By Tim Bradner
Alaska Journal of Commerce

The Alaska Natural Gas Development Authority, an Alaska state corporation, filed an application Nov. 29 with the state to build a $1.2 billion 20-inch spur pipeline from Southcentral to Interior Alaska.

The spur pipeline would be built off a large diameter pipeline the state hopes will be built from the North Slope through Canada to the continental U.S.

“Our intention is to bring gas to Anchorage and other communities in Southcentral Alaska, where most of the state's population lives,” said Harold Heinze, the authority's executive director.

Reserves are being depleted in producing fields that now supply the region and gas shortages for home heating and power generation are possible unless new gas is made available.

The application is the first to be filed under the state's new Alaska Gasline Inducement Act, or AGIA, a state law passed by the Legislature earlier this year that provides for state cash grants and tax breaks to gas pipeline projects that meet certain state criteria.

The deadline for filing applications under AGIA was Nov. 30.

Heinze said the authority intends for its proposed spur line project to be used by applicants for the larger pipeline to meet a requirement under the state law to bring North Slope gas to Alaska communities as well as to the Lower 48.

“Any company making an application can bolt our project onto their application to fulfill the requirement,” Heinze said.

The authority's proposed spur line would connect with the large-diameter pipeline at Delta Junction, southeast of Fairbanks, run parallel to the trans-Alaska oil pipeline from Delta to Glennallen, and then southwest toward Anchorage.

In the event that a pipeline is built south across Alaska to a natural gas liquefication plant in Valdez, a project that was proposed Nov. 30 by the Alaska Gasline Port Authority, an Alaska municipal group, the spur pipeline would branch off the large diameter pipeline at Glennallen, north of Valdez.

From Glennallen, the spur pipeline would connect with an existing gas transmission line owned by Enstar Natural Gas Co. in the Matanuska-Susitna Borough north of Anchorage.

Heinze said the state authority does not plan to build or own the spur pipeline, but would serve to expedite a project by doing permitting and preliminary engineering, and helping create an entity to develop the project. The authority may also issue tax-exempt bonds that could assist in financing, he said.

Enstar Natural Gas Co., the regional gas utility, is interested in actually developing a spur line project, Enstar spokesman Curtis Thayer told Platts, an industry publication. Enstar is a subsidiary of Semco Energy Inc., based in Port Huron, Mich.

Heinze said the cost of building the Glennallen to Palmer segment of the pipeline is estimated at $360 million in a 2005 analysis by Michael Baker Jr., a pipeline engineering company. A second estimate, for the Delta to Glennallen segment, was estimated at $365 million by URS Corp. also in 2005.

The estimates do not include compressor stations, metering or delivery facilities. Total project costs from Delta to the Matanuska-Susitna Borough are put at $1.2 billion, but these costs will be refined during an open-season process when the latest steel prices and other materials costs can be included and the size of the pipeline set to meet the amount of gas contracted for during the open season.

Tim Bradner can be reached at tim.bradner@alaskajournal.com.