Feds ask AGDC to take another look at Port Mac

The U.S. Federal Energy Regulatory Commission has asked Alaska Gasline Development Corp., the state gas corporation, to take another look at Port MacKenzie as a site for a large natural gas liquefaction plant for the proposed Alaska LNG Project.

AGDC is now leading the big gas project, which includes an 800-mile gas pipeline from the North Slope as well as the LNG plant at the pipeline’s southern terminus, now proposed for Nikiski, on the Kenai Peninsula.

The federal regulatory commission must issue a certificate for Alaska LNG. The agency is now reviewing information submitted in a final application for the certificate by AGDC.

Keith Meyer, CEO of the state gas corporation, said he doesn’t think FERC’s request for the Mat-Su analysis, or on other questions the federal agency sent in a Feb. 15 letter, will delay the project.

“FERC’s request for more information is a normal part of a major application as they do their job of ensuring a complete application. Addressing questions now will help streamline the final approval process,” Meyer says. “This will not impact our commercial discussions and should not cause any delay in the target start of construction.”

The Matanuska-Susitna Borough filed Jan. 9 to intervene in the FERC regulatory process arguing that the project planners did not adequately consider Port MacKenzie when they selected Nikiski as a preferred alternative.

At that time Alaska LNG was led by a consortium of the three major North Slope gas owners as well as the state, with the project teams led by ExxonMobil.

In its intervention request to FERC the borough argued that the Alaska LNG team, then working on preliminary engineering and an analysis of alternative routes, considered the wrong location on upper Cook Inlet, Point MacKenzie rather than the borough-owned Port MacKenzie, which are several miles apart.

In its Feb. 15 letter to AGDC, FERC requested that the state corporation do an anlaysis of the Port Mackenzie site including the change in the pipeline route from that now proposed to cross Cook Inlet to the Kenai Peninsula location.

FERC also requested that AGDC, “provide documentation of recent consultation with the Matanuska-Susitna Borough to support the analysis,” of the Port MacKenzie site.

FERC also asked the state corporation to reconsider its decision to exclude Valdez as pipeline terminus and site for an LNG plant, and cited the analysis in a 1988 Federal Environmental Impact Statement for the Trans-Alaska Gas System (an earlier gas project plan) that found the pipeline route to Valdez environmentally superior to a route through Southcentral Alaska.

In its rationale for rejecting the Valdez route, which would also parallel the existing Trans Alaska Pipeline System, the Alaska LNG Project teams argued that the designation of the Delta and Gulkana Rivers as wild and scenic rivers in 1980 precluded the Valdez option.

In its letter, FERC cited the 1988 final EIS for the Trans-Alaska Gas System as noting that the final route for that would not cross parts of the Delta and Gulkana Rivers designated wild and scenic rivers. FERC asked AGDC to do a revised analysis of Valdez.

FERC’s Jan. 15 letter also asked a number of detailed questions about information AGDC had already submitted. Many of the questions were for clarifications on information submitted or were additional questions on information submitted.

“Some of the questions we had already responded to, and this may simply be a case of multiple people at FERC working on the information,” said AGDC spokesman Jesse Carlstrom.

Some questions, such as on the new analyses for Port MacKenzie and Valdez, will require some additional fieldwork, however.

In any event, FERC appears unwilling to issue a schedule for an EIS until all of the questions are answered, raising doubts as to whether an EIS can be completed before the end of 2018, which the state corporation had hoped for.

It’s uncertain how an extended regulatory process would affect commercial negotiations between AGDC and a group of potential Chinese LNG customers and financial institutions. Gov. Bill Walker hopes to have agreements by December 2018 with the Chinese companies, which include Sinopec, a large energy company, Bank of China and China Investment Corp.