August 19, 2003 --- Vol. 9, No. 81August 2003

Enstar, NorthStar, plan natural gas to Homer

Enstar Natural Gas. Co. has signed a gas supply contract with NorthStar Energy Group Inc., the operator of the North Fork gas field west of Anchor Point on the southern Kenai Peninsula, and plans to provide natural gas service to Homer.

Enstar filed a request with the Regulatory Commission of Alaska Aug. 8 for approval of the 20-year gas supply contract between Enstar and NorthStar Energy and for approval of a proposed tariff. Enstar said in an Aug. 18 statement that in addition to commission approval, other requirements for it to start project construction include: successful drilling of a second natural gas production well by NorthStar Energy.

In addition to drilling a second well, NorthStar Energy will build an eight-mile pipeline from its leases to Anchor Point, and Enstar will build a pipeline from Anchor Point to Homer, and a distribution system to provide natural gas to Homer.

The gas price will be based on a 36-month daily average of the Henry Hub natural gas futures with a floor price of $3 per thousand cubic feet adjusted for one-half of inflation plus applicable taxes and transportation fees.

Larry Snead, manager of land and contracts for NorthStar Energy, told Petroleum News Aug. 19 that "the most exciting thing about it for us is that as a part of that agreement we will be building a line from the North Fork field to Anchor Point. Enstar will take gas for delivery at Anchor Point. But building line to Anchor Point allows us opportunity to build a line north to hook up with terminus of KKPL. It is our intent to pursue that."

KKPL, the Kenai Kachemak Pipeline, is the newly built line from Ninilchik to Kenai.

"We've been pursuing the development of the North Fork field since 2000, actually since about '97, because Gas-Pro has been pursuing that and NorthStar acquired Gas-Pro in 2000," Snead said.

Enstar did not provide a projected startup date, but said approval of the contract and proposed tariff "is a critical step" before Enstar and NorthStar can begin to construct pipelines and distribution facilities.

"Enstar must receive RCA approvals for both the NorthStar contract and the rate proposal for service to Homer, before Enstar commits resources to the project and before its prospective Homer customers incur the costs of converting to natural gas," the company said.

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