Mat-Su Borough officials say errors are skewing AK LNG baseline data

Frustrated over how their proposed site for an LNG plant has been dismissed by leaders of the roughly $40 billion Alaska LNG Project, Matanuska-Susitna Borough officials are pointing to statements from federal regulators they claim prove that parts of the project evaluation are based on flawed basic data.

James Wilson, an internal auditor for the Mat-Su Borough, told the Alaska Gasline Development Corp. board of directors during an Oct. 10 meeting that there seems to be a “process issue” that has prevented the errors the borough has flagged regarding its Port MacKenzie in project documents from being corrected.

The Federal Energy Regulatory Commission is currently evaluating the Alaska LNG Project — the state’s effort to sell North Slope natural gas via an 800-mile pipeline to a Southcentral LNG plant and export terminal — through the environmental impact statement, or EIS, review process. A favorable record of decision on the EIS would give broad federal approval to start construction and that is expected next June.

FERC issued the draft Alaska LNG Project EIS in late June and took public comments on the nearly 4,000-page document until Oct. 3.

The borough, which was granted intervenor status in the project docket by FERC, on Sept. 27 asked the agency to put together a supplemental draft EIS to correct what it called “foundational defects” in the current document.

As an intervenor, the Mat-Su — along with the Kenai Peninsula Borough and the City of Valdez — has the right to challenge the final EIS and the record of decision in federal court.

“Currently, while some of the information is sufficient, there is false and misleading information, at least in my opinion, that gets into the FERC record” for the project, Wilson told the AGDC board.

Valdez leaders have also petitioned FERC and AGDC to give more credence to their city as a possible end-point for the Alaska LNG Project, arguing in filings that it was arbitrarily dismissed despite reviews of previous gasline proposals finding it to be the least environmentally damaging option.

Mat-Su Borough Manager John Moosey said in an interview shortly after the draft EIS was made public that borough officials were satisfied with the document because based on an initial review it appeared to show Port MacKenzie “in a fair and more accurate light, and that’s really what we wanted.”

Prior to that, Mat-Su officials had spent several years attempting to correct sometimes obviously false information that seemingly led project leaders to select Nikiski, on the Kenai Peninsula, as the site for the project’s multibillion-dollar LNG plant.

For example, maps supplementing Alaska LNG Resource Report No. 10 that were submitted to FERC to outline the LNG facility location alternatives show Point MacKenzie, where the port is located, as being several miles north of its true location. The location pinpointed on the map has large tidal mud flats, which the port does not, and is on a parcel of private Alaska Native corporation land while the publicly owned port is on borough property.

Mat-Su officials have said such errors shouldn’t be dismissed because they distort the baseline information regulators are using to make decisions on the project.

Most of the information the borough has issues with is found in the project resource reports — the nearly 60,000 pages of environmental, socioeconomic and engineering data compiled by AGDC and the producer companies to support the project — according to Wilson. Those reports are the basis for the EIS.

Nikiski was selected in 2013 when ExxonMobil was leading early work on the project in a consortium with BP, ConocoPhillips and the state. AGDC leadership has, through multiple management changes, stuck with Nikiski as the chosen locale for the massive LNG plant.

Nikiski was chosen largely for its flat terrain and the ability to provide natural gas to the state’s four largest population centers along the pipeline route.

The draft EIS largely affirms the conclusions of AGDC and the producers.

The producer companies solidified their project endpoint by subsequently purchasing nearly 700 acres along tidewater in Nikiski to begin preparing for the LNG plant.

Borough officials have changed their tune regarding the Alaska LNG draft EIS since talking with the Journal in early July after taking more time to carefully read through the details of the exhaustive report, according to Wilson.

He and Mat-Su Port Commission member Randall Kowalke stressed to the board that they do not want to derail the project, wherever it would end, but they simply want their preferred location to be vetted with accurate information.

Specifically, the draft EIS overstates the volume of ocean floor dredging that would likely be needed for a large Port Mackenzie LNG plant and loading terminal by 700,000 cubic yards, or about 55 percent, he highlighted.

Those advocating for development at the port regularly point out that the dock is in deep water and strong tidal currents naturally scour the ocean floor in front of the dock.

The draft EIS also overestimates the potential impacts to Cook Inlet’s endangered Beluga whales from a Port MacKenzie LNG plant, Wilson said. He referenced the U.S. Army Corps of Engineers’ comments on the document, which ask FERC to correct or remove information about the dredging and whale impacts.

Additionally, the EIS greatly overstates the amount of wetlands in the largely undeveloped Port MacKenzie upland area, Wilson contended. It lists Port MacKenzie as having 1,591 acres of wetlands; Wilson said multiple reviews show that as being 430 acres too many. The amount of wetlands and subsequent required mitigation would be a significant consideration in choosing a site for the large development.

“I’m not sure the process of one side submitting inaccurate information — some of it’s accurate but a lot of it’s not — and then we just publicly counter; I’m not sure that’s the most effective way,” he said to the AGDC board. “I would think there’s a way we could improve the process so that we don’t just keep going back and forth. It takes a lot of time and energy.”

Interim AGDC President Joe Dubler said he and agency staff would take up Wilson on his offer to have a meeting and hash out the issues regarding data inconsistencies.

However, Dubler did say the supplemental draft EIS would likely result in a “significant delay” of FERC’s decision on the project, which is now scheduled for June 2020. But he added whether or not a supplemental version is needed is ultimately up to FERC officials.

“I’m a resident of the Mat-Su so I’m very interested in making sure that the borough’s happy with what we’re doing or at least not objecting to it,” Dubler said.

As for other aspects of the project, AGDC continues to work with BP and ExxonMobil to lower the $43 billion cost estimate for the project, which was most recently calculated in late 2016.

He and others at the corporation have said the estimate was made with conservative figures and design and construction methods in the LNG industry are constantly changing and could lower the project’s cost.

In March BP and ExxonMobil both committed up to $10 million to help AGDC complete the project EIS.

How much money AGDC will need will mostly depend on what additional information and study FERC requires to finish the EIS.

AGDC’s commercial focus under Gov. Michael J. Dunleavy’s administration has shifted from seeking investment via LNG buyers to searching for those who want to take over the project once the EIS is done.

As such, the corporation cut out much of its marketing work — and correspondingly 60 percent of its staff — in early July.

“We’re looking for companies that are willing to invest at this stage of the project once we get the FERC order in June of 2020,” Dubler said.

AGDC leaders are hopeful the work with the producers to lower the expected cost will help entice those investors, at which point the state would be a partner in Alaska LNG through the state’s ownership of gas resources.

Elwood Brehmer can be reached at [email protected].

10/16/2019 - 10:03am