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ANGDA and Enstar wait and work Organizations haven’t met since announcement of in-state pipeline partnership, but agree on work needed to advance the project Eric Lidji Petroleum News
In the three weeks since Gov. Sarah Palin announced a public-private partnership to build an in-state gas pipeline within five years, the organizations involved share a view of the near term work needed to advance the project, but continue to pursue independent ventures.
“We’re continuing with the work plan that we had developed,” Enstar spokesman Curtis Thayer told Petroleum News on July 30. “We assume ANGDA is proceeding with the work plan they developed. Then we’ll sit down and compare apples to apples and oranges to oranges.”
Under the partnership Palin outlined on July 7, the Alaska Natural Gas Development Authority and Enstar Natural Gas Co. would work to build a small pipeline from Cook Inlet to Fairbanks by 2013 or to the foothills of the Brooks Range by 2014.
The move was meant as a midterm solution to two problems: the rising cost of energy in Fairbanks and the declining natural gas supply in the Cook Inlet.
The Palin administration believes markets in Fairbanks will spur development in the Cook Inlet. If that assumption is wrong, the pipeline will simply continue north until it hits a supply source, either in the foothills of the Brooks Range or on the North Slope.
Separate projects in works ANGDA and Enstar have been separately working on similar, but mutually exclusive projects to deliver Alaska natural gas to in-state markets.
ANGDA wants to build a spur off a larger gas pipeline running from the North Slope to markets in North America. Enstar wants to build a bullet line running directly from the Gubik gas field north of the Brooks Range to the existing pipeline grid in Anchorage.
They also favor different routes: ANGDA has been studying the Richardson Highway, a route the state prefers, while Enstar is looking at the Parks Highway.
By bringing the two together, the state hopes to combine Enstar’s experience as a pipeline builder and operator with ANGDA’s ability to secure public financing.
Must design business setup But public companies and private companies don’t operate the same way, especially when it comes to buying goods and service, and financing capital projects.
Enstar and ANGDA agree on the need to determine the structure of a future business relationship, and on the need to compare the work each company has already completed toward an in-state pipeline to find what gaps might still remain.
“We are prepared to enter those discussions. I’ve informed both the state and Enstar of that.” Harold Heinze, chief executive officer of ANGDA, said at a board meeting in Fairbanks on July 30. “That meeting has not occurred.”
Enstar is ready, too, Thayer said, but the time-consuming deliberations surrounding the Alaska Gasline Inducement Act have prevented the parties from meeting with the state.
“Everybody’s in Juneau right now,” Thayer said. “We’re in Anchorage.”
Thayer expects Enstar and ANGDA to meet with the state in September, after the summer special legislative sessions have come to an end.
“We’ll be talking and we’ll figure out whether we’re going to come together,” ANGDA Chairman Scott Heyworth said at a board meeting in Fairbanks. “And it may or may not work out, but that’s just what we’re dealing with exploring right now.”
The proposal for the ANGDA-Enstar partnership came together quietly in the week before Palin made the announcement, and the two companies met for about an hour later that afternoon. So far, that has been the extent of the interaction between them.
Heinze and Heyworth both insist the partnership is simply an idea to pursue, not a mandate from the governor or a binding business arrangement forcing any action. Heinze said ANGDA wouldn’t start a formal partnership with Enstar without board approval.
Summer fieldwork continues In the meantime, both organizations are continuing existing fieldwork programs.
Enstar is spending $6 million this year to study a possible pipeline corridor between Gubik and Anchorage along the Parks Highway.
Anadarko Petroleum drilled an exploration well at Gubik this winter, but has yet to release details about the amount of gas it believes the field contains.
In mid-July, about a week and a half after the announcement of the partnership proposal, Enstar and Anadarko met in private to discuss the Gubik and Chandler fields. Thayer said Anadarko plans to return to the fields this winter to drill more exploration wells, but doesn’t have any new estimates about the potential reserves at the site.
ANGDA currently has a contractor in the field mapping the Richardson Highway route to gather information needed for a wetlands permit from the U.S. Army Corps of Engineers.
ANGDA also recently hired a company to study possible connections between Gubik and the existing corridor of the trans-Alaska oil pipeline. Although the project likely duplicates work Enstar plans to conduct, Heinze said ANGDA’s goal is to put as much information into the public domain as possible.
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