Unocal Corp. is seeking to expand natural gas exploration on the Kenai Peninsula.
Unocal officials on Thursday met with federal, state and local permitting agencies in Ninilchik to discuss permits for possible development and construction of pipelines from Happy Valley Well No. 1.
"Their preliminary tests have led them to believe they have a commercial find of gas there," said Kenai Peninsula Borough oil and gas liaison Bill Popp.
The natural gas source is six miles southwest of Ninilchik on the back end of Oil Well Road. Unocal is proposing to build a nearly 14-mile-long pipeline extending along Oil Well Road and the Sterling Highway that would connect to the southern terminus of the Kenai-Kachemak pipeline.
Unocal holds a 40-percent stake in the 32-mile-long pipeline, which was completed late this summer and began pumping natural gas from Ninilchik northward to Anchorage in September. Marathon Oil owns the remaining 60-percent share of the pipeline.
"The construction decision will be based upon the determination of permitting agencies and the availability of sufficient gas reserves," said Kevin Tabler, Unocal's land and government affairs manager.
He said the company still is drilling in the area to confirm the find is enough for a commercial pipeline project. If it is, Tabler said the first step would be completing the permitting application process, which he estimated could take as long as eight months.
Agencies participating in Thursday's preapplication meeting included the Alaska Department of Fish and Game, the state-federal Joint Pipeline Office, the federal Environmental Protection Agency, the U.S. Army Corps of Engineers and the borough.
Kaye Laughlin of the Alaska Department of Natural Resources, said permits cannot be issued until all involved agencies resolve any concerns with Unocal.
"They will try to help (Unocal) design a project that won't have adverse environmental impacts," she said.
Laughlin hinted that although there will be a good deal of work, the permitting process should go smoothly.
"This will take a while," she said. "But it is a popular project. People who like to challenge companies may not on this one."
Popp said the potential for an extension to the Kenai-Kachemak pipeline afforded significant benefits to the south peninsula.
"We're hopeful that they're going to be able to bring this project through to completion, because that will bring utility natural gas service in the Ninilchik area," he said.
"Every time this pipeline moves further south, it helps to improve gas economics for developing natural gas resources on the southern peninsula."
Preliminary plans show the pipeline crossing the Ninilchik River, Silver Salmon Creek and Dolly Varden Creek, as well as several unnamed streams using the same directional drilling techniques employed in laying the initial phase of the Kenai-Kachemak pipeline, Popp said.
He said preliminary discussions at Thursday's meeting pointed toward completion of the extension by November 2004.
Although Tabler offered no guarantees on a time frame, he said Unocal will seek to expedite the process.
"It takes six to eight months to permit, and four to six months for construction," he estimated. "Add those together and we end up in late fall of 2004. But hopefully, it'll be in September."
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