AGDC chooses route for Kenai Spur Highway around LNG plant
State gasline officials have picked their plan to reroute a highway around the site for the massive LNG plant they hope to construct, but now they need to pay for it.
In June, Alaska Gasline Development Corp. leaders selected the shortest and least expensive route to bend the Kenai Spur Highway around the roughly 800-acre LNG plant site in Nikiski.
They are currently working to determine what it will cost to secure the right-of-way for the 3.4 miles of new road before further work can begin, said Frank Richards, AGDC vice president and Alaska LNG Project manager.
The “West LNG” route was picked from six alternative paths for the Kenai Spur Highway, in part because of its cost, but also because it will impact the least number of Nikiski residents, according to Richards.
The $20 million highway project will require AGDC to purchase seven residential properties and portions of two commercial parcels along the route, which, as its name implies, would curve the highway around the western edge of the LNG plant property.
The highway currently parallels the Cook Inlet shoreline and bisects the plant site.
“Really, what we saw (in public meetings) is people wanted the least impact to the community, the least impact to neighborhoods and wanted the shortest distance to be able to do that,” Richards said in an interview.
The other options considered would have meant building between five and 12 miles of new road for $33 million to $85 million.
A reroute option suggested by a group of residents would have required AGDC to purchase just five full properties, but the nearly 10-mile corridor would have affected 57 parcels in some way and cost $72 million to construct, according to AGDC estimates.
The resident-suggested route would have also impacted 126 acres of wetlands, which likely would have necessitated a substantial additional environmental review of the road construction. The West LNG alternative does not cross any wetlands, Richards noted.
ExxonMobil purchased most of the approximately 800 acres needed for the plant, LNG storage tanks and marine terminal in 2014 and 2015 when the company was leading the project in a partnership with BP, ConocoPhillips and the state.
Richards acknowledged that the Legislature gave AGDC the authority to invoke eminent domain to secure land for the $43 billion Alaska LNG Project, but said there are no plans to use it.
He added that he personally contacted the landowners that will be most directly impacted by the new road before AGDC made its selection public.
“Our process is going to be, we go through a negotiation and discussion with the private landowners; we’re going to do an appraisal process to determine fair market value and negotiate a sales agreement with them,” Richards said. “We want to be good neighbors in terms of the property acquisition.”
The state-owned corporation has hired an engineering and surveying firm to delineate the exact right-of-way for the new stretch of highway. That is likely to continue through the rest of the year before more detailed design work and property acquisition can begin.
As someone who has had a highway routed through a parcel of family property, Richards said he understands this situation some Nikiski residents are being put in, but money will be available for those with properties in the path of the highway and not individuals on the edges of the work.
“We are concerned about the impacts to people’s lives and how they’re being impacted by this but we aren’t in a position to be able to provide any monetary relief to folks that aren’t directly impacted by the right-of-way necessary for the project,” he said.
“That being said, we want to hear how folks are being impacted, specifically if their lands are directly adjacent to it.
Once the right-of-way is settled, AGDC plans to advance the road design to about 30 percent complete, at which point a design-build proposal will be put out to bid for a guaranteed not-to-exceed contract amount, according to Richards.
The corporation is consulting with the state Department of Transportation as well to make sure the highway it builds will meet federal standards, thus continuing its eligibility for federal maintenance funding, Richards said.
DOT Commissioner Marc Luiken serves on the AGDC board of directors.
He added that geotechnical and soil surveys done at the plant site indicate the nearby road work should be relatively straightforward process without any significant engineering hurdles.
AGDC is also working to determine just how much it will cost to purchase the parcels it needs for the highway, which will be in addition to the $20 million construction cost, he said.
Those costs are all rolled into the $43 billion price tag for the Alaska LNG Project.
However, AGDC needs to find a way to pay for it all before the properties can be purchased and the work can be put out to bid.
“The next phase will be contingent on us have the money to be able to ultimately go forward with construction,” Richards said.
AGDC has contracted with the Bank of China and Goldman Sachs to help it solicit investments for the LNG project, but last session the Legislature opted not to give the agency the authority to accept outside funding, at least for now.
The Federal Energy Regulatory Commission, which is writing the environmental impact statement for Alaska LNG, does not have direct say over the highway work, but because it is a “non-jurisdictional connected action,” actual highway construction cannot be done until FERC approves the overall project, according to Richards.
FERC expects to issue its decision on the project by February 2020.
At that point, road work will start in earnest as AGDC wants to be able to needs to be able to shift traffic onto the new road before most of the foundational work can begin on the plant, Richards said.
Elwood Brehmer can be reached at [email protected].