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Federal agency has long list of questions for state-led Alaska LNG project

  • Author: Alex DeMarban
  • Updated: November 16, 2016
  • Published November 16, 2016

The federal agency responsible for conducting the environmental review for the $55 billion Alaska LNG project has sent project officials 268 pages of comments and questions — a demand for information from several state and federal agencies that will keep the state busy when it takes the reins of the project.

The request comes in response to information contained in only five of the 12 draft environmental reports that the project partners have submitted to the Federal Energy Regulatory Commission for review. The partnership, at the time of the submission, was led by ExxonMobil and included ConocoPhillips, BP and the state of Alaska.

More questions will be coming for the remaining seven resource reports that have been filed, said Keith Meyer, chief executive of the Alaska Gasline Development Corp. Meyer made his comments Tuesday in an informational meeting with reporters and other staff at Alaska Dispatch News.

The federal agency's requests for additional information are reasonable, given the project submitted 33,700 pages in the 12 reports, said Meyer.

He said he hopes to answer the questions early next year, using the state agency's staff of 22 employees. Part-time contractors can contribute if needed, he said.

By the middle of 2017, Meyer hopes to formally file the application with FERC, launching the process to create an environmental impact statement that would provide the public and permitting agencies with specific details about the project. A final impact statement would not greenlight the project, but would be a key step in helping agencies make permitting decisions.

The requests to Alaska LNG partnership, made by FERC in an Oct. 26 letter, seek more information on a wide range of topics, such as impacts from increased truck traffic during years of construction, mitigation plans for wetlands destruction and plans to protect birds. The letter includes comments from state agencies, such as the Alaska Department of Environmental Conservation, and federal agencies other than FERC, like the Environmental Protection Agency.

Larry Persily, oil and gas adviser to Kenai Peninsula Borough Mayor Mike Navarre, said there will be a lot of desk work involved in answering the questions, not fieldwork.

Persily said the request from FERC is not unusually large given the scope of the Alaska LNG project.

"We're talking a project crossing wetlands, mountains, rivers, permafrost — nothing in there shocked me or surprised me," he said of the letter from FERC. "It's still a lot of work to do, and of course, this addresses less than half of the reports."

Fieldwork has been wrapped up after four seasons of studies and after project partners have so far spent more than $500 million.

"I think they (the partners) know where the rivers and wetlands are, but the agencies are saying give us maps and plans," Persily said. "And (the partners) know how many tens of thousands of trucks will haul construction materials, but the agencies are saying, 'What's your plan to manage that?' "

The project is said to actually be three megaprojects, with a giant processing facility to remove naturally occurring carbon dioxide from North Slope natural gas for reinjection back underground, an 800-mile pipeline slicing down the state, and a facility in Nikiski to superchill the gas into a liquid so it can be shipped overseas in tankers to utilities in Asia.

The AGDC, a state agency, hopes to formally take the reins of the project early next year, a move that has sparked criticism over whether the state will face too big a financial risk. Meyer has said he hopes to secure long-term commitments from customers to underpin financing from investors looking for stable, reasonable returns. The agency plans to pursue federal tax-exempt status from the IRS to help lower costs.

Gov. Bill Walker, a supporter of a state-led venture who has traveled to Asia to pitch the project, said on Sept. 1 the state will know in a year whether the project can move forward. Without interest from potential customers, the state backs off, he said. The state would go ahead with the project only if it can obtain financing or investments for the gas line based on gas sales contracts, Walker has said.

Meyer said the state would not consider using the $54.4 billion Alaska Permanent Fund for the pipeline, including as a guarantee for loans.

So far, the administration has not announced any commitments from potential customers following the trips.

 

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