Eighteen months ago, Enstar seemed quite bullish on a bullet line to supply Southcentral with gas from the Brooks Range foothills. It seemed like a promising, affordable way to get gas here while the fate of the big North Slope pipeline to Canada and the Lower 48 was decided. The key hurdle seemed to be finding a large industrial customer for bullet line gas, to help spread the cost of the project and keep rates for residential customers in a reasonable range. But Enstar is no longer so bullish on the project.

This year, the Legislature and then-Gov. Sarah Palin funded a comprehensive study of in-state gas issues, including the feasibility of a bullet line.

"The state is really leading that effort now," though Enstar is participating in it, says John Sims, the company's director of corporate communications.

"Enstar has shifted our focus to our short term strategy. We have needs that have to be met in 2011, and obviously there's no way a bullet line would meet those needs."

There are good reasons talk about the bullet line has quieted down, according to Marty Rutherford and Mark Myers, two of state government's most knowledgeable oil and gas experts. Both are high-ranking officials at the Department of Natural Resources. Both quit Gov. Frank Murkowski's administration when he insisted on negotiating a bad deal to entice Alaska's Big Three oil companies into building a gas pipeline.

Rutherford says Enstar was getting to the point where it would need to spend serious money to keep moving ahead on the bullet line. The company wanted the Legislature to guarantee it could start billing today's customers for that work. Normally a utility can't bill customers anything for a project until it is actually built and operating. The Legislature wisely refused to grant what's known as pre-billing authority.

Also, the first-choice gas supplier for a bullet line, Anadarko, is taking more time than expected to see whether it has enough gas to develop in the foothills. If a bullet line has to get gas from the North Slope instead, it will require a costly conditioning plant to process gas liquids that aren't found in foothills gas.

But Myers says there are two more fundamental reasons the bullet line has fallen out of favor.

First, if the big pipeline to Alberta is built, a spur line to Southcentral beats the economics of a bullet line, hands down. The more distance the gas travels on the big line, with its huge economies of scale, the cheaper it is to get it the rest of the way to Southcentral.

More importantly, Myers and Rutherford say there is still plenty of new gas that can be produced here from Cook Inlet, right in the market that needs it, without building a $3 or $4 billion pipeline. The gas is in small and medium sized pockets that lie inside larger, existing gas fields.

Myers also says some early Cook Inlet gas wells were capped because they are not as productive as highly profitable gushers that tapped the big deposits inside a field. Those wells can be reopened, he notes.

Rutherford says her agency, the Department of Natural Resources, is doing more of its own analysis of situations like that, and learning more about the smaller Cook Inlet gas deposits, so it can push harder to get them developed. She says the state is gearing up to oppose any more overseas exports of Cook Inlet gas beyond 2011, unless the two exporting companies, ConocoPhillips and Marathon, add to their known gas reserves.

"You have to ask what itch is the bullet line trying to scratch," says Myers. It's clear we do need new gas supplies here in Southcentral, he says. But the gas supply situation is a challenge, not a crisis.

New gas from Cook Inlet "is going to be more expensive," Myers says. "But it's there."