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Kenai Borough wants gas line Borough tells state authority it’s a better location for line than Valdez Larry Persily Petroleum News Juneau Correspondent
The Kenai Peninsula Borough believes a pipeline carrying North Slope gas to tidewater for export as liquefied natural gas makes more economic sense in its neighborhood than in Valdez.
Based on that belief, the borough says it would support asking the Alaska Legislature to change the law that limits the Alaska Natural Gas Development Authority to only looking at building the pipeline terminus at Valdez.
The Kenai Peninsula has an LNG plant and export terminal and an underutilized fertilizer plant that could use additional supplies of gas, said Bill Popp, oil and gas liaison for the borough. Cook Inlet could run short of gas for the two industrial users, home heating and power generating needs in 10 years, Popp told the state gas authority board at its Sept. 22 meeting in Anchorage.
He also noted that the Southcentral pipeline grid already serves almost 400,000 of the state’s 635,000 residents, and a line to the Kenai Peninsula could feed North Slope gas into that system.
Borough suggests change in law Popp told board members they have the ability to suggest a change in state law if the economics show there is a better project than building at Valdez.
“We think it flies in the face of reason not to be looking at this issue,” he said in an interview the day after the board meeting.
The statute adopted by voters when they passed the citizens initiative last fall says the state gas authority shall prepare a project development plan by the summer of 2004 for a pipeline from the North Slope and an LNG export terminal in Prince William Sound. Supporters of the initiative have always talked of Valdez as the sound’s only feasible building site, where the LNG plant would share the community with the terminus of the trans-Alaska oil pipeline.
Scott Heyworth, sponsor of the initiative and a member of the state gas authority board, was not receptive to the Kenai Peninsula Borough’s suggestion of trying to change the law. He said past studies by longtime LNG proponent Yukon Pacific Corp. and others have pointed to environmental challenges to running a pipeline to the Kenai Peninsula.
Change could cause delay Heyworth also challenged the economics of building the line to the Kenai, and said any change in routing at this point could delay the project.
Popp responded that a pipeline to the Kenai could follow much of the existing rights of way used by the Alaska Railroad, utility lines and highway routes, and defended his belief that the economics are better to the Kenai Peninsula than Valdez.
In all likelihood, Popp said, any pipeline to tidewater for LNG export will not be stand-alone project but rather will be a spur line from a main pipeline running from the slope into Canada and on to the North America gas supply grid. As such, he said, it makes sense to route the spur to serve a majority of the state’s population. “We have a gas supply problem in Cook Inlet,” he said, adding that the line could solve that problem for decades to come.
Southcentral natural gas consumers and industries currently use more than 530 million cubic feet of gas per day, with about two-thirds of the volume going to fertilizer production and LNG export. The gas authority is looking at a line that would carry 2 billion cubic feet of gas, which would require major expansion of the peninsula’s existing LNG and fertilizer export operations to use up that much new supply. Kelsey also opposes change Board member John Kelsey of Valdez joined Heyworth in opposing any move to join with the Kenai Borough to amend state law for a new pipeline terminus site. “If these people want a pipeline, why don’t they go out and build one,” he said. “I say more power to them. Let them go.”
Board Chairman Andy Warwick of Fairbanks put an end to the discussion when he told the board, “I don’t think we need to debate the issue at this time.”
Popp said the day after the meeting it would be premature to speculate whether the borough would seek legislative action to change the law without support from the gas authority.
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