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Homer to get first phase of gas line City plans to use appropriation to build a regulator station and a short pipeline this year, plans to seek out additional funding Eric Lidji For Petroleum News
Enstar Natural Gas plans to start work on a gas pipeline to Homer later this year.
The Homer City Council recently agreed to revise the description of the project to construct what city officials are calling the first phase of an eventual transmission line.
The city of some 5,500 people on the south tip of the Kenai Peninsula currently uses diesel fuel and has been trying to convert to relatively cheaper natural gas for decades.
This early step involves paying Enstar $525,000 to build a pressure reduction station outside Anchor Point and a short pipeline, less than a mile, down the Sterling Highway.
That plan sets the stage for someday continuing the pipeline all the way to Homer and would bring natural gas to Chapman Elementary School, which currently runs on diesel.
The plan also allows Anchor Point to start switching over to natural gas much sooner.
That gas will come from North Fork, a gas field about 10 miles east of Anchor Point, operated by Armstrong Cook Inlet. A subsidiary of Armstrong is currently building the North Fork Pipeline from the field to just outside the city, where it will connect to an extension of the Kenai Kachemak Pipeline that Enstar is currently permitting.
Construction this year The Legislature approved a $4.8 million line item to build a gas pipeline to Homer earlier this year, but Gov. Sean Parnell vetoed all but $525,000 of it, saying the rest could come in a future funding cycle, after questions about the project had been answered.
Those questions came from the legislative intent attached to the appropriation, requiring that gas from a pipeline to Homer be priced equal to gas in other parts of the Cook Inlet basin; that a Homer pipeline not harm other customers across the region; that state funding for the pipeline help offset rates throughout the region; and that the city of Homer plan a distribution system to bring as many locals as possible onto the grid.
Elected officials in Homer, including Rep. Paul Seaton, believed those questions had already been answered by the time the Legislature approved the funding, but they worried the intent language might force the city to use some money for studies, instead of pipe.
The appropriation included $300,000 for a pressure reduction system in Anchor Point, needed to make gas from a regional pipeline usable in distribution grids. Homer wanted to use the remaining amount on pipe, even if it meant only modest construction this year.
Homer City Manager Walt Wrede, though, told the city council that the state Department of Commerce, Community and Economic Development, the agency administering the appropriation, assured him the money could be used entirely for pipeline construction.
Wrede said that moving ahead with a project located, for now, entirely outside the city limits of Homer would “help us leverage additional money to complete the project.”
While the city could construct the project itself, and theoretically become a gas utility in the future, Wrede recommended hiring Enstar to build, own and operate the project.
Wrede said the city still needs to complete some contracts and draft some work scopes before it can officially pull start the project, but on Aug. 3 Enstar spokesman John Sims told Petroleum News, “Our hope would be to get that done this construction season.”
Seaton wants remaining funds Seaton told Petroleum News he planned to go after the remaining funding for the project, but said he wants Homer to be a precedent for other cities looking for new energy.
“Is the establishment to the grid and the connection to the grid going to be solely the responsibility of the community on the end, unless they have gas they’re producing flowing back to the whole grid? It’s a question that will come up in the future,” he said.
Seaton’s office has been researching how Enstar expanded into the Matanuska-Susitna area in the 1980s. At the time, regulators spread the cost across the entire Southcentral system.
This first stage of a gas pipeline to Homer differs from that Mat-Su extension because Enstar will be constructing the project but not paying for it, and therefore not applying the cost to system-wide tariffs. (However, as a state-funded project, the pipeline cost is in essence being borne by a much larger constituency: the entire population of the state.)
Seaton said he wants to make the case that helping communities around the state secure stable sources of energy is a statewide issue and broader than any single community.
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