"They have positive results," said Enstar spokesman Curtis Thayer of Armstrong's two North Fork wells after a Thursday meeting between the two companies. "They have gas they would like to sell and it is commercially viable. From the preliminary discussion, it looks like Homer is the best opportunity for that gas."

Homer businesses and residents who presently rely on heating oil would stand to save a third of their heating expenses with a supply of natural gas, said Thayer, but he cautioned that no formal agreement has yet been reached and many hurdles still stand in the way.

"We probably wont see anything until 2010 but this is a great first step," he said.

In July, Armstrong completed a 9,000-foot well at North Fork, located about six miles east of Anchor Point off North Fork Road, and has been testing it since Oct. 6. Before Thursday's talks, the company faced two choices for delivering potential gas to market - connecting it via pipeline to the existing Kenai Kachemak Pipeline that presently ends at Happy Valley or shipping it to Homer through a new pipeline. Both destinations are about 10 miles from the well.

To get the gas to Homer, Armstrong and Enstar would first have to get regulatory permission from the Regulatory Commission of Alaska, said Thayer, and then would have environmental and engineering work to do. Enstar already has a "certificate of public necessity" from the RCA to bring gas to Homer, which it secured in 2000, but would have to get further approval of a contract with Armstrong. That contract has not yet been formalized.

Enstar sent engineers to Homer in 2006, said Thayer, to study infrastructure work that would have to be done to distribute natural gas in the community and the company now has an "outline" of such a system. The main pipeline would likely come straight into the center of Homer and then feed outward through pipes buried 36 inches deep.

"You usually start in the city core and then grow outward. We would probably connect a lot of government buildings like schools, the hospital and the university and then try to pick up homes and businesses along the way." said Thayer, adding that construction of the basic distribution network would likely take three to five years.

Officials from the City of Homer and the Kenai Peninsula Borough would have to be involved in discussions on building the main pipeline and distribution network, said Thayer, and would likely have to form a "user improvement district" to help pay the construction costs.

As of press time, Enstar had not yet contacted city, borough or state officials about the proposed project.

Aaron Selbig can be reached at aaron.selbig@homernews.com.