Alaska progressing on gas line, FERC tells Congress

Feb. 20, 2008
Alaska's selection of a preferred applicant to build a huge natural gas pipeline highlighted FERC's fifth progress report to Congress on the project.

Nick Snow
Washington Editor

WASHINGTON, DC, Feb. 20 -- Alaska's selection of a preferred applicant to build a huge natural gas pipeline highlighted the Federal Energy Regulatory Commission's fifth progress report to Congress on the project.

It noted on Feb. 19 that the state chose TransCanada Pipelines Ltd. from five applicants under criteria set in the Alaska Gasline Inducement Act (AGIA), which the legislature passed and Gov. Sarah Palin signed into law in May 2007. TransCanada filed jointly with Foothills Pipe Lines Ltd. to build a line from Alaska's North Slope to TransCanada's hub in Alberta.

FERC Chairman Joseph T. Kelliher said the commission was pleased with the state's progress in choosing a preferred applicant since the federal energy regulator's last such report on Aug. 15. The 2005 Energy Policy Act contained a requirement for FERC to periodically submit reports to Congress on the project's progress.

"I am hopeful this will further encourage development of the Alaskan natural gas pipeline project, and FERC stands ready to act," Kelliher said.

ConocoPhillips Co. also submitted an application Nov. 30, which it acknowledged would not meet all of the requirements under AGIA but expressed hope that it would be considered anyway because it would bring initial gas to markets in mid-2018, according to FERC. Palin rejected it, saying the state would require all applicants to adhere to AGIA requirements.

Keep the project moving
ConocoPhillips said on Feb. 14 that it would reassess how best to advance the project as described in its application. "Despite the lack of progress with the State of Alaska, as an initial step ConocoPhillips will continue its planning and contracting efforts in preparation for a route reconnaissance and environmental studies starting in June 2008. It is important that we take advantage of this summer field season and keep this project moving ahead," said Jim Bowles, president of the company's Alaska division.

Palin responded that Alaska would continue to evaluate TransCanada's application and would not permit negotiations with ConocoPhillips to affect its final decision. "As for the gas side of this project and the requests ConocoPhillips has made, we are more than willing to engage in a discussion about the gas terms at the appropriate time," she continued.

"Last year, we made available a package of gas terms as a part of the AGIA legislation. We are open to changing those terms as long as they are fair, reasonable, and based on data," Palin said. Moving to an open season would provide necessary data to make sound decisions on those gas terms, she added.

LNG project options
FERC also said there have been developments connected with an LNG proposal. The Alaska Gasline Port Authority, a municipal entity created by the City of Valdez, the Fairbanks North Star Borough, and the North Slope Borough, proposed construction of a gas pipeline from Prudhoe Bay to Valdez, where the gas would be liquefied and exported.

Alaskan officials rejected the Port Authority's request to reconsider an earlier determination that the group's application was incomplete. However the officials agreed to thoroughly evaluate LNG project options as part of their determination whether a gas pipeline that goes through Canada sufficiently maximizes benefits to Alaska's population and merits receiving an AGIA license, FERC's report said.

Alaska has held a series of public meetings across the state about the TransCanada proposal and AGIA during a 60-day comment period that concludes Mar. 6. Alaska's legislature is conducting hearings of all five proposals submitted under AGIA and has invited companies that did not submit AGIA applications to testify.

FERC's report said state officials will then decide whether the proposal merits issuance of an exclusive AGIA license, in which case Palin would submit the license to the legislature for final approval, possibly in April. Legislative action to approve the license would have to come within 60 days, and the license could be issued as soon as June, the report suggested.

FERC said other signs of progress since Aug. 15 are the federal coordinator's continued discussions with stakeholders and a technical conference that FERC's staff held in January to discuss third-party contracting requirements and expectations in preparing an environmental impact statement about the project.

Contact Nick Snow at [email protected].