New gas hurdles


An artist’s rendering of a possible Nikiski LNG terminal/Alaska LNG

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With just four months to go before the scheduled release of the Alaska LNG project’s draft environmental impact statement, federal regulators have addressed almost 200 additional information requests to the state’s project team.

The 63-page list delivered Tuesday includes questions about waterway crossings and temporary access roads for pipeline construction, and how to prevent damage to permafrost and protected endangered  Cook Inlet beluga whales. It also seeks more information on Port MacKenzie, just across Knik Arm from the state’s largest city, as an alternative to Nikiski for the project’s gas liquefaction plant and marine terminal.

The follow-up questions arrived as the project team at the Alaska Gasline Development Corp. (AGDC) was nearing the end of responding to an initial round of more than 800 questions and requests for more information from federal regulators.

The Oct. 2 packet came with a cover letter noting, “the enclosure includes several requests for information that have been made multiple times in the past for which an adequate response has not yet been received.”

The standard Federal Energy Regulatory Commission (FERC) caution followed: “You should be aware that the information described in the enclosure is necessary for us to continue preparation of the draft environmental impact statement. The forecasted schedule for both the draft and final EIS is based on AGDC providing complete and timely responses to this and any future data requests.”

Additional data requests are not unusual for the FERC, which is preparing a single, environmental impact statement (EIS) for the entire Alaska LNG development. The EIS will cover construction of 870 miles of pipeline from Point Thomson on the Beaufort Sea across the mountains of the Brooks and Alaska ranges to a gas liquefaction terminal in Nikiski on the eastern shore of Cook Inlet.

The state is the sole applicant in the estimated $43 billion venture. It is trying to put together deals with LNG buyers in Asia, assemble partners to invest in the project and arrange lenders to provide financing — plus pull together all necessary permits and authorizations.

AGDC is expected to introduce itself to potential investors late this year, followed by a more focused effort in early 2019. The state corporation has contracted with Goldman Sachs and the Bank of China to assist in finding investors and financing.

The state corporation could run out of money in late 2019 unless it can entice investors to help with development costs or convince the Legislature to appropriate additional funds.

A growing market for LNG has been fueling other projects. Royal Dutch Shell just green lighted a $30 billion LNG development in Northern British Columbia. The LNG Canada project was pushed by Canadian Prime Minister Justin Trudeau and backed by Shell partners Petronas of Malaysia, PetroChina, Mitsubishi and Korea Gas Corp., the Vancouver Sun reported.

The Canadian project will allow LNG to be shipped to Asian markets far faster than from the U.S. Gulf Coast, Shell said in a statement. Alaska is hoping it can also benefit from easy access to Asian markets.

But FERC is scrambling to handle 14 applications, plus Alaska’s, for U.S. LNG projects and the Oil & Gas Journal this summer reported FERC chairman Kevin McIntyre warning that “a number of factors can cause LNG projects to be processed by FERC staff at different speeds, including the varying complexity of the projects themselves, the completeness of the initial application, the need for FERC staff to request additional information, and the timeliness and completeness of the applicant’s responses and the degree to which other agencies act in a coordinated and timely manner.”

Big, complicated undertaking

FERC is scheduled to release its draft environmental impact statement (EIS) in February 2019, with a final impact statement in November 2019 and a commission vote on the state’s project application in February 2020 — assuming the state submits all the material needed for the review.

Among the new or expanded information AGDC has been asked to provide:

