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Providing coverage of Alaska and northern Canada's oil and gas industry
January 2009

Vol. 14, No. 2 Week of January 11, 2009

Partner other than Enstar for ANGDA?

Governor recommended ANGDA-Enstar gas spur line partnership; ANGDA has RFP out for due diligence on unnamed company X

Kristen Nelson

Petroleum News

Last summer Alaska Gov. Sarah Palin challenged the Alaska Natural Gas Development Authority to examine the possibility of a public-private partnership with Enstar Natural Gas to develop an in-state gas spur line.

Enstar’s role in the partnership was described in a statement from the governor’s office “as engineering, constructing, operating and maintaining the pipeline.”

ANGDA is beginning evaluation of another possible partner.

In a request for proposals issued Jan. 6 ANGDA said it wants to know whether companies other than Enstar should be considered for this partnership and said its board “has a fiduciary responsibility to seek out other interested companies and seeks a contractor to perform due diligence on a publicly traded company, which will be known as COMPANY X.”

ANGDA Chief Executive Officer Harold Heinze told Petroleum News in a Jan. 7 e-mail that “company X is a specific unidentified publicly traded large pipeline company.” He said the company’s identity will be revealed to the contractor selected in the RFP process “on a confidential basis.”

Information on the company should be available through its U.S. Securities and Exchange Commission filings, Heinze said.

The report to be prepared under the RFP will be useful to ANGDA’s board if a deal involving company X comes to the board, he said, and “will also provide a contrast to the board in its consideration of Enstar” as a potential partner in the spur line project.

The RFP has a budget not to exceed $100,000. A draft report is due March 16 and a final report April 20.

The selected contractor will provide a report “specifying the precedent conditions for forming a public/private pipeline partnership under Alaska Natural Gas Development Authority’s statutory authorities”; a list of desirable financial and operational parameters for the private partner in the partnership; an estimate of company X’s conformance to those parameters “based on a review of public information filed with the Regulatory Commission of Alaska and other agencies”; and an estimate of company X’s ability to satisfy regulatory requirements such as “fit, willing and able.”

Governor selected Enstar

The governor “announced the formation of a public/private partnership” July 7 and named ANGDA, Enstar and the State of Alaska as the partners, to “build the first phase of a bullet line to bring Alaska gas to Alaskans within the next five years.”

Palin said there was synergy: Enstar as a proven operator; ANGDA which can provide public financing; and the State of Alaska’s ability to expedite the project and potentially ensure lower tariff rates for an in-state pipeline.

Goals included delivery of natural gas to Southcentral and Interior Alaska within five years; spurring exploration and development of new natural gas resources in the Cook Inlet and Copper River basins and providing long-term supplies of natural gas for Southcentral and Interior Alaska.

Construction of the line would start in the south and move north, reaching Fairbanks and Interior Alaska by 2013. If new sources of natural gas are not developed in Cook Inlet or along the way to feed the line, construction could then proceed north and access natural gas supplies in the North Slope Foothills or beyond, making them available to Southcentral and Interior Alaska by 2014. If that phase is not needed, the in-state line could be connected to the main North Slope line when it is completed in 2018-20.

The governor’s office said in the July 7 statement that the development was in initial stages and details would take a few months to develop, with a recommended structure and more details targeted for rollout in the fall of 2008 and any necessary enabling legislation or appropriation to be sought in the legislative session beginning this January.

Different routes

Both ANGDA and Enstar have been studying bringing natural gas to Southcentral, but have been looking at different routes: ANGDA the Glenn Highway to Palmer, to connect Southcentral Alaska with a mainline moving North Slope natural gas to market, and Enstar the Parks Highway through Wasilla. Enstar has been talking with Anadarko Petroleum about moving natural gas from the Gubik field in the North Slope Foothills where Anadarko is doing exploration drilling.

The statement released by the governor’s office in July said the state believes the Richardson Highway route, which would then follow the Glenn Highway into Southcentral, is “the best for the state” because of the state’s “interest in reaching the populations, communities, and military and industrial facilities along the Richardson Highway.”

The state is also a resource owner in the Copper River Valley, and “has a significant interest in promoting the exploration and development of natural gas in that basin,” the governor’s office said.






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