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CIGGS deal not yet completed

Posted: Tuesday, September 13, 2005

A temporary agreement credited with playing a role in Agrium's decision to stick around for at least one more year is not final yet.

The Regulatory Commission of Alaska issued an order Sept. 6 granting an extension for Marathon Oil Company, Unocal Corp., Agrium Inc., the state of Alaska, Aurora Gas LLC and Enstar Natural Gas Company until Sept. 26 to reach a final settlement agreement and tariff for access to the Cook Inlet Gas Gathering System, or CIGGS, according to an RCA filing.

CIGGS is a pipeline that transports high-pressure natural gas from fields on the west side of Cook Inlet to the east side.

These parties came to a temporary agreement over use of CIGGS in June giving any interested party the ability to transport natural gas through the pipeline. Now, the parties need to hammer out a final agreement over its access.

This pipeline is owned by Marathon and Unocal and previously was unregulated, meaning its owners controlled the pipeline's use.

Involved parties have been in mediation to reach a final agreement.

Regulating the pipeline has been targeted by Alaska politicians and industry experts as a key part of helping save Agrium's North Kenai fertilizer plant and promoting new gas exploration in the Cook Inlet.

Access to the pipeline gives Agrium easier access to gas on the west side of Cook Inlet.

In the past, outside access to the pipeline has not been as critical because Marathon and Unocal were the primary gas producers in the area.

Plus, production at the major gas fields on the east side of Cook Inlet also is declining, making fields on the west side more important.

Smaller independent producers, such as Aurora, have come to the region hoping to cash in on new gas finds. CIGGS is the only infrastructure in place capable of transporting high-pressure gas to market from the west of Cook Inlet to markets. Installing new pipeline infrastructure is costly and time consuming.



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