Dan Fauske is ready to get "into the weeds" when it comes to the involved process of getting a long-talked-about natural gas pipeline built in Alaska, and that has leaders in Anchorage feeling optimistic.
"We have to heat and light our towns," said Dan Coffey, former Anchorage Assembly member and chairman of the Mayor's Energy Task Force, which Fauske presented a project update to Wednesday. "This to me is the most viable of the projects, and it's in the very capable hands of Mr. Fauske."
Fauske, now the head of the Alaska Gasline Development Corp. (AGDC) has been tasked by the Alaska Legislature with getting a 737-mile, small-diameter natural gas pipeline built from Alaska's North Slope to a yet-to-be-determined location in Southcentral. The goal? To provide affordable energy for the Alaskans who live along the line's proposed route, encompassing a majority of the state's population.
The longtime head of the Alaska Housing Finance Corp., Fauske, who has been dubbed the "czar of competence" by some, has taken on the role of president and CEO of AGDC, with hopes that by focusing his energy solely on the pipeline project, it will finally come to fruition after decades of talk.
It's a complicated prospect. In April, the state Legislature approved House Bill 4, legislation aimed at building a small-diameter gas pipeline that could deliver up to 500 million cubic feet of natural gas a day from the North Slope.
Dubbed "ASAP," the small-diameter line is separate from the much bigger, $45 billion to $65 billion-plus, large-diameter pipeline and LNG export project being considered by TransCanada, the Alaska Gasline Inducement Act (AGIA) licensee, and its partners BP, Exxon Mobil and ConocoPhillips.
Through AGIA, the state has committed up to $500 million worth of incentive capital reimbursements to the larger project. According to Alaska's Department of Revenue, the state has paid TransCanada more than $222 million in qualified reimbursements as of Dec. 31, 2012.
Fauske told the task force that getting the ASAP pipeline built isn't just about finding a place to hang his hat and collect a paycheck. For Fauske, he said the issue is personal: when his wife tells him she doesn't want to freeze, he listens.
And with railbelt communities struggling to deal with high energy prices and the price of liquefied natural gas fluctuating on a global scale, it's important to act fast.
"Time is the enemy on something like this," Fauske told the task force. "If we can't meet the price of imported LNG, (building the gas line) is a fool's errand."
Project update
With that goal in mind, Fauske presented an update on the project to members of the Anchorage-based Mayor's Energy task force.
In it, Fauske updated the city on the project, which included changes to the project scope. Originally introduced as a 24-inch diameter line capable of delivering 500 million cubic feet of natural gas to cities along the line -- which include population centers like the Mat-Su, Fairbanks and Anchorage -- the new scope of the projects ups that to 36-inch diameter with a max 1,480 psi operating pressure. That's down from an original estimate of 2,500 psi.
That lower pressure should make it easier for other communities to tie into the line, Fauske said. It will also create less need for increased infrastructure to pressurize the gas as it moves down the line.
"Many live up here because there aren't many people, but that's the problem in building (large, expensive projects)," Fauske told the task force. "There aren't many people."
When asked about possible export opportunities by members of the task force, Fauske reminded them that he was bound by law to bring a pipeline capable of delivering 500 million cubic feet a day -- tiny in terms of what larger markets would be interested in. But with that in mind, the line could be designed to carry even more -- up to a potential 1.8 billion cubic feet each day -- opening up possible export opportunities.
Fauske also laid out the project's timeline to the task force. The goal? Bring the project to "open season" by the first quarter of 2015. Open season is the process in which project sponsors propose key terms and parameters for a potential pipeline to prospective customers and solicit bids for contracting on the project.
Under the current proposed timeline, construction on the gasline would begin in early 2017, with the first gas available in 2020.
Concerns remain
Members of the task force still voiced some concerns over the project as a whole. Judy Brady, former Department of Natural Resources commissioner and longtime executive director of the Alaska Oil and Gas Association, noted that residents have been hearing about a proposed pipeline for the last 50 years. In her time in Alaska, she's been around seven serious proposals. With that in mind, she asked why Fauske thinks the current version of the pipeline will move forward.
"What's changed is the free lunch," he told her, noting that all previous efforts to build the line fell to the large oil companies. If they didn't want to play along, there was nothing Alaska could do. Under the current structure, even if the large-diameter gas line doesn't get built, this one will still happen.
"We're moving forward, no matter what," he said. "We don't want our largest cities to crumble."
It's that sense of pressure that has Anchorage Mayor Dan Sullivan optimistic.
"I think his project keeps pressure on the bigger project because they know there's a backup plan," Sullivan said. "Hopefully the big producers and TransCanada and the AGIA project feel a sense of urgency to get their project moving, or else we have a backup."
Contact Suzanna Caldwell at suzanna(at)alaskadispatch.com. Follow her on Twitter @suzannacaldwell.