  • Additional responses to the Matanuska-Susitna Borough’s assertion that it has identified a better site for the LNG plant than the location reviewed — and rejected — by AGDC in a filing with FERC this summer. Federal regulators also asked the state corporation to further explain why it believes building at the borough’s Port MacKenzie would require one more construction season than in Nikiski, about 65 air miles to the southwest on the opposite side of Cook Inlet. The borough has long promoted Port MacKenzie for industrial development.
  • Plans to promote employment of Alaska Natives and other minorities during construction and operation.
  • More information on interconnection points to the mainline for gas distribution in Alaska. AGDC has identified three of five connection points (Fairbanks, the Matanuska-Susitna Borough and Nikiski) for Alaska gas takeoffs from the export project, but has not settled on the remaining two off-take points. “Provide the locations or an update on the other gas interconnections to be built within Alaska,” FERC asked, “(and) discuss the feasibility of including an interconnection to provide gas to the Denali Borough that could serve the communities in that borough as well as Denali National Park and Preserve.”
  • Site-specific plans for each of 12 proposed gas line crossings of the trans-Alaska oil pipeline from Prudhoe Bay to Fairbanks.
  • Locations and acreage for any temporary access roads that would be left in place after construction. AGDC has told FERC that access roads would be removed and the land restored after construction “unless the landowner or land management agency requests that the improvements be left in place.”
  • A  table of the 29 pioneer camps proposed during construction, including the location, current land use, camp size, number of workers at each camp, duration of use for that camp and land-restoration procedures.
  • A discussion of how the pipeline construction techniques “would be similar and/or different” from the practices used in laying fiber optic lines in trenches along the Dalton Highway that resulted in permafrost thawing and environmental damages. The state is still investigating the aftermath of the 2015-2017 telecommunications line construction from Prudhoe Bay to Fairbanks. “Thawing permafrost is creating a muddy mess in Alaska’s Arctic after two competing broadband projects dug trenches alongside the Dalton Highway for their separate fiber optic cables,” Alaska Public Media reported in the wake of that work. 
  •  Additional description of the impacts on permafrost during project construction and the long-term impacts, “including impacts on thermal equilibrium given the shift in soil makeup and the permafrost profile.”
  • Further site-specific geotechnical information for proposed trenchless crossings at the Middle Fork Koyukuk, Tanana, and Yukon rivers in Northern and Central Alaska and the Chulitna and Deshka rivers in the Southcentral region.. A trenchless crossing means drilling underneath the river and pulling and/or pushing the pipe through to the other side. In a May filing with FERC, the state team reported that further field work would be required to assess the feasibility of trenchless crossings including, in some cases, drilling bores holes to determine soil conditions. “Provide a schedule as to when these additional geotechnical and geophysical studies will be completed and dates for when the revised trenchless feasibility crossing studies will be provided,” FERC asked.
  • An explanation why the number of pipeline crossings of the Atigun and Dietrich rivers and temporary work areas between 166.2 and 168.6 miles south of Prudhoe Bay “cannot be reduced to minimize in-stream impacts and bank disturbance and destabilization,” FERC said. “As currently proposed, there are seven crossings of the Atigun River and three crossings of the Dietrich River.”
  • Where and how the project would obtain water to build ice roads for construciton north of the Brooks Range.
  • Additional information on the impact of ballast waters that LNG carriers would discharge as they arrive in Cook Inlet to load up at the LNG terminal. The ballast waters would be up to 25 degrees warmer than the ambient waters of Cook Inlet, AGDC reported to FERC in an earlier filing.
  • An explanation of how AGDC’s proposal for 3.5 inches of concrete coating on the 42-inch-diameter pipe laid across the Cook Inlet seafloor to reach Nikiski would comply with federal regulations which require “that the top of the pipe is below natural bottom, unless the pipe is supported by stanchions, held in place by anchors or heavy concrete coating, or protected by an equivalent means.”
  • A more detailed crossing plan for Cook Inlet to include a description of how the powerful currents could affect stability of the pipeline during construction and operation. “Explain if tidal and other flow currents would cause movement of debris and boulders across the pipeline,” FERC asked. And provide “a description of how the pipe would be anchored for tidal currents throughout pipe lay operations, especially in the near-shore transition areas … (and) a description of how the concrete-coated pipe would be handled during pipe lay operation to ensure the pipe is not buckled or damaged due to weight and water currents.”
  • What AGDC will do to reduce the risk of freshwater aquatic invasive species from equipment brought into the state for project construction.
  • A list of measures AGDC would use to minimize impacts on Cook Inlet beluga whales during construction and use of the freight offloading dock in Nikiski. The corporation’s June 11 response to FERC “did not address part of our question on what mitigation measures were planned for construction … and increased activity in the area … used by Cook Inlet beluga whales for feeding, giving birth and raising young.”
  • Plans for a new public road, parking and a public path to the beach during construction of the LNG plant in Nikiski. AGDC has told FERC it is considering building an alternate public access point south of the marine terminal to make up for its plan to block existing access to the beach.
  • And more information on AGDC’s plan to take 1 million gallons of water per day from the city of Kenai’s public water system to meet the LNG plant’s freshwater requirements, including the effect of the proposed withdrawals on the Kenai aquifer.

As with past requests from FERC, the state project team will now start providing answers and a schedule for when it will complete the work.

Larry Persily is the former editor and publisher of the Wrangell Sentinel, the former editorial page editor of the Anchorage Daily News, a former Deputy Commissioner of the Alaska Department of Revenue, and the former coordinator for the now-defunct Alaska Natural Gas Transportation Projects that once planned a natural gas pipeline from the Arctic to the lower 48 states.

8 replies »

  1. I know Dunleavey says that he is committed to the LNG pipeline “if it makes economic sense”. That’s what he needs to say during his campaign. But what is the real story? Is he for or against it? Will the project continue? Or will it wither and die on the vine next year?

  2. Good look at what is further required of AGDC. I’m curious as to what Persily’s interest in this process, other than just keeping his hand in it?

    • curiousity. he has had a long association with gas from the gasline office to working briefly for the Kenai Borough on the potential for Nikiski.

      and, of course, an interest in Alaska. he’s an old fart whose been here almost since forever. i knew him when i worked in Juneau and he was in Wrangell back when the region had two big pulp mills and a sizable timber industry.

  3. I would be interested to know how much of the State’s money has been spent on this illusion. Walker’s legacy, besides being the most unpopular governor in all 50 states, will be tied to this pipeline to nowhere and the wasted resources he spent on it. If this was private sector he would have been fired early on in his job if for no other reason, his appointment of a criminal to the Board of Fisheries. What private enterprise would have put up with his wasteful spending of, literally, of hundreds of millions of dollars? Combine that with his insensitive treatment of people, his unilateral take of the people’s pfd, and his failure to cut wasteful state spending, and you have a man who cannot be ushered out of office quickly enough.

    • My read on larry’s perspective is that we’re still bush league operators.
      Kittimat approval and NG tariffs dont exactly make for bullish sentiment-imo
      And im all for a economically viable effort

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