FERC expects Alaska gas line applications in 2010

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Sept. 9 -- The US Federal Energy Regulatory Commission expects to receive open season applications in 2010 from both groups proposing construction of a natural gas pipeline from Alaska’s North Slope to the Lower 48 states.

TransCanada Alaska Co. LLC and Denali—a joint venture of BP PLC and ConocoPhillips—have publicly announced their plans to conduct the formal process of obtaining shipper commitments on their respective proposed systems next year, FERC said Aug. 26 in its latest semiannual report to Congress.

FERC noted that it is required under Section 1810 of the 2005 Energy Policy Act to submit reports twice a year to federal lawmakers on progress made in constructing and licensing a gas pipeline from Alaska to markets in the Lower 48 and any related impediments.

FERC reported that since it submitted its last Alaska gas line report on Feb. 20, TC Alaska entered the commission’s prefiling process for its project while Denali’s prefiling process for its project continued. Other gas pipeline projects in Alaska which would not be subject to federal jurisdiction also continued to be developed, it said.

FERC noted that Denali plans to build a 48-in., 4 bcfd capacity gas line from ANS to the Alberta Hub to serve North America. TC Alaska, the licensee under the Alaska’s Alaska Gasline Inducement Act (AGIA) program, plans to build an operate a 48-in., 5 bcfd throughput gas line from ANS to North America via the Alberta Hub, FERC said.

Denali activity
FERC noted that during 2009 its staff has worked closely with Denali project officials and the federal interagency team to exchange information and coordinate activities to ensure a timely and efficient application development and review.

FERC said it continues to executive its National Environmental Policy Act and Natural Gas Act certificate application responsibilities for Denali’s proposal. It said its staff focused on producing an environmental impact statement (EIS) for the project on a timeline defined by the Alaska Natural Gas Pipeline Act.

Highlights since Feb. 20 included Argonne National Laboratory’s selection on May 15 as third-party contractor for the EIS’s preparation. FERC said its staff met in Calgary that day with officials from Denali, Argonne, and Canada’s National Energy Board to review project efforts in Canada and how they are coordinated with field work in Alaska.

FERC said the staff traveled to Alaska in August to meet with agencies that are part of the federal interagency team, to conduct pipeline route reconnaissance, and to meet with Alaska’s Department of Natural Resources. Discussions focused on the agencies’ ability to review two projects simultaneously, the need for infrastructure improvements to support construction, and strategies for engaging Alaskan Natives in the project’s review, FERC said.

FERC said that, since the previous report, Denali submitted several items to the commission as part of the prefiling process, including a public participation plan on Apr. 21 and its first monthly status report on May 1. In that status report, FERC said Denali reported that it had awarded an engineering contract for the project’s mainline portion to Bechtel Corp. for during the preliminary design phase.

Denali officials also met in June with the US Department of Transportation’s Pipeline and Hazardous Materials Administration to provide a project update and discuss special permits it might seek. None of these permits would require PHMSA action until Denali completes its open season, where project officials plan to concentrate efforts while resuming more intensive environmental field surveys in 2010, FERC said.

TC Alaska activities
FERC reported that TC Alaska asked the commission to initiate the prefiling process for that gas line project on Apr. 23, and that FERC’s energy projects office director approved the request on May 1. FERC’s staff has been working with TC Alaska officials and the federal interagency team since that time, FERC said.

In TC Alaska’s prefiling request, project officials reported that contracts have been awarded to develop plans and schedules for technical work leading up to a 2010 open season, and to perform preliminary engineering studies and develop a preliminary cost estimate for the project, FERC said in its report. It said that TC Alaska also is setting up a spatial data management system and completing aerial photography of its proposed pipeline route. “Similar to Denali, TC Alaska conducted an infrastructure needs assessment to identify its requirements for highway system and air strip upgrades,” it said.

FERC noted that on June 11, TransCanada Corp., TC Alaska’s parent, announced that it had agreed with ExxonMobil Corp. affiliates to work together on an Alaska gas line.

TransCanada said TC Alaska remains the project’s sponsor, that its responsibilities as the AGIA licensee with Alaska’s state government won’t be affected, and that it will continue as the project’s primary contact point with government agencies and the public. But TransCanada added that it and ExxonMobil now are sharing some expenses to advance the project’s technical, commercial, regulatory, and financial aspects.

FERC reported that in TC Alaska’s first monthly status report on July 15, project officials said they were continuing their study of a preliminary route through Alaska that will be the basis of engineering and cost estimates to support its open season. TC Alaska also said in its report that it has begun to plan for a limited late summer geophysical program at specific locations along the study corridor, including work on the pipeline reliability model, further integrating strain capacity and strain demand elements, and frost heave testing.

FERC said TC Alaska also met in June with the Alaska AGIA State Pipeline Coordinator’s office, the US Bureau of Land Management, and FERC to discuss regulatory requirements. Activities in Canada included more meetings with federal, territorial, and provincial regulators and with First Nation communities along the proposed project’s route; construction planning; and conducting an environmental needs analysis and an environmental constraints review, it indicated.

Other projects
FERC noted that the Alaska Gasline Port Authority’s proposed LNG export project would liquefy and load gas shipped from Prudhoe Bay to Valdez onto tankers for sale on the US West Coast, Mexico, Hawaii, elsewhere in Asia. It said TC Alaska has committed to include an option of transporting gas for this project within its open season for a line from ANS to Alberta. FERC said it would have jurisdiction over this or any other Alaskan LNG project.

FERC reported that Alaska’s Natural Gas Development Authority is continuing to develop plans to develop intrastate gas pipelines, including a 460-mile system of various diameters from Beluga in southern Alaska to Fairbanks that would be used initially to transport gas from Cook Inlet, and then connect later to either the Denali or TC Alaska system to bring ANS gas to southern Alaska.

FERC said Alaska is using in-state data to consider four in-state gas delivery alternatives from ANS to Cook Inlet: a pipeline along the Parks Highway, a pipeline along the Richardson and Glenn highways, a spur from a main line to Alberta along the Parks Highway, and a similar main line spur along the Richardson and Glenn highways.

FERC said Alaska intends to identify the preferred alternative, develop the associated right-of-way, analyze costs, and facilitate discussions and agreements between gas producers and customers. “Once these efforts are complete, assuming the chosen project is economic, the state will provide the private sector the opportunity to purchase these assets and develop the project,” FERC said.

It said the Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects (OFC) continued work with the interagency to create a consolidated plan. OFC is preparing a plan for each proposed project, has completed the first phase of one for the Denali project, and is working on the first phase of one for the TC Alaska project, according to FERC.

It said that the US Department of Energy’s program office for the federal loan guarantee process for a natural gas pipeline from Alaska monitored potential project’s developments from Feb. 20 to Aug. 26. “When a more complete commercial project emerges from Denali, TC Alaska, or another sponsor, DOE will proceed with structuring the loan guarantee program,” FERC said in its report to Congress.

Contact Nick Snow at nicks@pennwell.com.

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