Port Authority resurfaces seeking Valdez route

  • The Alaskan Explorer is loaded with oil for BP at the Alyeska Pipeline Service Co. marine terminal in Valdez. The nearly-forgotten Alaska Gasline Port Authority resurfaced in comments to federal officials filed this month that demand a gasline from the North Slope follow the current route of the Trans-Alaska Pipeline System and be routed to Valdez instead of the selected site of Nikiski, where about 600 acres of land have already been acquired by the producers for the LNG processing plant. (Photo/Molly Dischner/For the Journal)

The Alaska Gasline Port Authority wants federal regulators and state proponents of a large natural gas pipeline project to remember Valdez still wants a second pipeline.

The authority, or AGPA, filed 52 pages of comments Feb. 9 with the Federal Energy Regulatory Commission petitioning the agency to at a minimum thoroughly vet the option of routing the Alaska LNG Project to terminate near Valdez, with the hope Valdez would be selected as the best option at the end of the environmental impact statement, or EIS, process.

Currently, the plan is to end the up to $45 billion Alaska LNG Project at the northern Kenai Peninsula town of Nikiski, a choice made in 2013 when the project was led by the major North Slope producer companies with the state as a minority share partner.

Since, the producers have 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.

The state-owned Alaska Gasline Development Corp. — having taken the lead role in the Alaska LNG Project late last year — is now negotiating an access agreement for the producers’ property and the key LNG export permits tied to the Nikiski location.

AGPA board of directors Chairman Dave Dengel of Valdez said in an interview that the Valdez alternative route has been analyzed under previous gasline proposals and received favorable rulings from FERC.

“This isn’t new. There’s lots of environmental work and data that’s been collected; some of it may be stale but it’s not as if somebody’s starting from scratch,” Dengel said.

The Alaska Gasline Port Authority is a longstanding municipal port authority formed by the City of Valdez and the Fairbanks North Star Borough to promote an export project for North Slope natural gas.

Dengel emphasized that neither Gov. Bill Walker — a former mayor of Valdez and general manager of the authority who filed for an export permit for AGPA in 2012 — or anyone from his administration was involved in drafting the submission to FERC.

The authority’s comments, signed by Dengel as well as they mayors of Fairbanks, North Pole, Valdez and the Fairbanks North Star Borough, note that the Valdez alternative would allow the state to use much of the existing trans-Alaska pipeline system, or TAPS, right-of-way.

That would also allow the contractors building the gasline to reuse gravel pad and mancamp sites left from TAPS construction in the 1970s, thus reducing the environmental impact of the gas project, according to the AGPA filing.

The Nikiski route, which deviates from TAPS near Livengood, north of Fairbanks, would also require about 120 miles of new access road to the pipeline corridor compared to 34 miles towards Valdez, the filing states.

Additionally, a Valdez-directed line would avoid Denali National Park, a small but potentially complicating issue for the state.

FNSB Mayor Karl Kassel said in an interview that he wants an objective review of all the options for the project, noting previous gasline studies have indicated the Valdez route could have a greater long-term economic benefit to the state versus the Nikiski option.

AGPA cites statements in the resource reports filed with FERC for the gasline project acknowledging that “during construction of the (Nikiski) marine terminal, it is anticipated there would be temporary but significant adverse impacts on some set gillnet permit holders participating in the Cook Inlet commercial salmon fishery.”

It is also apparently unclear to what level the setnet permit holders would retain ownership of their shoreline leases near the LNG terminal after construction.

Finally, and possibly the biggest reason for the push for the alternate route, is a gasline to Valdez would provide more communities access to natural gas than heading to Nikiski, AGPA asserts in its comments.

Kassel reiterated that point, emphasizing that access to natural gas along the Richardson Highway corridor would do more to spur economic development in the state than adding a second source of gas for Anchorage and the population centers of the Kenai Peninsula and Mat-Su boroughs.

“It’s not just Fairbanks,” Kassel said. “I’m trying to look at (the gasline) from a statewide perspective.

And while both options would make gas accessible to the Fairbanks borough, the Nikiski route would require a 30-mile spur line to the City of Fairbanks at a cost of $60 million to $100 million, a cost likely to be borne by the local governments, Kassel said.

Following TAPS would take the gasline more directly through the Fairbanks borough and could also increase the amount of property tax, or payments in-lieu of taxes the borough would be eligible for from the project.

Dengel added that prospective Japanese customers for Alaska’s natural gas — who have funded AGPA as of late — prefer Valdez for its deep water that would allow for larger LNG tankers than a Nikiski terminal.

Along with the support from potential LNG buyers that Dengel declined to name, the authority recently received $8,000 from the City of Valdez, the first municipal funding it has gotten in years, he said.

Ultimately, Dengel said he believes FERC will select the Valdez route if it is appropriately considered when the Alaska LNG Project record of decision is issued.

“We at least want to get a fair hearing from FERC,” he said. “At the end of the day if they say no, the Nikiski route is better, well, ok, at least somebody has looked at it that’s supposed to be impartial and that’s FERC.”

FERC, in its own October comments to AGDC on the extensive resource reports for the Alaska LNG Project, requested seemingly cursory information relative to the detail found in an EIS about a Valdez delivery option.

The agency asked for data on the active fault crossings, wetland crossings and large stream crossings the Valdez line would traverse as well as how practical constructing an underground pipeline to Valdez would be among a list of about 20 items.

AGDC President Keith Meyer made it clear in Feb. 14 testimony to the Senate Finance Committee that it’s basically Nikiski or bust.

“We’re not taking a second look,” Meyer said bluntly.

“Valdez is a great location, there’s no doubt about that and I’m not trying to say anything negative about that but we picked Nikiski and that’s going to be the site; that’s going to be the route,” he added. “We filed 33,000 pages of resource reports all talking about that and detailing that so (Nikiski) is going to be the location.”

Already on a compressed schedule for nearly every aspect of the project to get it sold, paid for, permitted, built and in service to meet the expected LNG market demand in the mid-2020s, Meyer said responding to AGPA’s comments through FERC and alleviating any associated concerns from the agency could take several months.

Before the intervention AGDC had planned to file with FERC by July to initiate the roughly two-year EIS process for the Alaska LNG Project.

“Switching would cost us years,” Meyer concluded.

Kassel acknowledged that evaluating the alternative could slow the regulatory process by a couple months on the front end, but contended that time would likely be made up for and then some as permitting the existing corridor should be easier in the long run, he said.

“I wouldn’t be doing this if I thought it was jeopardizing the project,” Kassel said.

Elwood Brehmer can be reached at [email protected].

03/15/2017 - 1:53pm