State gets incomplete grade from FERC

  • Alaska Gasline Development Corp. President Keith Meyer has touted the state agency’s application to federal regulators as complete, but the Federal Energy Regulatory Commission has a different opinion and is requesting answers to 570 more questions before it can advance the draft environmental impact statement process. (Photo/Andrew Jensen/AJOC)

While Alaska Gasline Development Corp. officials often tout the reams-worth of documents they’ve submitted to federal regulators for the Alaska LNG Project, those regulators responded with a letter Feb. 15 contending the state agency has refused to send information imperative to analyzing the $43 billion megaproject.

In a three-page letter to corporation executives — followed by 168 pages detailing AGDC’s alleged shortfalls to provide information for analysis and requests for additional data — regulators wrote that they have repeatedly requested study data from the state-owned corporation during the pre-filing review phase for the project’s environmental impact statement but “an adequate response has not yet been received.”

The Federal Energy Regulatory Commission, or FERC, is an agency of the Energy Department that leads LNG export project permitting. It also expects further data on the project’s safety, reliability and engineering plans will be requested, according to the letter.

AGDC filed its EIS application for the Alaska LNG Project with the agency last April. At nearly 60,000 pages, AGDC leaders said they believed it to be the largest EIS filing in the history of the National Environmental Policy Act process, which became the federal permitting standard for large projects nearly 50 years ago.

According to FERC, AGDC has said it will not provide certain study information because the studies are not required by the state or other entities at this point, the Feb. 15 letter states.

Future responses by the gasline corporation that such information won’t be passed along because the state and other federal agencies don’t require it will be deemed incomplete and the requests will be made again.

“Certain requests ask for studies to be completed and provided, or information on the specific avoidance and mitigation measures that may be implemented by AGDC for the various proposed construction-related activities.

“Rather than providing specific avoidance and mitigation measures to be adopted or describing potential considerations if the construction schedule cannot be maintained, AGDC has deferred providing information to future plans or the permitting phase (e.g., through Alaska Department of Fish &Game Fish habitat permit application or other processes),” the FERC letter states.

“It is imperative that the information provided in AGDC’s responses include definitive commitments to implement specific avoidance, minimization, and mitigation measures. Incomplete information or ill-defined commitments by AGDC may compromise our ability to adequately assess and disclose the full impact of the project.”

The agency asked for a complete response within 20 days, adding that the information is necessary to continue drafting the EIS.

AGDC spokesman Jesse Carlstrom said the corporation’s regulatory experts are drafting a schedule to provide to FERC within the 20-day window as to when the specific requests will be responded to but some of the agency’s questions will require additional field work.

“This is a talented team and we’re working fast but to knock all this out in 20 days would be a stretch,” Carlstrom said.

He added that FERC wants all of the information it will need to write the EIS up front while AGDC has been operating on the presumption that specific mitigation measures and other detailed, site-specific environmental data would be provided as other state and federal agencies need it for their permit reviews.

That’s how the Army Corps of Engineers, which is preparing to release a final supplemental EIS for the smaller Alaska Standalone Pipeline, or ASAP project, has allowed AGDC to operate, according to Carlstrom.

“We’ll get FERC what they need,” he said.

Leaders of the state corporation have been pushing for FERC to issue its schedule for the project since late last year and have said they hope the significant detail in the many volumes of studies filed in the application would help the agency finish the final EIS by the end of 2018.

In a Jan. 22 press release, AGDC announced had responded to all of FERC’s 801 original data requests that were generated from the April filing.

Carlstrom and AGDC leaders characterized the latest round of 570 questions as a positive indication that the Alaska LNG Project is at the forefront of the agency’s work.

AGDC President Keith Meyer has said the preferred timeline, which he acknowledges is aggressive, is needed to keep the project on track to be in production by 2024-25. That would allow the project to meet a demand window in a global LNG market that has been flooded with supply and driven prices down in recent years.

Carlstrom said AGDC leaders are still hopeful FERC will be able to publish a draft EIS by the end of the year, but that would push their ideal timeline back by several months at a minimum. After a draft EIS is published a public comment period of at least 45 days — on very large or contentious projects it is often longer — and associated public meetings are required.

The final EIS is then issued once the appropriate comments are considered and incorporated into the draft documents.

Ports of consideration

Of particular note among FERC’s specific requests attached to the letter are directives to study rerouting the roughly 800-mile gas pipeline to Valdez and ending it at Port MacKenzie — across Knik Arm from Anchorage — instead of AGDC’s preferred pipeline terminus and LNG plant site in Nikiski.

