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Alaska continues work on gas pipeline from North Slope despite Cook Inlet find

https://www.chemnet.com   Nov 15,2011 Platts
Engineering and planning for a 24-inch natural gas pipeline from the North Slope to Southcentral Alaska by a state corporation is continuing, for now, despite new gas discoveries in Cook Inlet, managers of the state project said Monday.

"It won't be known until next summer whether a new gas discovery claimed by Escopeta Oil Co. in Cook Inlet can be commercially developed, and if it is a large discovery," said Dave Harbour, a spokesman for Alaska Gasline Development Corp., which is planning the 737-mile, 24-inch pipeline project.

Escopeta has estimated its discovery at about 1.4 Tcf in recoverable resources, but company officials have said further testing is needed.

AGDC said work on the pipeline from the slope must continue if the project is to stay on schedule to meet Southcentral Alaska energy needs if Escopeta's find doesn't work out.

"The legislature, with Governor [Sean] Parnell's support, created the ADGC in 2010 to ensure that by the end of the decade Interior and Southcentral Alaska citizens have adequate supplies of natural gas at the lowest possible price," Dan Fauske, CEO of the state corporation, said in a statement. "We remain dedicated to that mission."

State House Speaker Mike Chenault, a Republican from Kenai, restated his support for continued work on the pipeline as an alternative.

"It's encouraging that new gas is being found in Cook Inlet, but we must make sure we will be able to deliver gas to Alaskans, from the North Slope if there is no substantial new reserves found in Cook Inlet, Chenault said.

An estimated 35 Tcf of gas has been discovered on the North Slope.

TransCanada and ExxonMobil are working on a proposed 48-inch pipeline from northern Alaska to Alberta but the project appears to have bogged down following large new shale gas discoveries in the Lower 48 states.

Governor Parnell recently asked North Slope producers and TransCanada to reconsider LNG exports from Alaska as an alternative.

SPUR LINE?

If a large-diameter pipeline is built from the North Slope, the 24-inch pipeline project would become a spur line off the larger pipeline, ADGC's Fauske has said previously. But if the big line continues to be stalled, Alaska should be prepared to build the smaller line all the way to the North Slope, he said.

Meanwhile, AGDC is now working on a federal environmental impact statement for its project and in securing of a federal right-of-way, said Dave Haugen, project manager. The draft of the EIS is now expected in early spring, he said.

"The schedule for the EIS has slipped. It had been expected in September," Haugen said. "A right-of-way across state lands has already been secured for the project," he said.

"This winter AGDC's technical group will be evaluating data gathered in the 2011 summer field program, and planning is also underway for the 2012 field program," Haugen said.

Much of the field work is focused on river crossings such, as well as at Atigun Pass in the Brooks Range where there is constricted space because the existing trans-Alaska oil pipeline also uses the pass.

The legislature has appropriated $44 million over the last two years to support work on the 24-inch pipeline. A state appropriation will be requested for continued work in 2013 but the amount has not yet been approved by Parnell, according to ADGC financial officer Joe Dubler.

The appropriation is expected to be part of the governors Fiscal 2013 budget request that will be released December 15. The legislature must approve the appropriation, however.

Because of the recent Cook Inlet gas announcements, legislators may seek a delay of more appropriations for the 24-inch pipeline until the discoveries by Escopeta and others are confirmed.

Chenault, however, said he will push for enough money to be approved for 2012 summer field work, so that the schedule doesn't slip a year.

AGDC has previously said that it will need to spend about $400 million in engineering, planning and the acquisition of permits by the time the project is sanctioned, or approved, for construction.

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