Pipe could help plant

Posted: Thursday, June 30, 2005

After mediation that took almost a month, Agrium will have access to a pipeline that is critical in the company's ability to purchase more natural gas to keep the plant running.

The Cook Inlet Gas Gathering System, or CIGGS, was an unregulated pipeline owned by Unocal Corp. and Marathon Oil Co. that delivers natural gas from the west side to the east side of Cook Inlet. Unregulated means the pipeline's owners control its use.

Agrium plans to close its North Kenai plant Oct. 31 unless it can find additional natural gas at the right price to continue running the plant. The Calgary-based manufacturer of fertilizer products currently is in negotiations with Cook Inlet gas producers to purchase more gas. It has not yet announced the outcome of those negotiations or with whom they are negotiating.

Access to CIGGS is necessary for Agrium to be successful in its quest for more gas. Agrium spokesperson Lisa Parker said any high pressure natural gas Agrium purchases from the west side of the inlet must be transported through CIGGS. High pressure gas is needed to make anhydrous ammonia, she said.

She pointed out that access to CIGGS is only one piece of the puzzle Agrium needs to be able to secure additional gas.

A nonbinding agreement between involved parties grants access to the pipeline beginning Nov. 1, according to Regulatory Commission of Alaska documents. Marathon and Unocal will charge a tariff of 15.2 cents per thousand cubic feet of gas to use the pipeline.

Now, the parties involved in the negotiations must file a final agreement by 4 p.m. Aug. 26 with the RCA. It will then be ruled on by the RCA.

"It opens up the pipeline system," Parker said.

Because of the agreement, Agrium, along with any other entity, may transport natural gas through CIGGS.

Agrium filed a petition with the RCA two years ago to regulate CIGGS — and other pipelines — which was rejected. The second petition was filed last fall to regulate CIGGS only. Since the second petition was filed, the state, Enstar Natural Gas Co., Aurora Gas LLC and Alaska Pipeline Co. LLC entered CIGGS negotiations. The parties started mediation in May.

Unocal information officer Diane Dunham would not comment on the agreement and deferred questions to Marathon.

Confidentiality agreements prevent parties involved in the agreement from discussing specifics of the agreement, said Marathon spokesperson Paul Weeditz. Speaking generally, Weeditz said Marathon is committed to resolving Cook Inlet regulatory issues involving the company — including CIGGS.

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