Drilling has begun on a $1.3 million natural gas pipeline that will cross the Kenai River and connect the community of Funny River to an existing line in Sterling.

ENSTAR Natural Gas Company representatives said they were about 400 feet into the 1,100 foot line and while they are drilling into hard rock rather than an expected vein of sand 20 feet below the river bottom, they plan to finish drilling in about a week.

The project is not scheduled to be completed until sometime between mid-May and early June, however the company plans to have the four bores required for the expansion completed by April, said Enstar Southern Division Operations Manager Charlie Pierce.

Once completed, about 700 properties on the south side of the river could potentially receive natural gas line service from ENSTAR.

Currently the extension project is being funded through a 2013 capital projects appropriation through the legislature but, while it extends the potential for service to Funny River residents, further development will be necessary before homeowners and parcels can gain access.

The Kenai Peninsula Borough Assembly during its March 18 meeting is set to review petition packet that would establish a utility special assessment district, or USAD, near Mile 14 of Funny River Road, the area where the line will cross the river.

Special assessment coordinator and appraiser auditor for the borough Marie Payfer said if the borough approves the application, the sponsors will then be responsible for getting signatures from the 264 affected parcel owners.

More than 70 percent of the affected property owners must sign on to approve the USAD which will cost parcel owners in an approximately seven-mile area of Funny River Road $3,549.46 over the next 10 years.

The assessment amount was calculated assuming an additional cost of about $912,580 to ENSTAR and an administrative fee of $24,477.44 to the borough according to USAD proposal documents.

Payfer said the borough’s administrative fee was necessary to maintain the project over the 10-year period.

“The borough puts a lot of work into this … we kind of act like a bank between the property owners and ENSTAR so the borough basically fronts the money to ENSTAR and then we collect that money from the customers,” she said.

Owners who choose to pay the amount over a 10-year period will be subject to interest at prime plus two percent, or 5.25 percent, Payfer said.

Another special assessment district is being planned for the east side of Funny River road near the mile 14 line.

“They’re still trying to establish the boundaries, so they’re probably not going to get there this year,” Payfer said.

Pierce said residents in the Funny River community have been working with ENSTAR’s Soldotna office for a decade, trying to get access to natural gas.

“The cost estimates that we have provided over the last 10 years have gone up expeditiously and consequently have prevented, or made it cost prohibitive for the residents over there to acquire, or have natural gas service,” Pierce said.

House Speaker Rep. Mike Chenault, R-Nikiski, said he was happy to see the project moving forward.

“For a number of years the folks in Funny River have talked about their high cost of fuel and … that they would love to have natural gas,” he said. “Last year we were able to find some money available to fund that project and I think that’s some of the things that we should be doing is trying to lower the cost of fuel and the cost of heat anywhere in the state.”

Rashah McChesney can be reached at rashah.mcchesney@peninsulaclarion.com.

Contributed Photo: ENSTAR ENSTAR equipment sits near the Kenai River Thursday March 6, 2014 where the company is working to drill beneath the river and connect residents inFunny River to a natural gas line in Sterling.