Bringing North Slope gas to the Cook Inlet basin is about to take the next step.
The Alaska Natural Gas Development Authority will file an application with the state of Alaska on April 1, requesting clearance on state lands to build a gas line from Glennallen to Palmer, said Harold Heinze, CEO of ANGDA.
That would give ANGDA clearance for about two-thirds of the land needed for the project, Heinze said.
The application will help clear the way for a spur gas line tapping into a proposed larger pipeline traveling from the Slope through Canada to Chicago to bring gas to Southcentral Alaska.
If the main gas line does not happen, a bullet line also is an option, going directly from the Slope to the inlet, he said. It will follow the same route, he said.
Getting permission to build either of these on state land poises ANGDA to take next steps on the project when the time is right, Heinze said. This is the first major step in making the spur gas line a reality, he said.
"This kind of puts us in swinging position to work with this project in the most positive way," Heinze said.
The proposed spur line would be a 24-inch high pressure buried line that could transport 1 billion cubic feet of gas per day to the region : double the current amount consumed in the inlet. The project will cost about $300 million. Heinze estimated that price tag could increase by $50 million.
Dwindling natural gas reserves in the inlet basin have prompted fears that industry will flee the area. Agrium's North Kenai fertilizer plant, a major consumer of gas in the region, has announced its closure later this year. The ConocoPhillips and Marathon Oil LNG plant's federal export license expires in 2009. It has been stated publicly that the expiring license combined with the absence of a large new natural gas supply may cause it to close, as well.
Heinze cautioned that for a spur line to be built, there needs to be somebody to purchase the large volume of gas it would deliver.
Without the high volumes, the transportation costs become high, he said. Domestic users cannot purchase all of the gas the gas line would bring, he said.
Having industrial users, such as Agrium and ConocoPhillips, is critical to its success, he said. Without these industrial users, or something like them, the cost of gas delivered through the pipeline could increase, he said.
The economics of building a smaller pipeline are difficult and probably not plausible, he said.
Propane intended for use in coastal areas in Alaska could be moved through the line, lowering the transportation costs, he said. Propane is one of several different natural gas forms and produces more heat. It could be barged to Alaska coastal and river areas to fuel those communities, he said. It also has a high market value and could be exported to foreign countries.
The state realizes the importance of bringing gas to Southcentral Alaska, said Mark Myers, director of the Alaska Department of Natural Re-sources Division of Oil and Gas and director of the state Division of Geological and Geophysical Surveys.
"(The proposal) will be looked at very seriously," Myers said.
The application will have to follow a public process, allowing for a public comment period. A final decision could be made in September.
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