pipeline to the existing Kenai Kachemak Pipeline that presently ends at Happy Valley or shipping it to Homer through a new pipeline. Both destinations are about 10 miles from the well.

Homer Mayor James Hornaday said he was pleased by the news of Armstrong's successful wells but would like to see a completed plan -- including potential costs to the city -- to bring the gas to Homer.

"This is good news and I don't mean to sound skeptical, but I've heard this talk before," said Hornaday, noting that Homer residents have been seeking a natural gas supply for more than 30 years. "I think it sounds encouraging and I would hope it would reduce the cost of living for everyone in the whole area. The next step is to figure out the distribution system."

To get the gas to Homer, Armstrong and Enstar would first have to get regulatory permission from the Regulatory Commission of Alaska, said Thayer, and then would have environmental and engineering work to do. Enstar already has a "certificate of public necessity" from the RCA to bring gas to Homer, which it secured in 2000, but would have to get further approval of a contract with Armstrong. That contract has not yet been formalized.

Rep. Paul Seaton, R-Homer, said he understood that Enstar's RCA certificate required them to ultimately build a pipeline to Anchor Point, as well.

"If they're thinking of another route that wouldn't supply Anchor Point, my understanding is they'll have to reapply for their certificate," said Seaton, who also wondered if outlying communities like Seldovia and the Russian villages could be supplied with gas.

"I hope Enstar will be down here talking to citizens soon, so we know what their plan is going to be," said Seaton.

Enstar sent engineers to Homer in 2006, said Thayer, to study infrastructure work that would have to be done to distribute natural gas in the community and the company now has an "outline" of such a system. The main pipeline would likely come straight into the center of Homer and then feed outward through pipes buried 36 inches deep.

"You usually start in the city core and then grow outward. We would probably connect a lot of government buildings like schools, the hospital and the university and then try to pick up homes and businesses along the way." said Thayer, adding that construction of the basic distribution network would likely take three to five years.

Officials from the City of Homer and the Kenai Peninsula Borough would have to be involved in discussions on building the main pipeline and distribution network, said Thayer, and would likely have to form a "user improvement district" to help pay the construction costs.

Homer City Manager Walt Wrede said he had not yet talked to officials from Enstar or Armstrong about bringing gas to the city but was encouraged by the new possibility.

"It's good news for the community anytime we can bring down the cost of energy and the cost of living," said Wrede. "Once we get the gas here, we need to work with Enstar on the distribution lines. The city looks forward to that discussion."

Aaron Selbig can be reached at aaron.selbig@homernews.com.

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