Kenai-Kachemak pipeline gets new partner

Marathon Oil joins group effort to ship natural gas from central to southern peninsula

Posted: Friday, August 31, 2001

Marathon Oil Co. has joined a consortium studying the feasibility of building a natural gas pipeline from the Kenai gas fields to Homer.

The agreement, signed Aug. 21, makes Marathon an equal partner in the Kenai-Kachemak Pipeline Project, according to an announcement from Homer Electric Association. The other partners are Unocal; Alaska Electric Generation & Transmission, of which Homer Electric is the primary owner; and Alaska Pipeline Co., a subsidiary of Enstar Natural Gas Co.

Norm Story, Homer Electric general manager, said Marathon has substantial potential gas reserves on the southern peninsula, and its involvement ads momentum to the pipeline project. Marathon has applied to the state to form an exploration unit encompassing state, federal, Cook Inlet Region Inc., University of Alaska and privately owned subsurface holdings from Ninilchik to Clam Gulch and adjoining areas of Cook Inlet.

"Marathon also brings a great resource of technical ability in finding and developing gas resources to the group," Story said.

John Barnes, Marathon's Alaska business unit production manager, said Marathon has been drilling for several years to develop existing fields and find new reserves.

"Like other members of the KKPP, we have been evaluating options to bring these new reserves to market for some time," he said. "Marathon is pleased to be able to cooperate with those who have like interests and to bring our knowledge and resources to the project."

The Kenai-Kachemak pipeline group formed in December to study the feasibility of a pipeline to tap potential gas fields near Ninilchik.

The pipeline would carry south peninsula gas to markets further north and facilitate natural gas service to south peninsula homes and businesses. Ultimately, the partners would like to extend it to reach consumers as far south as Homer.

The conceptual phase, which was finished in July, evaluated possible routes and operation and permitting issues. It also included preliminary cost-feasibility research. The next step will be solicitation of bids from engineering firms to develop a design. After that, the partners seek state permits to begin construction. The partners already have held preliminary discussions with state agencies.

"We are hopeful that the permitting process will proceed smoothly so that construction can begin once sufficient gas resources are confirmed," Story said.

Construction of the $45 million project could begin by fall 2002.

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