Pipeline will connect area to new gas source

Companies teaming up for common goal

Posted: Monday, January 28, 2002

Three energy companies operating on the Kenai Peninsula have united in one common purpose.

With the discovery of a new natural gas source on the southern peninsula and the prospects for more to come, a new pipeline will link more than just the three companies. It will connect new gas sources with much of Southcentral Alaska.

Kenai Kachemak Pipeline LLC was formed with the goal of distributing natural gas from wells in the Ninilchik and Anchor Point areas to Homer and communities as far north as the Matanuska-Susitna area.

The newly-formed company is co-owned by Unocal Corp. and Marathon Oil Co. and has partnered with Enstar Natural Gas to oversee construction and operation.

Unocal Manager of Resource Development John Zager told the Kenai Chamber of Commerce Wednesday that Unocal and Marathon both have equal stake in the pipeline, being the primary developers and financers.

Their first step was finding viable sources of natural gas. The two companies accomplished this last Tuesday afternoon, when a gas well was discovered in Ninilchik through a combined effort.

"That makes the project a little bit more real in terms of the convenience of the pipeline being installed," Zager said.

He said Enstar will work with the group to manage operation, construction and distribution to Anchorage and some peninsula communities.

"The primary purpose will be to move gas to the north," Zager said. "It will also facilitate gas usage in the communities along the route."

Enstar will build a low-pressure distribution line that will carry gas from Anchor Point to Homer.

The project, which could get under way as early as this fall, will cost about $100 million, Zager said. But he said the price tag isn't an obstacle for the two oil companies.

"One of the benefits is that companies of Unocal and Marathon's size is that we have the ability to finance something like this, as opposed to going out trying to secure third-party financing," Zager said.

The pipeline will be buried four feet under ground. Zager said much of the pipeline will run along Sterling Highway easements, going around dense population centers to avoid creating any potential hazards to pipes.

Where the need arises, the pipeline will be buried underneath the seven rivers and streams in its pathway. These include the Kasilof, Ninilchik and the north fork of the Anchor rivers and Crooked, Happy, Stariski and Deep creeks.

Zager said the timeline for the project will run just beyond next fall, with the first gas scheduled to begin passing through the pipe system by November 2003.

"We have a pretty firm deadline of having the pipeline actually capable of flowing gas late 2003," he said. "We could begin clearing the right of way possibly this fall.

"There has to be a winter construction period through the wetlands. You have to do that when it's frozen, so you get out there with the equipment and install it in that environment."

But he said construction will be moderated during spring and summer months to keep from deterring visitors to the area.

"We are cognizant of the tourists and fishing industries," Zager said. "As best we can, we'll attempt to minimize any impact to tourism during the months of June and July and probably August."

Zager said safety will be a large focus in putting down the pipeline. He said he is aware of fears that the gas flowing through the line could be harmful to the habitat or the people living nearby. But said he expects the composition of the gas to be at least 98 percent methane, a less harmful form of gas.

"This relieves any issues of poisonous or 'sour gas,'" he said. "In the event of a leak, this gas should go straight up into the air and dissipate."

Zager said the pipeline will be designed with sensors to detect cracks and leaks and will be built of materials that will protect it from corrosion and rust. Block valves are placed every eight miles to shut off gas supply in the event of a leak.

Overflight checks of the pipeline area will be done periodically to see if vegetation growing around the pipes are affected by the gas from possible leaks.

Zager said Enstar will have a 90-minute response time to any leak reports. The company also will be the contact for anyone who plans to dig near the pipeline. Enstar will help them to pinpoint its location to avoid errant breaks.

Homer Electric Association was listed in Zager's presentation as having a part in the pipeline, but he clarified that HEA would play a small part in the operation.

"Its role has changed a bit over time," he said. "A co-op of its size just doesn't have the flexibility our companies do in terms of financing the project."

HEA spokesperson Joe Gallagher said that, at this point, the utility company is operating only in the capacity of a supporter, but he said there is much to gain from the pipeline's success.

"Homer Electric does remain a strong supporter of this project," he said. "The lower Kenai Peninsula residents have wanted this for a while. It will have a positive impact on the area. By having natural gas, it will spur the economy on the lower Kenai Peninsula. When the economy sees a boost, it's good for Homer Electric."

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