The state will partner with Enstar Natural Gas Co. to build a pipeline to carry gas through the state's midsection, Gov. Sarah Palin said Monday.
The goal is to provide affordable gas to Fairbanks and other parts of Alaska facing high energy costs, Palin said.
And the state itself might invest in the project, which could cost $3 billion or more, she said.
The pipeline would complement a much larger proposed pipeline to carry North Slope gas into Canada and the Midwest, the governor and company spokesmen said.
The smaller line would be reversible -- that is, capable of carrying gas south from the North Slope or north from Cook Inlet, where it's possible drillers could find big new gas fields, they said.
Construction could begin by 2011, and gas could be flowing by 2013, according to the governor's timeline.
Monday's announcement at Palin's downtown Anchorage office left many practical questions unanswered, however, and came only two days before state legislators are to reconvene in Juneau to continue hearings on TransCanada Corp.'s proposed megapipeline to Alberta.
Palin is urging the lawmakers to award TransCanada a state license and a $500 million subsidy for the project under AGIA -- the Alaska Gasline Inducement Act of 2007.
Some lawmakers and other critics have accused Palin of focusing too heavily on shipping Alaska gas out of state and not enough on supplying local needs.
Palin said Monday she has never lost sight of addressing local energy demand and said the partnership with Enstar, the main gas utility for Southcentral Alaska, is one way to do it.
She denied Monday's announcement was timed to shore up support for the AGIA license.
"It's not out of fear that AGIA is not going to work," she said.
But a board member with the Alaska Natural Gas Development Authority, a tiny state agency that will join forces with Enstar, said the partnership came together only in the last week or so.
Voters created the authority in 2002 to pursue a natural gas pipeline, long one of the state's top economic development priorities. Harold Heinze, a former Arco Alaska Inc. president, runs the agency.
The in-state pipeline would carry about 460 million cubic feet of gas per day, compared to the much larger volume of 4.5 billion cubic feet being proposed for the Canada pipeline.
Palin and her aides said many details about the smaller gas pipeline, which she dubbed "AGIA lite," have yet to be worked out.
Among the questions:
How much would the pipeline cost, and exactly what route would it take?
Where would the gas to fill it come from? Palin and her aides conceded it would rely on gas that hasn't yet been discovered in the North Slope Foothills, in various Interior basins, and in Cook Inlet. They said the pipeline could encourage Inlet gas exploration by providing a market for a big discovery -- the gas could flow north into the big pipeline to Canada.
Who, other than the state, would finance a pipeline some 700 miles long without firm gas supplies to fill it?
Enstar has been studying a $3.3 billion pipeline that would stretch from Cook Inlet north along the Parks Highway to Fairbanks and beyond to the North Slope foothills, where Texas-based oil company Anadarko Petroleum Corp. has been drilling for gas.
The development authority, meantime, has studied a pipeline along the Glenn and Richardson highways from the Interior. This has been described as a "spur line" that would tap into the big Canada line to bring gas to Southcentral, where known Cook Inlet gas fields that have long heated and powered the region are nearing depletion.
State and Enstar officials said both routes will be considered under the new partnership.
Scott Heyworth, acting board chairman for the gas development authority, said financing won't be a problem. He said the partnership came together quickly in recent days.
"This is going to be a hot project," said Heyworth, who sat next to Palin during Monday's press conference. "We're going to find the financing."
Palin's in-state gas line plan "has my full support," said U.S. Sen. Ted Stevens, R-Alaska.
"The concept of a public-private partnership will get this project from the drawing board to construction quickly and efficiently," he said.
State Rep. Jay Ramras, a Fairbanks Republican who's been outspoken on the need for cheaper Interior energy, applauded Palin's announcement but said he still won't vote for the TransCanada subsidy, which he sees as a waste of $500 million.
"Today I'm Sarah Palin's biggest fan on her energy policy, but AGIA is still stupid," he said.
Find Wesley Loy online at adn.com/contact/wloy or 257-4590.