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Enstar looks at foothills bullet line A 500 million cfpd pipe would connect to future Anadarko gas field; utility hopes to avoid a natural gas shortage in the Cook Inlet Eric Lidji Petroleum News
Hoping to avoid a supply crunch predicted for Cook Inlet, Enstar Natural Gas Co. is planning a bullet line to deliver natural gas from northern Alaska to Anchorage, the Anchorage-based utility told members of the Senate Resources Committee on March 12.
Giving rough figures, Enstar estimated building a $3.3 billion pipeline capable of carrying around 500 million cubic feet of natural gas per day sometime around 2014. The 650-mile pipeline would most likely connect Southcentral Alaska to a future gas field operated by Anadarko Petroleum Corp. in the foothills of the Brooks Range.
“If you were to look at the Foothills as being the source, it resolves a lot of the politics around the North Slope and the producers,” said Curtis Thayer, a spokesman for Enstar.
Prevent gas shortage Over the past few years, Enstar has been exploring a number of concepts to sidestep a possible shortage of natural gas supply in Cook Inlet, predicted to hit sometime around 2013.
Those concepts have included everything from in-field storage to partnering with other companies to buy the Kenai Peninsula liquefied natural gas plant, should it ever close, and convert it into a storage facility.
The bullet line is a newer option.
Earlier in the year, Anadarko spud the Gubik No. 3 well along the Colville River near Umiat on the eastern boundary of the National Petroleum Reserve-Alaska. Along with partners BG Alaska and Petro-Canada, Houston-based Anadarko hopes to finish drilling the well soon and move the rig south to drill another gas prospect, the Chandler No. 1 well, on Arctic Slope Regional Corp. land.
The two wells comprise the first exploration program in northern Alaska to specifically target natural gas. Because no system currently exists to market northern gas, many saw the exploration venture as dependent upon construction of a larger natural gas pipeline going to the Lower 48.
Thayer said Anadarko approached Enstar about the possibility of building a transmission line to market natural gas from the foothills. Thayer said Anadarko hopes to have results from the drilling program “in the next couple of months.”
Enstar can’t afford to wait much longer to solve its supply problem, according to Gene Dubay, senior vice president and chief operating officer of Continental Energy Systems, a partner of Enstar.
“I don’t believe we have a choice,” Dubay said. “I think Enstar-Continental is committed to this project. I believe it may take a few months for our various constituencies to embrace this idea, but I believe, as I sit here, we at Enstar and the community don’t have a choice.”
Advantages for Enstar, Anadarko Although Enstar does not believe the bullet line would interfere with a larger natural gas pipeline from the North Slope, a bullet line could have several advantages for both Enstar and Anadarko.
Anadarko would be able to move gas from the foothills much sooner than it would by waiting for a larger pipeline to be built. The company would also get to take advantage of a recently enacted tax break on natural gas produced for in-state use.
For Enstar, the bullet line could prevent a predicted loss of natural gas supply in the near future, one that would require the company to take expensive and drastic measures to continue providing fuel to more than half of the state’s population.
And because Enstar believes the gas at the foothills prospects is “drier than Cook Inlet” gas, Enstar could build the bullet line without having to also build a conditioning plant to process the gas.
Possibility of adding large customers Because of economies of scale, tariffs on a small line can often be quite high, but Dubay believes it can be brought down.
“The tariff is much very dependent on whether the industrial load continues to be there,” Dubay said referring to the LNG plant and suggesting the line could help to re-open the Agrium fertilizer plant on the Kenai Peninsula. “The tariff, I believe, on the line would be less than two dollars if you had that industrial load.”
Enstar also mentioned other possible customers, including the two Anchorage electric utilities Chugach Electric Association and Municipal Light and Power, Fairbanks Natural Gas and other Fairbanks utilities and power systems, and power generation facilities like those used at military bases across the Railbelt.
“We have met with local Native corporations in Anchorage and they too want to invest and be a part of this project,” Thayer said. “So we’re trying to bring everyone together, but we’re trying to do it through private enterprise.”
Bullet line would build on engineering from spur line
For several years, Enstar has been working on a spur line along the Parks Highway to take off gas from a larger North Slope pipeline. The bullet line would build on much of that work by simply adding a segment on the northern end on the line connecting Fairbanks to the gas supply.
Running south from Fairbanks, the bullet line would run either through Denali National Park and Preserve along a 1,500-foot right of way between the railroad and the Parks Highway right of way, or take a longer and more expensive route around the park along the right of way for the Northern Intertie.
Enstar has met with the Alaska congressional delegation to discuss the possibility of running the bullet line through Denali National Park.
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