State officials push for more engineering on large gas pipeline

State officials are trying to prod North Slope producers and TransCanada to commit this summer to a more detailed design and engineering phase for a planned $45 billion to $65 billion Alaska gas pipeline and liquefied natural gas export project, Commissioner of Natural Resources Dan Sullivan told legislators in a briefing Wednesday.

Initiating the Pre-Front End Engineering and Design work will be the first major financial commitment by slope producers BP, ConocoPhillips and ExxonMobil, who are teaming with TransCanada Corp., a pipeline company.

“The governor has called on the companies to reach commercial terms among themselves to begin the Pre-FEED this summer,” Sullivan told the Senate Resources Committee in a briefing.

Deputy Commissioner Joe Balash, appearing with Sullivan before the committee in Juneau, said the pre-FEED will involve a substantial commitment.

“The budgets will begin to match the state’s own financial commitment to the project under the Alaska Gasline Inducement Act,” or about $500 million, Balash told the legislators. Alaska is contributing that amount under an agreement with TransCanada made in 2010.

“We’re now focused on ensuring that this summer’s field season is used” by the companies to gather data, which the companies regard as part of a Pre-FEED work. “If they don’t take advantage of the summer season we could lose a year on the project,” Balash said.

Much of the environmental data needed to support federal and state permit applications must be obtained in summer.

Sullivan said the companies are meanwhile making good progress in establishing alignment amongst themselves. At the governor’s request they reached a milestone in mid-February of making major decisions, he said, that include agreements to locate the gas conditioning plant at Prudhoe Bay in the same complex with an existing large field gas plant, that 42-inch pipe will be used on the 800-mile pipeline, and on an LNG production target of 17.5 million tons per year.

The south Alaska terminus of the pipeline and the port location for the LNG plant will be decided within several months, the companies told the governor in February.

Tim Bradner can be reached at [email protected].

03/29/2013 - 6:10am