Anchorage Daily News

Alaska can be a sucker for hype about big projects that never get off the drawing board. So it's big news when there's serious talk about a multibillion dollar project that doesn't need big-time government help and isn't causing howls among environmentalists.

The bullet line, to bring natural gas from the North Slope foothills to Southcentral, is starting to look like a realistic project.

It has a big potential customer -- Enstar, the natural gas utility for Southcentral. It has the support of an experienced pipeline company with ready access to private construction financing -- again Enstar. It has a realistic, but not yet totally proved up source of gas -- Anadarko's Gubik Field.

Enstar gave the Daily News editorial board an optimistic briefing recently. The company is spending $5 million this year to study engineering issues and economic feasibility. With those results in hand -- in about a year, or a year and a half -- Enstar would commit $60 million to begin design work and pursue permits.

"If we spend $60 million, we're gonna build the line," said Gene Dubay, chief operating officer of Enstar's parent company. A bullet line would cost $3 billion or so and construction would take two years.

Only two make-or-break questions remain to be answered:

Does Anadarko have enough gas at a good price?

And is there another big industrial user at this end that will buy a large volume of gas? (Enstar alone wouldn't buy enough gas to justify the $3 billion cost of the pipeline.)

Enstar's executives were optimistic on both counts.

Dubay said he's confident Anadarko will prove up enough gas reserves.

Colleen Starring, Enstar's vice president, said the mothballed fertilizer plant on the Kenai, Agrium, is willing to commit to the project if gas is available. There's also the possibility of exporting more liquefied natural gas to Asia. The Enstar executives indicated Japan now buys gas at prices almost three times the going rate in Alaska's market.

Enstar doesn't need any tax breaks, the executives said. The state's new oil and gas production tax helps a lot -- it sets a very low tax rate for natural gas that's used in-state.

There won't be a big environmental fight over the pipeline route, either. A bullet line can follow the oil pipeline and Dalton Highway corridor from the North Slope to Fairbanks. From there south to Wasilla, Enstar has three options: the Parks Highway, the Alaska Railroad, or the Fairbanks-Anchorage electrical intertie. A bullet line does not have to invade pristine wilderness.

By staying inside Alaska's borders, the bullet line avoids messy federal regulation of natural gas pipeline rates and service, according to Enstar. There are no international complications with Canada.

The $3 billion construction cost could easily be handled by the private equity group that owns Enstar and its parent, Dubay said. Enstar has invited three prominent Alaska Native corporations -- CIRI, Arctic Slope and Doyon -- to invest in the project.

Building a bullet line first doesn't conflict with the gas pipeline serving the Lower 48, according to Enstar. It doesn't need to tap the huge gas reserves at Prudhoe Bay or Point Thomson. Construction on the bullet line could finish before serious construction on the export line got under way.

The Palin administration is still reviewing TransCanada's application for state subsidies to build a gas line serving the Lower 48. If Gov. Palin presents a TransCanada contract to the Legislature, Alaskans can expect some unhelpful and ultimately irrelevant political posturing about getting gas to in-state markets.

Because on that score, it's looking more and more like Enstar and Anadarko can take care of it.

BOTTOM LINE: The private market may make this project happen without a lot of government help.

Daily pork

NOTE: One of a series on curious items in the $3 billion capital budget awaiting veto decisions by Gov. Sarah Palin. Her deadline is May 23.

The project: "The polar bear is not a threatened species" research.

The recipient: Legislative Council.

The amount: $2 million.

The argument: The Interior Department is to decide by Thursday whether polar bears are a "threatened species" because of global warming.

Some Republican legislative leaders are worried that listing the polar bear as threatened will give greenies a tool for blocking oil development and will ruin the state's economic future.

The purpose: To dupe Americans into a contrary view of the polar bear's plight. The money would pay for a conference that highlights research by scientists who think polar bears will survive just fine. And it would publicize their views.

Pork-o-meter rating: 10. Buying bogus polar bear "science" is not only pork, it's a turkey.

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