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Another Alaska natural gas pipeline idea is pondered

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Posted: Friday, September 3, 2010 4:13 am | Updated: 1:20 pm, Wed Dec 26, 2012.

FAIRBANKS — A Fairbanks company is gauging interest in a plan to connect to North Slope natural gas fields with a 10-inch diameter buried pipe. Energia Cura is soliciting input from potential customers under a nonbinding “open season” process that opened last week.

Co-owner Alex Gajdos said the firm’s owners have been studying the idea for a decade and think a pipeline could be built for about $500 million within four years, provided the plan clears various hurdles.

Gajdos, a former employee for both Golden Valley Electric Association and the Regulatory Commission of Alaska, said the pipeline would be smaller and cheaper than alternatives being considered by state officials and major energy companies. He said a line carrying at least 12 billion cubic feet of gas annually — more than 10 times Fairbanks’ current consumption — would avoid the need for multibillion-dollar investments to reach Anchorage.

A bullet pipeline plan drew favor with many state lawmakers last spring. But Gajdos said he expects natural gas prices to remain low, Cook Inlet gas development to increase and Anchorage to seek supplies closer to home. That would leave Fairbanks searching for energy options.

The proposed line would hug the Dalton and Elliott highways to Livengood, where a major gold mine is planned, to the northern edge of Fairbanks. Gajdos said it would then branch toward large customers such as power plants, oil refineries and military bases.

Gajdos and partner Tom Chapman wrote to state officials last month asking for help, as the line would require access to hundreds of miles of state highway rights of way. The company would offer the state a small slice of ownership interest in exchange. Gajdos estimates natural gas could reach the Fairbanks area at a wholesale price of about $10 per thousand cubic feet, less than half the retail price now, under conservative volume estimates.

Gajdos said state agencies have offered limited feedback but said potential investors appear interested. He said he’s surprised no one’s shopped his idea before. But he acknowledged the potential hurdles inherent in such a plan — a “squeeze play,” as he puts it, given physical and economic constraints — and said he hopes policymakers will appreciate and support the plan’s simplicity.

Gajdos said an eventual builder-owner could offer equity ownership to private investors and also could consider options such as traditional financing and public ownership. He estimates a pipeline would represent, largely through reduced energy costs, at least a $1.72 billion value to the Fairbanks area across 20 years.

Gajdos acknowledged plenty of questions remain in the plan. The builder might not be interested in getting into the utility business, he said, which means questions about local distribution are unresolved. He said it remains unanswered whether a dedicated gas treatment plant would be needed on the North Slope. But Gajdos said he and Chapman have sunk personal savings into the plan and think it represents Fairbanks’ best short-term energy option.

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