Enstar wants to take over the estimated $10 billion project, but its own CEO says the pipeline isn’t viable without massive state subsidies.
For a large portion of its route, the proposed in-state pipeline would largely parallel the path of the existing trans-Alaska oil pipeline, pictured here.
Enstar Natural Gas, which serves some 60% of the state’s population, recently asked for permission to take over the proposal from the Alaska government agency that currently owns it, according to a copy of Enstar’s request reviewed by Northern Journal. In public opinion polling, Enstar said, Alaskans strongly prefer a pipeline to another leading alternative to address the looming shortfall: importing LNG from outside the state.
Despite Enstar’s enthusiasm, the in-state pipeline project faces a major hurdle: its cost, last estimated — several years ago — to be some $10 billion. But the expense could be enormous — a fact that Enstar’s own chief executive, John Sims, acknowledged in an interview last month, before his company’s request was made public.
“At this point, we don’t have a priority,” Sims said. “We’re looking at how to serve all of our customers here.” To fill the expected gaps, the Railbelt’s largest member-owned electrical utility, Anchorage-based Chugach Electric Association, is looking at using either a new, floating storage unit or repurposing an existing LNG export facility on the Kenai Peninsula to accommodate imported LNG shipments.
A state-subsidized in-state pipeline project would allow Enstar to maintain its profits, said Mark Foster, an economics consultant who’s worked as a utilities regulator. But the cost would be “comically large,” and the $76 billion Alaska Permanent Fund is the only state bank account that would be big enough to cover it, he said.
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