Cook Inlet gas leak shows why Alaska LNG route must end in Valdez, group says

A municipal-led gas line group says that a recent hard-to-fix pipeline leak in Cook Inlet shows that Alaska's gas-export project should not be allowed to cross under the Inlet to Nikiski but instead end on land in Valdez.

The Alaska Gasline Port Authority told federal regulators Monday that Hilcorp Alaska's problems over the winter support the argument that it would be a mistake to end the proposed 800-mile pipeline in Nikiski along the Inlet.

"It proves leaks in pipelines can happen and it's a lot better to get to them quickly," Valdez Mayor Ruth Knight said Thursday.

The port authority, formed by Valdez, the Fairbanks North Star Borough and the North Slope Borough in 1999 to advocate for a gas line, told the Federal Energy Regulatory Commission in February that extending the pipeline to Valdez, along the utility corridor already used by the trans-Alaska oil pipeline, would save money and better protect the environment.

The port authority's filing this week adds to that argument.

The state, through the Alaska Gasline Development Corp., applied Monday for a FERC permit to build the Alaska LNG project. Under the plan, natural gas would be shipped by pipeline from the North Slope to Nikiski, where it would be converted into liquefied natural gas and exported.

The project cost is estimated at $40 billion to $45 billion. The 42-inch pipeline would cross Cook Inlet for almost 30 miles, from a point north of Tyonek before reaching Nikiski.

The regulatory commission recently asked AGDC to provide more information about the Valdez option.

The port authority says in its recent argument that a Hilcorp helicopter discovered the oil company's gas leak Feb. 7. The undersea, 8-inch pipeline wasn't patched until April 13 because sea ice and strong tides made conditions unsafe for repair divers tethered to surface boats.

Hilcorp's inability to fix the leaking line for months illustrates the risks of sending the much larger Alaska LNG pipeline across the Inlet to Nikiski, the group said.

The 17-year-old port authority is now run by the city of Valdez and the Fairbanks borough. It has pursued a gas-export project with the pipeline to Valdez to create jobs and revenue for the state.

A pipeline to Valdez would not require a subsea extension and would avoid "any issues with seafloor pipelines like those recently made plain in Cook Inlet," the group said. The port at Valdez "provides ice-free conditions year-round and relatively minor tides."

AGDC officials did not respond to requests for comment.

Larry Persily, oil and gas adviser to Mayor Mike Navarre of the Kenai Peninsula Borough, which includes Nikiski, said the authority's comparison is off-base. Hilcorp's gas line was installed in the 1960s, when regulatory standards were lower than they are today, he said.

The Alaska LNG project has planned to coat the large gas pipeline with about 6 inches of protective concrete for its Cook Inlet crossing, Persily said. The gas pipeline that leaked was coated with a single inch of concrete.

"There would be better construction, better materials, and tougher oversight on construction and operation," Persily said.

He said it's unlikely federal regulators would license the Alaska LNG project if the pipeline could not quickly be repaired year-round, whether there was sea ice or not, he said.

Port authority chairman Dave Dengel, who signed the filing along with Knight, the Valdez mayor, said he's concerned about huge expenses associated with repairs of the Alaska LNG pipeline if it's built in Cook Inlet.

"I don't think everyone has factored in all the costs" of the project, he said.