Alaska Gov. Sarah Palin has lifted the curtain on a public-private joint venture with Enstar National Gas Co. to build an in-state gas pipeline that she says could be online in five years at a cost of about $3 billion.

In a statement on her website, Palin says the bullet line will not interfere with development of a proposed 1,715-mile pipeline designed to take North Slope gas to Canada and then to U.S. markets.

The bullet line would have a capacity of 460 million cubic feet per day and would run north from Cook Inlet, near Anchorage, to the state’s interior region and Fairbanks, the state’s second-largest city. The prospective line could continue to the North Slope Foothills or potentially be connected to the proposed main line now under consideration by the legislature.

Cook Inlet's production, which is led by ConocoPhillips, Marathon Oil Co. and Chevron Corp., is in decline. The fields produced 196 billion cubic feet in 2006 and 168 billion last year. Enstar would be the operator of the line, which could run between 690 to 790 miles, depending on the route, and would cost more than $3 billion. A breakdown of how much the state would have to pay was not available.

The legislature will soon start a second special session and resume debate on Palin's recommendation to award TransCanada Corp. a license toward construction of the larger pipeline. Some legislators say the in-state gas needs should be a priority over a main line such as the one proposed by TransCanada, or even a competing project offered by BP Plc and ConocoPhillips.

The Alaska Gasline Inducement Act (AGIA), under which TransCanada submitted its application, does allow the state to assist in building a separate small-diameter pipeline. But it also prevents the state from providing support if the line carries more than 500 million cubic feet of gas per day.

“While we have publicly been focusing our efforts on AGIA and our overland gas route to Canada and the Lower 48, we have also been working on an in-state gas line that can swiftly address the needs of interior and south-central Alaskans while we continue our progress on AGIA,” Palin says. “It is time to bring together the tremendous resources we have in this state to build an in-state gas line that delivers an affordable and reliable supply of natural gas to south-central and interior Alaskans, targeting delivery within the next five years.”

She adds that this project could move about twice Alaskans’ current daily gas use, and could see gas flowing as early as 2013 to residential and commercial customers.

--JAS