The shift away from a big natural gas pipeline to Canada became official on Wednesday, when Alaska Department of Revenue Commissioner Brian Butcher and Alaska Department of Natural Resources Commissioner Dan Sullivan sent a letter (attached below) to Alaska Gasline Inducement Act (AGIA) Licensee TransCanada approving a project plan amendment (PPA) request made on March 15, 2012.
The two proposed amendments requested pertain to facilitating a shift, recently encouraged by Gov. Sean Parnell, toward exploring a liquefied natural gas project option under the AGIA framework.
Both proposed amendments were approved by the commissioners.
First, the licensees proposed to include in the project plan the limited work plan, timeline and associated budget set forth in the amendment application. The licensees say that amendment will allow the current project, the Alaska Pipeline Project, to follow through on work plans for an LNG project formalized between it and the North Slope producers. The producers generally outlined the work plans in a March 30 letter to Gov. Parnell (attached below).
Second, the licensees proposed to amend the date by which they are required under AGIA to file an application with the Federal Energy Regulatory Commission for a certificate of public convenience and necessity. With the approval, TransCanada will have until October 2014 to apply for the certificate. The extra time will coincide with an assessment of an in-state LNG project, the application says. The state expects the deferral to reduce its project reimbursement obligations for fiscal year 2013.
The PPA has been approved, the commissioners write, because it is necessary due to changed circumstances outside the licensees' control and not reasonably foreseeable prior to the license being issued in 2008, is consistent with Alaska statute, and does not substantially diminish the value of the project to the state or its likelihood of success.
The approval requires the licensees to conduct a public solicitation of interest in an LNG pipeline to tidewater and liquefaction facility, as well as a pipeline to Alberta, by the end of December 2012.
The state agrees to continue reimbursing the project effort under the terms of AGIA, which provides up to $500 million in subsidy, but unless a separate amendment is filed and approved, the state won't reimburse costs for work done on any LNG Pipeline Midstream facilities which occurs outside the revised work plan, timeline and budget.
The approval also requires licensees to consult with Alaska Gasline Development Corporation and see whether or not "useful work product" can be reasonably acquired from it, in order to avoid duplicating efforts and costing state money unnecessarily. The approval also requires APP to inventory, preserve and turn over to the state all work products, complete or not, that have been gathered regarding the Alberta route.
The state says TransCanada and partner Exxon will still be doing some on a big natural gas line to Canada, but an LNG project to end somewhere in Southcentral is now the main focus.