Kenai Peninsula Natural Gas Study: Final Report

Abstract

A very large industrial facility such as the proposed Midrex iron ore reduction facility would make a pipeline economically feasible, but the resulting cost of gas to consumers would still be about twice the level of current Enstar rates, due to higher local distribution costs. Also, under this scenario customers along the pipeline route would not automatically have access to cheap gas unless they were clustered in groups of at least 10 people within about one mile of the connection to the main line. This study examines the economics of bringing natural gas to Homer, Seward, and intermediate points along the Sterling Highway. We conclude that natural gas delivered by pipeline to Homer or Seward from the existing Enstar system will remain uneconomical or marginally competitive with diesel under plausible assumptions about economic growth. That's because both Homer and Seward have very small numbers of customers compared to the cost of a pipeline necessary to reach either community.