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Gas to Homer next year; Enstar’s new pipeline plan twice as long
A pipeline to Homer will be both bigger and smaller than originally envisioned.
Enstar Natural Gas Co. is beginning the permitting and regulatory work this year for a $10.7 million pipeline running 22 miles from Anchor Point to Kachemak City.
The Homer Extension is around twice as long as an earlier iteration of the project outlined in 2004, but Enstar now expects the project to consume less gas than it once anticipated.
The transmission line project is moving forward following decades of stops and starts after policymakers recently approved an $8.15 million grant. To fund the remainder, ratepayers will pay Enstar a $1 per thousand cubic foot surcharge for roughly 10 years.
As currently envisioned, the Homer Extension involves three phases: an 8-inch plastic main running 17.2 miles from Anchor Point to Homer High School, a 6-inch plastic main running 3.5 miles to East End Road and a 4-inch plastic main running 1.6 miles to Kachemak City.
Gas in fall of 2013 Enstar expects to build the pipeline in 2013 and begin offering service later that fall.
Enstar originally drafted the Homer surcharge in 2004, during a previous attempt to bring gas to the region. At the time, the project involved a 4-inch plastic line running 11 miles at a cost of $3.5 million. The surcharge would have also paid off the project in 10 years.
Even though ratepayers will now be covering a smaller cost than they would have in 2004, Enstar still expects the $1 surcharge to take about 10 years to pay back the project costs.
The reason is Enstar expects to sell less gas now than it envisioned selling in 2004.
“We have done a lot of independent analysis on consumption over the last five years to better understand our customers and their gas consumption for supply analysis and load forecasting,” Enstar spokesman John Sims told Petroleum News by email. “Most of the buildings in the area are not large consumers and comparable buildings in other areas around our service territory show they will consume less gas than originally forecasted.”
Additionally, Enstar believes increased conservation awareness efforts are changing consumption habits. “Enstar has seen a significant reduction in gas use due to conservation and people building tighter homes, which also will lower consumption,” Sims added.
Progress in Nikolaevsk The project is one of two expanding natural gas access in the southern Kenai Peninsula.
Despite technical qualms, state regulatory staffers are in favor of moving along a proposal to connect Nikolaevsk to the regional natural gas transmission system.
Under a deal signed earlier in the year, Enstar Natural Gas Co. intends to build a short pipeline branching off the Anchor Point Energy LLC-owned North Fork Pipeline.
As outlined, the project involves using a $447,000 state grant to build a regulator station and a two-inch mainline running 8,930 feet to the Nikolaevsk Community School.
The Regulatory Commission of Alaska initially rejected the application to create an interconnection, saying Anchor Point Energy did not provide enough information about the project, or the financials of its owners, to meet regulatory requirements. In its second application, Anchor Point Energy addressed the issues, but also asked the RCA to waive certain reporting requirements and keep some financial information confidential.
Anchor Point Energy is a subsidiary of Armstrong Oil & Gas Inc. and its partners at the nearby North Fork unit, all small independents. Anchor Point Energy asked for its owners’ financials be kept confidential, saying the risk of a competitive or financial disadvantage if the records became public would “outweigh the public interest.”
Although it called sections of the Anchor Point Energy application “poorly written” and “poorly supported,” the RCA staff said existing regulations could justify the waivers.
According to the analysis, “there is a public interest in facilitating this application” and “operational costs and characteristics are not likely to be significantly impacted by the interconnection,” and so the RCA should grant the waivers and accept the application.
Interconnection required With prompt approval, Enstar believes it could connect Nikolaevsk in time for community institutions and residents to convert their heating systems before winter.
Nikolaevsk is home to some 308 people, according to the most recent state estimates.
While the school is expected to be the largest customer, Enstar expects the initial build out to also include the community fire station and 12 homes. Enstar could potentially extend the line 1,700 feet to connect a community church and nine additional homes.
In addition to the public benefit, Armstrong Cook Inlet is required to connect Nikolaevsk to the transmission grid in order to meet the terms of its unit agreement at North Fork.
—Eric Lidji
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