Meyer has said repeatedly the plan is to end in Nikiski, noting the state, BP, ConocoPhillips and ExxonMobil spent more than $600 million over the past five years evaluating the Nikiski route and changing to Valdez could take years of additional study time.

AGDC officials note the state was a minority partner in the project when Nikiski was selected, owning just 25 percent share of the LNG plant at the time. AGDC took control of the Alaska LNG Project in early 2017.

The corporation announced Feb. 8 that it would be opening a one-person office in Nikiski to better interface with area residents who will be directly impacted by the project.

The producers have also purchased about 650 acres of land in Nikiski to site the massive natural gas liquefaction plant and marine export terminal at the end of the 800-mile gas pipeline.

AGDC is in negotiations to purchase or gain access to the property.

The state is also planning to reroute the Kenai Spur Highway, which currently bisects the planned LNG plant site.

Previous efforts to export North Slope gas have evaluated a route to Valdez; the final EIS for the Trans-Alaska Gas System released in 1988 determined Valdez to be preferable over Cook Inlet, according to FERC.

“AGDC indicated that the difference between the Valdez delivery option evaluated in 1988 and the current alternative alignment is that the Delta and Gulkana Rivers were designated as Wild and Scenic Rivers on December 2, 1980, subsequent to the issuance of the 1988 final EIS, and that the approvals necessary to cross these rivers are an excluding factor,” FERC asserted in its attachment to the Feb. 15 letter.

“However, the TAGS final EIS evaluated the Delta and Gulkana Wild and Scenic Rivers along the Valdez delivery option and concluded that ‘there would be no direct impacts to the Gulkana and Delta Wild and Scenic River areas since the route would not cross the designated portions of these rivers.’”

The Alaska Gasline Port Authority, comprised of the City of Valdez and the Fairbanks North Star Borough, urged FERC about a year ago to consider routing the Alaska LNG Project to Valdez as it would provide natural gas along the Richardson Highway corridor and save the Fairbanks Borough up to $100 million to build the 30-mile spur line needed to get gas from the large line under the current alignment, local officials said at the time.

More recently Matanuska-Susitna Borough officials asked FERC to consider Port MacKenzie on Jan. 9. According to a Feb. 16 borough press release, AGDC dismissed a Port MacKenzie alternative, but according to the borough, it mistakenly studied a shallow-water site about 4 miles north of the actual port.

Mat-Su officials contend ending at their port could save the project up to $3 billion because the pipeline — about 50 miles shorter — would not have to cross the bottom of Cook Inlet and as such would be environmentally safer as well.

“The Mat-Su Borough fully supports this worthy (gasline) effort and simply requests that our deep draft port be considered, as promised,” Mayor Vern Halter said in a formal statement.

Mat-Su Borough spokeswoman Patty Sullivan said in an interview that borough officials learned of the site discrepancy after the EIS application was filed.

Carlstrom said Port MacKenzie was removed from consideration when the project was led by the producers’ joint venture because it is classified as a multi-use port and a 20 million tons per year LNG plant spreading over hundreds of acres would preclude other activities.

According to Sullivan, the area examined north of the port is referred to as “Point MacKenzie” by AGDC when the actual Point MacKenzie, classified by the U.S. Coast Guard, is a short distance south of the port. The discrepancy has not been explained, she said.

Additionally, the borough has long touted Port MacKenzie for its naturally deep water — up to 60 feet at low tide — and the thousands of acres of developable land in the area.

“We really are the large industrial port with the least amount of neighbors,” Sullivan said.

She emphasized the Mat-Su Borough supports the gasline project, but that officials simply want their proposals vetted appropriately.

AGDC officials that have worked on the project since its inception said they were informed of the producers’ choice of Nikiski in 2013 but specifics as to why were not offered and additional examination beyond what the producers — highly experienced in this type of work — had done would have added substantially to costs and potentially delayed the project for years.

ExxonMobil project leaders said in October 2013 that Nikiski was the preferred choice out of 20 possible locations because it allows the gasline to feed the state’s largest population centers with a long-term supply of natural gas.

The Nikiski site also offers more flat land that is easier to develop along with better access and weather that allows for year-round construction, the producers said in 2013.

Carlstrom said avoiding crossing the Chugach Mountains on the route to Valdez was also a factor in choosing Nikiski.

“Mountain ranges for pipelines, though not insurmountable obstacles, they’re best avoided and by following the corridor paralleling TAPS from Prudhoe Bay to just north of Fairbanks and then connecting with the Parks Highway corridor we completely avoid that mountain range,” he said.


Elwood Brehmer can be reached at [email protected].

02/21/2018 - 11:32am