NEWS BULLETIN

July 07, 2008 --- Vol. 14, No. 75July 2008

ANGDA and Enstar forming joint pipeline partnership

After years spent pursuing separate pipelines with the similar goal of increasing natural gas supplies to Alaska communities, the Alaska Natural Gas Development Authority and Enstar Natural Gas Co. announced today they will form a public-private partnership to build a pipeline connecting Fairbanks to Cook Inlet by 2013.

Details of the partnership remain scarce today. The two companies plan to spend the next few months answering questions of ownership, operation and financing, and to figure out whether legislative action will be needed to move the pipeline into reality.

Unlike the original plans of ANGDA and Enstar, which featured pipelines designed to ship northern gas to the south and offset expected shortages in Anchorage, this pipeline would originally head northward to fuel Fairbanks with gas from the Cook Inlet.

The two companies and the state hope to induce exploration in Cook Inlet by offering new residential and industrial customers along the road system. The state also hopes to capitalize on gas-prone leases in the Copper River basin.

However, if that Cook Inlet exploration fails to materialize, the pipeline could eventually run independently to gas fields in the foothills of the Brooks Range or to the North Slope, where the flow of the pipeline would be reversed to send northern gas south by 2014.

Barring those options, the pipeline could also connect to a mainline running from the North Slope to the Lower 48, expected to come online around 2020, according to the state. There are currently two competing plans for building that mainline.

The starting point for discussion is a pipeline running from Palmer to Glennallen and heading north along the Richardson Highway, where it would connect to Delta Junction and then on to Fairbanks.

That route has been promoted by ANGDA for years, and would be between 70 and 100 miles longer than the route up the Parks Highway originally preferred by Enstar. As such, neither company had firm cost estimates for the newly announced project. Enstar had estimated the cost of its 690-mile bullet line at $3.3 billion.

In the past, ANGDA and Enstar have engaged in an occasionally heated rivalry over the issue of spur line and bullet lines. The state privately began looking at bringing the companies together over the past month, with discussions beginning in earnest over the past week or two.

See full story in July 13 issue of Petroleum News, available to subscribers online at noon, Friday, July 11 at www.PetroleumNews.com


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