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Assembly approves pipeline land lease

Posted: January 8, 2014 - 11:28pm
File photo/Peninsula Clarion Kenai Peninsula Borough Land between Cook Inlet and the Kenai Spur Highway, selected by the Cook Inlet Oil Corp. for an oil pipeline route originating on the west side of the inlet and ending in the Nikiski Industrial Area. The assembly reclassified the former gravel set aside for public use as "utility" land in preparation to lease the property to the oil company.
File photo/Peninsula Clarion Kenai Peninsula Borough Land between Cook Inlet and the Kenai Spur Highway, selected by the Cook Inlet Oil Corp. for an oil pipeline route originating on the west side of the inlet and ending in the Nikiski Industrial Area. The assembly reclassified the former gravel set aside for public use as "utility" land in preparation to lease the property to the oil company.

Kenai Peninsula Borough Assembly passed two oil and gas industry items during its Tuesday meeting.

The first, consent agenda resolution to urge the United States Department of Energy to approve ConocoPhillips’ natural gas export license application. The second, an ordinance to approve a property lease for Cook Inlet Energy.

ConocoPhillips closed its Kenai LNG plant in 2012 citing gas supplies shortages. According to the resolution, the plant previously produced more than $20 million annually in economic benefit.

With recent developments in the Cook Inlet, the State of Alaska asked the company to reopen the plant, and in December of 2013, ConocoPhillips filed for a two-year Kenai LNG export license. The LNG facility is estimated to provide 50 direct jobs and 120 indirect jobs on the central portion of the Kenai Peninsula.

Later in the meeting, the assembly unanimously authorized Borough Mayor Mike Navarre to execute a 30-year lease to Cook Inlet Energy for 4.7 acres north of Kenai for $5,700 annually; subject to 3 percent annual increases. The lease may be renewed for two additional 10-year terms.

The assembly previously approved a reclassification of the 4.7 acre property north of Kenai to open it for use for the pipeline project.

According to a borough staff report, the land is an abandoned former gravel pit on a steep bluff which sits above a beach area used “intensively” for commercial, recreational and personal uses.

The company plans to construct a 26-mile long, 8-inch diameter trans-foreland pipeline from its western Cook Inlet Kustatan Production Facility to the Kenai Pipeline Company Tank Farm on the eastern side of the inlet. According to the company’s Trans-Foreland Pipeline Project proposal, the pipeline will allow the company to bypass the Drift River infrastructure and reduce oil transfers between the shore and barges across the inlet to the tank farm dock.

Assembly member Sue McClure said the lease will eventually transition from CIE to Tesoro.

During public comments about the ordinance, Karen Brown, of Michael Baker Jr. Inc. — the company designing the pipeline — said the company will begin the pipeline as far away as it can from the eroding bluff. She said it’s going to be drilled underneath the bluff half of a mile offshore.

“So you will never actually see the pipeline on this piece of property,” she said. “What you’ll see is a valve box. It will probably be an underground valve box. … And it’s going to be able to shut the pipeline down on the subsea portion or on the land portion.”

She said the company plans to start bringing in equipment and begin construction around April.

“We’ll use that area for some lay down for some pipe that would be put underground there,” she said.

While the borough assessment on public access to the land in December was that it was impossible to put direct beach access to the land for the public; the parcel holds at least two well-used trails accessing the upper portion above the beach.

A 100-foot piece at the northern end of the property will be reserved for public use.

Kaylee Osowski can be reached at kaylee.osowski@peninsulaclarion.com.

Clarion File material was used in this article

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