Marathon wants to build pipeline extension

Posted: Wednesday, October 12, 2005

Marathon Oil Co. wants to build a pipeline extension to a gas field in Kasilof after nearly a year of concern that regulatory hurdles may be too great to build the infrastructure needed to bring the gas to market.

Marathon filed an application with the Joint Pipeline Office two weeks ago to build a 4.2 mile, 6 inch diameter pipeline extension from the Kasilof gas field discovery — discovered last year — and connect it to the Kenai-Kachemak Pipeline, or KKPL.

KKPL begins at Kalifornsky Beach Road Mile 12.4 and goes to the Happy Valley gas pad on Oil Well Road.

Marathon has been concerned there would be "unacceptably high regulatory costs" associated with the four-mile lateral pipeline extension to connect the field to KKPL, according to a written statement from Marathon responding to Clarion questions.

Marathon decided to build the extension because the RCA has put more emphasis on improving the efficiency of permitting new gas lines, according to the statement.

In addition, Marathon recognizes the need for additional gas development in the Cook Inlet, the statement said.

Initial production from the field is expected to be 5 to 10 million cubic feet per day — two to three times the amount needed to meet the daily needs of the city of Kenai, according to Marathon.

Marathon estimates the pipeline extension will cost $3.5 million. In addition, the company believes the regulatory costs could total an additional $1.75 million.

The main permits needed to build the extension are a certificate of convenience from the Regulatory Commission of Alaska and the Alaska Joint Pipeline Office's right-of-way lease. The statement named at least five additional permits needed but didn't name any specifics.

Marathon has been one of the most active explorers and developers of gas in the Cook Inlet basin in recent years.

However, new gas discoveries often mean the need for new pipelines and other infrastructure will follow.

Marathon's concern over regulatory hurdles is just one of many industry voices saying permitting procedures in Alaska are too lengthy, costly and hamper investment.

The Joint Pipeline Office estimates it can take between seven and 18 months to issue the needed right-of-way lease because of public comment period requirements.

Shane Walker, Alaska coastal management program liaison for the Joint Pipeline Office, said the latest permitting procedures reflect what society has decided is important.

"I think society in general, over 30 years, we've determined that some things are necessary," he said.

Walker added that the Kasilof field is near the Clam Gulch Critical Habitat Area. There are a lot of resources there with multiple uses, he said, and a decision like this needs to be carefully considered.

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