‘Aggressive’ timeline for AK LNG needs one year for permitting

  • Alaska Gasline Development Corp. President Keith Meyer wants to have a full environmental impact statement done on the Alaska LNG project by the end of 2018, which he acknowledges is “aggressive.” A schedule for the permitting process has yet to be published. (Photo/Michael Dinneen/For the Journal)

State gasline officials have made headway of late with potential buyers and investors in the Alaska LNG Project, but progress on the regulatory side has been harder to come by.

The Alaska Gasline Development Corp. filed an environmental impact statement application with the Federal Energy Regulatory Commission, or FERC, for the $43 billion project in mid-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 in 1970.

The size of the EIS filing could end up being a mixed blessing for the project.

The 13 exhaustive resource reports that comprise the bulk of the material are the end product of the $600 million the state, BP, ConocoPhillips and ExxonMobil spent evaluating the project during the preliminary front-end engineering and design, or pre-FEED, period, when the companies were equity partners with the state. That arrangement ended last year as the producers handed off the lead role to the state as global LNG prices bottomed out.

AGDC emphasizes that the massive filing illustrates the comprehensive nature of the pre-FEED work and limits regulators’ needs for supplemental information; that should help speed the EIS along.

President Keith Meyer is targeting a final investment decision on the Alaska LNG Project by early 2019, and, as a result, a record of decision on the EIS by the end of 2018, which he acknowledges is “aggressive.”

However, whether AGDC’s regulatory timeline is feasible is still an unanswered question simply because of the project’s size and the need for statutory public comment periods.

Also, the municipally-owned Alaska Gasline Port Authority has urged FERC to evaluate routing the Alaska LNG Project to Valdez as opposed to AGDC’s planned Nikiski terminus, but how much consideration the request will receive and how that could affect the EIS timing is also unknown.

FERC is generally regarded as one of the most expeditious federal agencies when it comes producing environmental permits but has yet to publish a schedule — which is fungible regardless — for the EIS.

Meyer said AGDC can still sign the many binding commercial agreements it needs for the project before FERC issues its record of decision; those agreements would just need clauses indicating they are contingent on a favorable decision from regulators.

“If we don’t (get a decision in time) we can deal with it,” he said.

AGDC regulatory Vice President Frank Richards wrote a letter to FERC commissioners Nov. 16 requesting, among other things, that the commission publish the Alaska LNG schedule by Dec. 15. AGDC leaders originally hoped FERC’s timeline would be published sooner.

“The issuance of a schedule will provide valuable assurance to the market that the regulatory process, and particularly commission review of Alaska LNG, is on track and consistent with Alaska LNG’s (2025) targeted in-service date,” Richards wrote.

He said during the corporation’s Dec. 7 board meeting that AGDC is hopeful a final EIS is published by mid-2018 to stay on its desired timeline. Meyer and Richards have stressed the support the project has received from Trump Administration and actions the White House and federal agencies have taken to streamline infrastructure permitting, but to get there it seems FERC would really have to get moving soon.

EIS public scoping meetings to determine what all regulators should evaluate were held in late 2015 under the former ExxonMobil-led project structure. The next major step under a standard EIS development would be for FERC to issue a preliminary draft EIS for cooperating federal agencies to review and comment on.

Subsequent to that, the resulting draft EIS would be issued, initiating a public comment period of at least 45 days — on very large or contentious projects it is often longer — and associated public meetings.

FERC would then respond to the appropriate comments and incorporate them into the final EIS publication, after which a minimum 30-day waiting period must be held before a record of decision on the project is reached.

Richards also asked FERC to publish the schedule before getting responses to all of its questions in his Nov. 16 letter, noting the commission could adjust the schedule if AGDC is too slow in responding to stay on track.

His team has responded to 584 of FERC’s 801 questions and requests for additional data stemming from the application filed in April as of the Dec. 7 meeting, Richards said. AGDC was waiting for questions on the last of the 13 resource reports at that time as well.

Additionally, he urged FERC to adopt or otherwise incorporate the supplemental EIS that the U.S. Army Corps of Engineers is in the midst of finalizing for the smaller $10 billion Alaska Standalone Pipeline, or ASAP, project and defer to the Corps on wetlands issues.

“The Alaska District of the Corps of Engineers has regulated the construction of infrastructure projects through Alaska’s continuous and discontinuous permafrost for many decades, and construction planning in Alaska has centered on the application of the Corp of Engineers’ guidance,” Richards wrote.

He continued: “The commission should rely on the experience and expertise of the Alaska District of the Corps of Engineers and require a duplicative demonstration justifying a waiver of the Office of Energy Projects’ wetlands procedures. If not waived, these procedures will have a significant impact on project construction planning, schedule and cost.”

Such a waiver would lift wetlands construction and mitigation requirements from FERC’s Office of Energy Projects that are more restrictive than those the Alaska District of the Corps uses, according to Richards.

AGDC notes the pipeline corridors for Alaska LNG and ASAP are virtually identical and therefore evaluation of the route does not need to be duplicated. The primary differences in the two pipelines is the line for the ASAP project, meant for in-state gas use, is 36 inches versus the 42-inch Alaska LNG pipe and would stop near Big Lake in the Matanuska-Susitna Borough. The Alaska LNG line would continue south, cross beneath Cook Inlet and end at the LNG plant in Nikiski.

Experts have said EIS for the Alaska LNG is basically three separate evaluations in one document; one each for the North Slope Gas treatment plant, the pipeline and the Nikiski plant.

ASAP decision delayed

While AGDC wants FERC to use the Corps’ ASAP work, the Corps added public meetings to the supplemental EIS for ASAP and thus has pushed back its schedule for issuing a decision on the backup gasline project to July, according to Richards.

Prior to the adjustment AGDC had been expecting a final supplemental EIS in December with a record of decision in March.

In late 2012, the Corps approved an EIS for a smaller version of ASAP with a 24-inch pipeline but when the state upped the size of the proposed gasline to 36 inches, the Corps determined differences between the in-state plans — changes to the gas conditioning modules, a North Slope barge dock, pipeline route and a smaller overall footprint with fewer pipeline compressor stations — necessitated an SEIS.

The draft SEIS was once expected to be out in mid-2015 but wasn’t published until July of this year.

Yukon designation pulled

In an unsurprising move, the Environmental Protection Agency’s Region 10 has dropped its push to designate the Yukon River an aquatic resource of national importance, or ARNI, as it relates to the ASAP project.

EPA Region 10 officials wrote a letter to the U.S. Army Corps of Engineers Alaska District in late August detailing the agency’s concerns with AGDC’s approach to building the ASAP project through wetlands in the Yukon watershed.

Roughly half of the 737-mile pipeline corridor is through the massive river drainage. They did not feel AGDC’s compensatory mitigation plan for filling wetlands in the Yukon drainage was sufficient.

Gov. Bill Walker responded with an early October letter to EPA Administrator Scott Pruitt contending Alaska’s wetlands — 43 percent of the state’s acreage — are so vast “it would not be practicable, nor environmentally justifiable, for this project to mitigate for all wetland impacts along the entire pipeline route.”

Region 10 officials did not send the Corps a second letter as called for under the 1992 agreement between the agencies that established the process for designating an ANRI, rendering the issue moot, according to Richards.

Also, Walker’s former Commerce Commissioner Chris Hladick took over as Region 10 administrator earlier this month after being appointed to the post by Pruitt in October.

Elwood Brehmer can be reached at [email protected].

12/21/2017 - 2:45pm