Mat-Su Borough mayor asking for fair assessment of port for gas project

A spat between the Matanuska-Susitna Borough and the state-owned Alaska Gasline Development Corp. continues over the best location for a large liquefied natural gas, or LNG, plant for the large gas project.

AGDC has selected Nikiski, on the Kenai Peninsula, for the plant. The borough contends that Port MacKenzie, on upper Cook Inlet, is a superior site, and that AGDC has unfairly dismissed it as an alternative.

It is also a shorter distance for the 42-inch gas pipeline needed to be built from the North Slope because its avoids having to cross Cook Inlet to the Kenai Peninsula.

The latest exchanges include an Oct. 2 response from AGDC to the borough’s protest to the U.S. Federal Energy Regulatory Commission that says a plant site proposed by Mat-Su near the port is environmentally superior to a site assessed by AGDC and found wanting.

The state corporation disputed that assertion, in its own response to FERC, arguing the borough’s proposed site suffers many of the same disadvantages as the other locations, and in any event that navigation issues in the upper Inlet pose challenges to the project’s schedule.

In an earlier Sept. 14 filing to FERC the borough asserted that AGDC had made “willfully misleading statements which reflect an inaccurate analysis of the options available at Port MacKenzie,” in its protest to FERC over the Nikiski site selection. Now the FERC has weighed in again, asking AGDC to better document its analysis of the Mat-Su alternative.

Mat-Su Borough Mayor Vern Halter said the Borough would like a fair assessment of its industrial port as the terminus to the $42 billion gas project. “The Mat-Su Borough wants the best location for Alaska’s LNG project. If that’s not Port MacKenzie that’s acceptable, but give the alternative sites your best analysis before ruling them out, as you are required to do by federal law. We haven’t gotten that,” Halter said.

“Two years ago, AGDC started analyzing a (Port MacKenzie) alternative site on a mudflat, the least attractive site for a port, while ignoring our industrial deep draft dock and its 60 feet of water just three miles to the south,” Halter said. Halter also asked AGDC’s board to look into why AGDC staff continues to avoid giving a fair assessment of Port MacKenzie.

The route to Port MacKenzie is shorter, saves Alaskans more than $1.4 billion in construction costs and an estimated $100 million per year in maintenance and debt interest costs.

In its response filed with FERC AGDC said it had engaged in substantial consultations with the borough including several meetings and exchanges of information. “Between the issuance of FERC’s data request on February 15 and AGDC’s submission of its response on July 13, both parties agree they met in person on four occasions and exchanged numerous emails and factual and technical information,” the state gas corporation said in a statement.

“AGDC in good faith analyzed two sites, Option 1 and 2, at Port MacKenzie based on the information and recommendations provided to it by MSB and its own consultant. The Option 1 site was analyzed in detail based on (the borough’s) input on considering the existing Port facilities and planned development a for purposes of siting a 20 MMTPA LNG facility,” the statement said.

The borough proposed another “optimum site” on July 3, “four years after the pre-filing review of this project was initiated, seven months after MSB intervened in this case, and after the four meetings with AGDC,” the state gas corporation said.

In its response filed with FERC, AGDC also said:

“The MSB ‘optimum site’ option does not avoid any of the obstacles and negative impacts associated with Option 1, which include:

• Longer transit times to Port Mackenzie relative to Nikiski and a resulting need for an additional LNG shipping;

• A higher level of waterway congestion in the Cook Inlet Navigation Channel given its proximity to the heavily-used Port of Alaska;

• Increased safety risks stemming from more severe ice conditions over longer periods of time and greater tidal currents;

• Draft restrictions limiting the times when the Knik Arm Shoal channel could be crossed;

• Substantial impacts, including anthropogenic disturbances to marine mammals and specifically beluga whales, and resulting restrictions associated with the construction and operation of LNG facilities within the Beluga Critical Habitat Area 1.

The borough contents that AGDC’s statement that there is not much of a difference between sites at Port MacKenzie is inaccurate.

“That’s not true,” said Mat-Su Borough Internal Auditor James Wilson, who has been leading the analysis effort at the Borough. “Their (AGDC’s) option 1 shows 571 acres available with wetlands. A liquefaction plant requires at least 900 acres. Our optimum site has 1,048 acres, zero wetlands,”Wilson said.

Port MacKenzie has other advantages, the borough said. One is that a trestle built to deep water north of the present deep draft dock at the Mat-Su port would be 960 feet shorter than the trestle planned by AGDC at Nikiski.

AGDC wasn’t aware of this until Mat-Su made the information available, the borough said.”This fact has not been shared with FERC by AGDC in its examination of alternatives,” the borough said in its statement.

Meanwhile, the Nikiski site as the proposed terminus requires the gas pipeline to cross under Cook Inlet,and AGDC has other questions from FERC about that, including many related to tidal currents in Cook Inlet that could affect the stability of the pipeline during construction and operations, Mat-Su said.

The disagreement began when the borough discovered that the Alaska LNG Project, then under an industry-managed consortium led by ExxonMobil and including AGDC, had inadequately analyzed the Mat-Su alternatives. In its initial analysis the industry team had by mistake considered Point MacKenzie, a geographic feature several miles away from the borough’s Port MacKenzie. That became part of the decision to choose Nikiski.

When the borough asked AGDC, by now leading the Alaska LNG Project, to do a new analysis, the state dragged its feet and is still doing that, Mat-Su contends.

The back-and-forth over the LNG plant sites will likely continue. AGDC has until Oct. 22, or 20 days after FERC’s request for more information, to provide the requested information on its analysis.