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Pipeline proposal raises questions from competitors

Cook Inlet gas find may lessen need for costly line for in-state use

Posted: November 8, 2011 - 1:04am

A plan to bring natural gas to the Anchorage area with a state-sponsored small-diameter pipeline is facing challenges from rivals, especially after new natural gas finds announced in Cook Inlet as recently as Friday.

House Speaker Mike Chenault, R-Nikiski, last week announced renewed support for a pipeline to bring the North Slope’s vast natural reserves to the Southcentral market. That would ensure the state’s population center, from the Mat-Su Borough to the Kenai Peninsula, would have a stable gas supply for home heating and electrical production.

That small line, sometimes called a “bullet line” or more recently the Alaska Stand Alone Pipeline, would be a 24-inch line that would cost an estimated $7.5 billion to build.

Doing that would damage the chances of what the state really needs, said Merrick Pierce, chief financial officer for the Alaska Gasline Port Authority. It wants to build the so-called “All-Alaska” gas line from Prudhoe Bay to Valdez, to export liquefied natural gas to Asian markets.

“It absolutely would hurt the All-Alaska gas line, I don’t think the state could afford two different projects,” Pierce said.

As important, he said, is the loss of the economies of scale that a 48-inch line would have. Chenault’s proposal, he said, would mean more expensive gas than Anchorage has now, without the export profits that Pierce envisions with the All-Alaska line.

Chenault ally and ASAP supporter Rep. Mike Hawker, R-Anchorage, last week appeared to dispute that a large line would provide cheaper natural gas, calling it too soon to answer that question.

Just hours after Chenault and Hawker appeared at a press conference in Anchorage touting the bullet line Friday, Escopeta Oil Company announced its exploratory drilling had found gas it estimated to amount to 3.5 trillion cubic feet in an offshore “jack-up” drill rig in Cook Inlet.

“If it’s as good as they say it is, that’s kind of a blessing,” said Sen. Tom Wagoner, R-Kenai, who sponsored tax credit legislation to spur the new exploration.

It’s also likely to change the terms of the debate, he said.

“If there’s 3.5 tcf there, and I say ‘if,’ its going to make a big difference in people wanting to spend any more money building a bullet line,” said Wagoner.

At the very least, he said, the new finds from Escopeta and a recent onshore find from Buccaneer Energy should buy time for the Cook Inlet explorers to find additional gas for the region.

Bullet line advocates remained committed, however.

Monday, Rep Mark Neuman, R-Big Lake, announced a meeting of the Legislature’s In-State Gas Caucus Wednesday in Fairbanks to continue the push for a small line for the Anchorage area.

“I applaud Speaker Chenault and other Majority Caucus members for really keeping the ball moving and advancing the debate on providing Alaska’s gas for Alaskans,” Neuman said in a press release.

• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneauempire.com.

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