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Vol. 12, No. 49 Week of December 09, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Enstar: Parks Highway gas spur line viable

Alan Bailey

Petroleum News

A gas spur line following the Parks Highway and connecting the Matanuska-Susitna valleys gas grid with the Nenana basin, Fairbanks and a future North Slope gas line would be viable, even without an industrial gas consumer to bolster the gas demand, Enstar spokesman Curtis Thayer told Petroleum News Nov. 28.

“The approximate cost of that line that we’ve looked at is about $700 million,” Thayer said. “… A $700-million line to Fairbanks or the Nenana basin — that clearly works without an industrial anchor.”

The spur line might take four to five years to complete, Thayer said.

In 2005 Enstar partnered with Arctic Slope Regional Corp. and Michael Baker Engineering in a conceptual study of the Parks Highway spur line route. Meantime, the Alaska Natural Gas Development Authority has obtained a provisional right of way for an alternative spur line route that would follow the Glenn Highway from Glennallen in the Copper River Valley.

Both routes

It is important to consider both pipeline routes, although the Parks Highway option does have road, railroad and electrical intertie rights of way along its route, Thayer said. A Parks Highway line would pass close to the Nenana basin, which might hold 3 trillion to 5 trillion cubic feet of natural gas, he said.

Thayer also said that a provision in the new state production tax that taxes any Alaska gas produced for use in state at the same favorable rate as Cook Inlet gas has improved the spur line economics. Enstar and Native regional corporation Doyon Ltd. had lobbied for that tax provision, he said.

Andex Resources and its partners Usibelli Energy, Arctic Slope Regional Corp. and Doyon Ltd. have been exploring for gas in the Nenana basin and completed a 2-D seismic survey in the basin in the spring of 2005. But Tom Dodds, president of Andex, told the Alaska Legislature in 2006 that Andex and its partners had placed on hold the planning of a Nenana basin gas exploration well, pending resolution of the proposed petroleum production tax.

Enstar is also still looking at the concept of a “bullet line” connecting North Slope gas into Southcentral Alaska, Thayer said.

“Our engineering department is looking at it,” Thayer said. “We had a meeting just two weeks ago on the progress of that.”

With a price tag in excess of $2 billion and a raft of permitting and construction complexities, viability of the bullet line would require an industrial anchor such as an LNG or fertilizer plant. So, proving out gas in the Nenana basin with a view to building a spur line would seem to make sense as a first option, Thayer said.

Financing

And financing for a spur line or bullet line?

Enstar would seek partners for the project, said Colleen Starring, Enstar’s regional vice president. But Cap Rock Holdings, the company that bought Enstar’s parent company Semco in October, also has a significant interest in Alaska developments.

“They’re very interested in Alaska — one of the reasons they purchased Semco was the Alaska properties,” Starring said. “They see tremendous opportunities up here.”

And Enstar has the necessary experience to build a major Alaska gas transmission line, Thayer said.

“We own and operate more gas distribution and transmission lines than any other company in Alaska,” Thayer said. “It’s how we make our money. We’re an expert in that field. This is not an issue for us. It’s a 250-mile transmission line and we already operate over 400 miles”



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