The closure of the Agrium Inc. fertilizer plant in Kenai, AK, due to a shortage of natural gas in the region, which was announced this week (see Daily GPI, Sept. 26) could be the shot in the arm needed to move an already-pondered “bullet” pipeline from Alaska’s North Slope to bring gas to Cook Inlet.

Local gas distribution utility Enstar Natural Gas Co. has been looking at ways to get additional supplies into Cook Inlet, spokesman Curtis Thayer told NGI. One option would be to encourage more development of local reserves. A second would be a spur pipeline off of a larger Lower 48-bound pipeline from Fairbanks to Cook Inlet. And the third option, the one now favored, would be a bullet line to bring gas from the North Slope to Cook Inlet.

“We have worked in Juneau to get a bullet line concept, to bring a bullet line form the North Slope down to south-central [Alaska],” Thayer said. “We only actually need to bring it about 60 miles north of Anchorage into our pipeline system, and then we could carry the gas through Anchorage and then of course down into the Kenai Peninsula. And at the time we were looking at having the Agrium plant as well as the LNG [liquefied natural gas plant] plant be an anchor tenant or anchor customer.”

Another project proposed by the Alaska Natural Gas Development Authority would tap a pipeline from the North Slope on its way to Canada at Delta Junction, AK, and move gas to Glennallen then on to Valdez as well as Kenai.

Thayer said the loss of Agrium has reignited interest in the bullet line project.

“We need to do something for our own customers in the power generation [sector] in Cook Inlet,” Thayer said. “We need to be looking at that, and I think really with this Agrium closure it just speeds up the need as far as looking at this whole process.”

Thayer said that such a bullet line, carrying up to 0.5 Bcf/d, would be exempt from Alaska Gov. Sarah Palin’s Alaska Gasline Inducement Act (AGIA) process. AGIA sets forth the process for bringing Alaska’s dream of a pipeline to the Lower 48 to fruition (see Daily GPI, Jan. 19).

“We have already done a lot of preliminary right-of-way work and some engineering as far as Fairbanks, and now we’re looking at continuing that north to the [North] Slope,” Thayer said of bullet line planning.

So the Agrium closure could become a blessing in disguise for Cook Inlet gas consumers, who could see a pipeline from the North Slope to serve their market in as few as five years, Thayer said.

“To be honest with you, I think [Agrium] probably helps [the pipeline proposal] because the plant isn’t being dismantled,” Thayer said. “And it shows the importance and need for gas in Cook Inlet. They plan on mothballing it and keeping people so it can be restarted one day. The one thing we do know is we could get a line off the North Slope down into Cook Inlet a lot faster than having a spur line run to a line to the Lower 48.”

Piggybacking a larger pipeline to the Lower 48 could take 10 to 15 years, Thayer said, and its completion would depend upon how quickly the state, gas producers and pipeline backers could come to terms on a project that has been envisioned for decades.

“We could have a whole new set of industry here. We could be looking forward to a new generation of employment and economic opportunity,” said Kenai Peninsula Borough Mayor John Williams, as quoted by the Peninsula Clarion.

©Copyright 2007Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.