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Enstar to spend $6M on bullet line in ’08 Anchorage natural gas utility expects to know by next summer whether or not the project is feasible; outstanding issues remain Eric Lidji Petroleum News
Enstar Natural Gas plans to spend $6 million over the next eight months to gather information about its proposed bullet line to Anchorage.
The engineering work scheduled between now and next February will help Enstar determine a “more precise route, more precise cost and more precise timeline” for a 690-mile small-diameter pipeline to increase natural gas supplies to the population center around Southcentral Alaska.
“We need gas sooner rather than later,” Colleen Starring, Enstar’s regional vice president, told the Alaska Support Industry Alliance on May 8. “If there were another discovery in the inlet that’s great, but we can’t wait for that to happen.”
The $3.3 billion bullet line would run from possible gas fields in the foothills of the Brooks Range to Anchorage through Fairbanks, following the rights of way of the Parks and Dalton highways.
Enstar expects the line to be between 20 and 24 inches and pressurized to 2,500 pounds per square inch, which would allow for increased shipments without increasing the size of the pipeline. Several natural gas prospects sit along the proposed route.
The engineering work planned for the remainder of the year would serve as the first phase in proving whether or not the project can realistically move forward. Starring said the company expects to decide by June 2009 whether or not to sanction the project and spend around $60 million on the second phase of the project.
Several issues to resolve The fate of the bullet line depends on several factors largely outside of Enstar’s control.
First, the most likely source of gas for the bullet line comes from the Gubik and Chandler fields in the southern foothills of the Brooks Range. Anadarko is currently exploring those fields, trying to determine whether the resources justify full production.
Second, to follow the Dalton and Parks highways, Enstar would either need state and federal permission to cross several parks, or would likely have to increase the cost of the project to go around those parks.
Finally, Enstar admits that the residential customers along the Railbelt probably couldn’t support the bullet line without a slate of industrial users buying large quantities of gas.
“We need a strong industrial base down in the inlet or this line is never going to be economically feasible,” Starring said.
Starring said that while “we have nothing signed or nothing agreed to,” Enstar has spoken with the fertilizer company Agrium, the oil refiner Flint Hills and the utility Fairbanks Natural Gas and three Alaska Native corporations about the project.
Enstar hopes the bullet line, if built, would spur both exploration for natural gas and industrial users of gas, including increasing exports.
Companies shipping gas through the line would take advantage of a new 5 percent tax on gas produced for in state markets.
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