The proposed route for Alaska’s great gasline dream/AGDC art

By Larry Persily
Special to craigmedred.news

Federal regulators have warned the Alaska Gasline Development Corp. (AGDC) that it is falling short on providing the information, construction and operation plans needed to prepare an environmental impact statement for the proposed Alaska LNG project.

“Incomplete responses and the reissuances of requests for information will affect the schedule for completing the environmental review,” the Federal Energy Regulatory Commission (FERC) wrote in a Feb. 15 letter to the state-run corporation.

“To date, only minimal drafts, and in most cases just outlines, of these plans have been provided, and/or the development of the plans have been deferred to a later date,” FERC said. The comment referenced past requests to AGDC to provide proposed mitigation plans for wildlife avoidance, marine mammal monitoring, vegetation and soils restoration, groundwater monitoring, and invasive plant avoidance.

“Rather than providing specific avoidance and mitigation measures to be adopted … AGDC has deferred providing information to future plans or the permitting phase,” FERC said. “It is imperative that the information provided in AGDC’s responses include definitive commitments to implement specific avoidance, minimization and mitigation measures. Incomplete information or ill-defined commitments by AGDC may compromise our ability to adequately assess and disclose the full impact of the project.”

In December, AGDC told FERC that it would develop plans to reduce the project’s impacts on public land and recreational activities after the final environmental impact statement (EIS), but before construction starts.

FERC isn’t buying those sorts of responses. The federal agency’s Feb. 15 letter said, it “needs site-specific information on the construction and operation of the proposed facilities in these areas, as well as measures to reduce impacts” before, not after, it prepares a draft EIS.

State needs EIS schedule

Since last summer, AGDC has been working to respond to more than 800 requests from FERC for information needed for the environmental review of the proposed, state-led, $43 billion North Slope natural gas pipeline and liquefaction project.

The state answered the last of the questions in January and had been hoping FERC would decide it had enough information to set an EIS schedule. The regulatory agency will not publish that schedule until it is confident it has enough project detail to set a realistic timeline for the EIS completion.

Since filing an application with FERC last April, the state has been pushing the regulatory agency to commit to completing a final EIS by Dec. 31, 2018. FERC’s Feb. 15 letter does not specifically address the state’s hope. It instead present 171 pages of instructions, requests for information and follow-up questions to data gaps it wants resolved to get the project moving. The letter lists 288 multi-part requests for more information.

“This enclosure,” FERC wrote in a cover letter, “includes several requests for information that have been made multiple times during the pre-filing phase, as well as in the current application review, for which an adequate response has not yet been received.”

AGDC filed the project application in April 2017 even though federal regulators just two weeks earlier cautioned the state corporation to stay in pre-file status “due to the number of questions lingering.” A month before that, FERC provided similar advice: “Stay in pre-filing as long as necessary to make the application as complete as possible.”

The Alaska LNG project had been in pre-file status since September 2014, when North Slope oil and gas producers ExxonMobil, BP and ConocoPhillips were leading the development effort. The state took over project management in 2016 after the companies, citing weak markets, balked at committing an additional $1 billion or more needed to complete permitting and final engineering and design work.

Expedited schedule vital

An expedited environmental review schedule is important to the state’s marketing efforts for the project, AGDC wrote to FERC in November 2017.

“The issuance of a schedule will provide valuable assurance to the market that the regulatory process … is on track and consistent with Alaska LNG’s targeted in-service date,” AGDC said.  The state is targeting a final investment decision on the project next year.

It wants to obtain FERC and other regulatory approvals so it can begin lining up gas supply contracts with gas producers, finding customers to buy the LNG, and partners and financing to build the project. AGDC has said it wants to complete construction and ship its first cargo in 2024.

Lengthy initial data requests and follow-up questions from FERC are common before the agency issues an environmental review schedule. Of seven U.S. Gulf Coast LNG projects that received their Notice of Schedule from FERC between 2011 and 2016, the average time from application to an EIS schedule was 12 months and one large project took 19 months.

None of those coastal terminals, however, required 870 miles of pipeline as the Alaska project proposes to build from Prudhoe Bay through the middle of the state to a liquefaction terminal on Cook Inlet.

Disagreement on studies

A point of contention raised in FERC’s letter is whether AGDC must submit specific study results to FERC for the environmental review.

