Homer Alaska - Business

Story last updated at 1:31 PM on Tuesday, November 22, 2011

Work on gas bullet line continues, officials say



By Tim Bradner
Morris News Service - Alaska

Engineering and planning for a 24-inch natural gas pipeline from the North Slope to Southcentral Alaska by a state of Alaska corporation is continuing for now, despite new gas discoveries in Cook Inlet.

Escopeta Oil recently announced that it had discovered natural gas in Cook Inlet. Escopeta representatives told Anchorage Mayor Dan Sullivan's Energy Task Force that the company would not be able to confirm proven natural gas reserves until next summer, said Dave Harbour, a spokesman for Alaska Gasline Development Corp., which is planning the 737-mile, 24-inch pipeline project.

Escopeta has estimated its discovery at about 1.4 tcf in recoverable resources, but further testing is needed.

Meanwhile, AGDC officials said work on the 24-inch pipeline from the Slope must continue if the project is to stay on schedule to meet Southcentral Alaska energy needs if Escopeta's find doesn't work out.

"The Legislature, with Governor (Sean) Parnell's support, created the AGDC in 2010 to ensure that by the end of the decade Interior and Southcentral Alaska citizens have adequate supplies of natural gas at the lowest possible price. We remain dedicated to that mission," Dan Fauske, CEO of the state corporation, said in a statement.

House Speaker Mike Chenault said it is important to continue support for the in-state gas pipeline as a fallback.

There is an estimated 35 tcf of gas that has been discovered on the North Slope. TransCanada Corp. and ExxonMobil Corp. are working on a proposed 48-inch pipeline from northern Alaska to Alberta, but the project appears to have bogged down following large new shale gas discoveries Outside.

Parnell recently asked North Slope producers and TransCanada to reconsider LNG exports from Alaska as an alternative, but whether that might happen is uncertain.

Fauske, of AGDC, has said previously that if a large-diameter pipeline is built from the Slope, the state's 24-inch pipeline project would become a spur line off the larger pipeline. But if the big line continues to stall the state should be prepared to build the 24-inch line all the way to the Slope, he said.

The state pipeline corporation is now working on a federal Environmental Impact Statement for its project and in securing of a federal right-of-way, said Dave Haugen, project manager. The draft of the EIS is now expected in early spring. The schedule for the EIS has slipped. It had been expected in September.

A right-of-way across state lands has already been secured for the project, he said.

This winter AGDC's technical group will be evaluating data gathered in the 2011 summer field program, and planning is also under way for the 2012 field program, Haugen said.

Much of the field work is focused on river crossings, including the Yukon and Tanana rivers, as well as at Atigun Pass in the Brooks Range, where there is constricted space because the existing trans-Alaska oil pipeline also uses the pass.

The Legislature has appropriated $44 million over the last two years to support work on the 24-inch pipeline. A state appropriation will be requested for continued work in 2013 but Parnell has not yet approved the amount, according to AGDC financial officer Joe Dubler.

The appropriation is expected to be part of the governor's fiscal year 2013 budget request that will be released Dec. 15. The Legislature must approve the appropriation.

AGDC has previously said that it will need to spend about $400 million in engineering, planning and the acquisition of permits by the time the project is approved for construction.

Tim Bradner is a reporter for the Alaska Journal of Commerce.

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