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Alaska Governor: In-State Gasline Five Years Away

Alaska Gov. Sarah Palin will introduce legislation to spur development of a pipeline to serve the state's gas-starved Southcentral region, she told lawmakers Thursday. This came one day after entities working on two separate in-state projects said they were not collaborating, despite a partnership announcement by the state last summer that called for them to work together.

"We're facilitating a smaller, in-state gasline with legislation we'll hand you next month," Palin said during her state of the state address. "My goal for this in-state line is completion in five years. It will carry 460 MMcf/d to energize Alaska. Previously, we've relied on diminishing gas supply from Cook Inlet...but that is not sustainable."

Utility ENSTAR Natural Gas and the Alaska Natural Gas Development Authority (ANGDA) have been working on separate projects to bring much-needed supplies to the part of the state Alaskans call Southcentral. ENSTAR has been struggling to contract for supplies to serve its customers, and Anchorage-based Chugach Electric Association also is trying to hammer out supply contracts to support power generation (see NGI, Jan. 12). But a pipeline is seen as a necessary longer-term solution.

The ENSTAR plan is for a bullet pipeline linking North Slope gas with Southcentral. The utility has said that without an in-state line flowing gas by 2015 it won't be able to connect new customers in its service territory and some gas users might be forced to switch fuels. ANGDA's project would reach into interior Alaska via a different route to eventually connect with a large-diameter pipeline from the North Slope. TransCanada Alaska LLC has the state concession to build the North Slope gasline (see NGI, Dec. 22, 2008). Producers ConocoPhillips and BP are backing a competing project known as Denali (see NGI, June 30, 2008). In the meantime, before the large North Slope pipeline is built, the ANGDA project would access Cook Inlet gas through an extension.

Preliminary spending on the ENSTAR project should reach about $15 million this year, ENSTAR spokesman Curtis Thayer told NGI recently. Updated estimates for the entire project should be available in March. Currently the project is pegged at about $3.3 billion by ENSTAR. "We have not found any show-stoppers," Thayer said of the bullet line proposal, which now is merely known as the ENSTAR line.

ANGDA is engaged in an environmental impact assessment for its project and has secured conditional rights-of-way. Construction could begin as early as next year.

When lawmakers heard recently that ENSTAR and ANGDA were not collaborating, some expressed disappointment. State Senate Resources Committee co-chair Sen. Lesil McGuire (R-Anchorage) called for Palin to create a public-private partnership of the two entities. "I believe ultimately the best thing for Alaskans would be to have ENSTAR and ANGDA working together. But I certainly don't want to see a situation where a publicly funded entity, such as ANGDA, is competing or potentially hampering the efforts of a private company doing business in the state of Alaska," McGuire said, as reported by the Associated Press.

Last summer it seemed a partnership of ENSTAR, ANGDA and the state was in the cards following an announcement by the Palin administration (see NGI, July 14, 2008). The project was to rely on ENSTAR's capability as an operator; ANGDA was to provide public financing; and the state was to expedite the project and possibly "ensure lower transportation rates." The project proposed would move 460 MMcf/d -- about twice the current daily gas use of Alaskans -- and begin flowing gas as early as 2013, the Palin administration said at the time. However, in the months following the announcement, lawmakers and others saw little progress.

At the time of the in-state gasline collaboration announcement, Palin highlighted her energy plan. She did the same on Thursday with her state of the state address when she called the North Slope gasline -- the big one that would serve the Lower 48 -- "our next economic lifeline." Mindful of dramatically lower oil prices, Palin said, "Without revenues from developing clean natural gas, priorities can't be funded, and we will deplete reserves within a decade.

"Unfortunately, some focus only on potential obstacles when they discuss projects like the gasline: the giants in the land preventing us from gathering fruit. But as I recall, we've already slain a few giants," she said, alluding to Alaska's North Slope oil pipeline.

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