“In your previous responses to requests,” FERC said. “AGDC has stated that because these studies are not required by the state or other entities, AGDC will not provide the information (e.g. sediment modeling, health impact assessment, etc.).

“I remind you that FERC’s regulations implementing the National Environmental Policy Act require applications filed under the Natural Gas Act to include the information. … Applicants must conduct any studies or provide any information that the commission staff considers necessary or relevant to determine the impact of the proposal on the human environment and natural resources.”

FERC added: “Any response from AGDC that states ‘the information is not required by the state or other agency and will not be provided’ will be considered incomplete and reissued [by FERC].”

FERC gave AGDC 20 days to respond either with the requested information or a schedule of when the answers will be provided.

The state corporation has projected spending about $5 million a month this year on marketing, regulatory and other efforts, and at that rate it has enough state funds to last to the end of the year. The governor has not requested legislative approval of any new funds at this time.

Much of the corporation’s work has focused on commercial and marketing efforts, and staff is scheduled to participate in gas and infrastructure conferences in Houston and Montreal next month, according to the AGDC website, which does not show a date for the next board of directors meeting since the last one in December.

FERC wants Port MacKenzie analysis

Among the additional information requested by FERC is further analysis of alternative locations for a LNG plant. By law, an EIS must consider project options to determine the “least environmentally damaging practicable alternative.”

The state picked Nikiski on the Kenai Peninsula for its LNG plant and terminal.  As an alternative, FERC wants an environmental and engineering analysis of Port MacKenzie, including an analysis of the pipeline route to the site just across Knik Arm from Anchorage. The Matanuska-Susitna Borough, which owns the port, filed a complaint in January asserting that AGDC, and before it the North Slope producers, failed to adequately consider Port MacKenzie as a preferred site to Nikiski.

The borough argued that the Alaska LNG project may have violated the National Environmental Policy Act and federal Clean Water Act by “improperly and intentionally excluding” Port MacKenzie as a “reasonable alternative.” The producer-led team selected Nikiski in 2013 after what it said was a lengthy review of more than two dozen options.

FERC also instructed AGDC to prepare an environmental and engineering analysis of a pipeline route to Valdez. As with Mat-Su Borough, the city of Valdez filed complaints with FERC saying it  would be a better location than Nikiski for the LNG plant.

Other information requested by FERC  includes:

• An update on plans and additional details for the proposed relocation of several miles of the state-maintained Kenai Spur Highway to make room for the liquefaction plant and marine terminal in Nikiski. AGDC has said the highway must be moved before substantial construction at the site could begin. A final highway route has not been selected, nor land acquired for the new right of way.

• Additional details on dredging required for the material offloading facility (dock and barge landing) that would be built at Nikiski for delivery of construction equipment and plant modules.

• A description of how a North Slope gravel mine would be constructed to supply the project with the material needed for work and construction pads, along with more detailed information on the pipeline project’s gravel needs.

• More information on the alternative of routing the gas pipeline for several miles through the Denali National Park and Preserve, including field studies of the park route. AGDC has told FERC that although the park route is preferred to burying the pipe in steep terrain outside the park boundaries, the state needs Congressional approval of a change in federal law to make the park option viable.

• More information on plans for pipeline crossings of waterways (in particular, for the Point Thomson pipeline along the North Slope), construction work yards, the potential for pipeline construction and operation to thaw permafrost, and plans to fill wetlands — in particular, the use of temporary gravel fill during construction.

• More details on impacts to schools that might gain students from the influx of construction workers; more details on the estimates of local residents who would be hired for construction and operation; and more details on the estimated volume of goods and services that would be purchased for the project in Alaska.

• More information on impact payments to cities and boroughs affected by the project, including information on the taxable or non-taxable status of the state-led project.

• More information on road, rail and air transportation plans for construction materials and workers.

• And a cumulative impact analysis of the project’s effects on subsistence harvests, wildlife habitat and increased competition for resources from an influx of construction workers.

Larry Persily is a former deputy commissioner of the Alaska Department of Revenue, a former editorial page editor for the Anchorage Daily News, the former coordinator for the Federal Office for Alaska Gas Line Projects, and a former consultation to the Kenai Peninsula Borough on gasline and revenue issues. He writes regularly on oil and gas issues.