Anchorage Daily News

In any other part of the world, Ed Kerr would have said Armstrong’s newly drilled gas well was commercial, but on the southern end of the Kenai Peninsula a well isn’t commercial until there is a pipeline to take natural gas to market. Odds are, a pipeline will be built, however, given Enstar Natural Gas Co.’s strong interest in building a transmission line west to the Kenai Kachemak Pipeline and south to Homer, both about 10 miles from Armstrong Cook Inlet’s North Fork 34-26 well.

The well, the first drilled by the Alaska affiliate of Denver-based Armstrong Oil and Gas Co., was completed in July. Testing began Oct. 6, Kerr said. He is the vice president of land and business development for Armstrong.

“We’re cautiously optimistic about what we found. We definitely have a gas well, but I don’t have any rates I can give you ... because it’s currently shut-in for a pressure buildup test,” he said last month.

“I am 100 percent positive we have a gas well — in any other part of the world that’s what I would say, but we still have to get a pipeline to it.”

Enstar, an Anchorage-based gas utility, has been good to work with, Kerr said, and seemed very interested in building a transmission line from the field to either KKPL, the existing pipeline system that ends at the Happy Valley gas field, or to Homer, which currently has no access to natural gas.

shipping north or south

The two companies are meeting in mid-November, said Curtis Thayer, Enstar director of corporate and external affairs. At that meeting Armstrong will share its well test data with Enstar, he said.

When asked which transmission line Enstar was likely to build first Thayer said, “It really depends what … quantities (of gas) they might have.”

North Fork, he said, “is equal-distant between our system (KKPL that currently ends at Happy Valley) and Homer.”

There is room in Enstar’s pending contract with gas producer Marathon Oil for “about 5 percent of our gas needs next year ... to be carved out for an independent or third party to fill. (The contract is before the Regulatory Commission of Alaska for approval, Thayer said.)

“We would love them to tell us they have 1 tcf (trillion cubic feet) of gas. We obviously want to bring it to market, but does it go south or north? That’s more of an Armstrong decision than ours.” North is the general direction of the existing Enstar natural gas market, which includes Anchorage.

The direction will depend on what kind of contract Armstrong can get for its gas, Thayer said.

If Armstrong wants to “flow it north they … have an immediate market. If they want to take it south, then you have to develop a system to accept it in Homer, as well as build a transmission line.”

That’s something that would take “at least three to six years to build out,” Thayer said.

Armstrong, which Kerr said would likely drill more wells in the field if a line to take the gas to market was going to be built, could grow its production over time, Thayer said, and possibly take gas north initially and then to Homer when that community had a system to accept the gas. “Those are types of conversations that need to be had,” Thayer said.

A transmission line to Homer and a distribution system in the community would take longer than building a system in a relatively new area, because “Homer … (has) a mature system, where gas lines would have to be built (under) sidewalks and driveways. It would make it a little hard to develop, but not impossible; just more difficult … and more expensive,” he said.

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