(Or, "Falling in Love With Our Own Molecules")
We received news from the BLM this morning that The Final EIS for the Alaska Stand Alone Gas Pipeline Project (ASAP) is open for public comment. The 30-day comment/review period begins on October 26, 2012, and ends on November 26, 2012. The Record of Decision on the proposed action will be issued after the public interest review is complete.
- EIS Not Yet Reality. Until a ‘Record of Decision’ is issued following the current 30 day comment period, the prize is still not locked in. So, parties will take a deep breath and await the final, final, final result following receipt and evaluation of comments. The EIS is granted for a specific project not for a hybrid or different project. So, anything different than the specifically proposed 24", 737 mile pipeline is not necessarily covered by the pending EIS adoption.
- Final EIS adoption is a requirement for gas pipeline construction but not a guarantee of construction.
- By the end of the 2012 3rd quarter, Governor Parnell had expected the producers, TransCanada and the ASAP sponsor, AGDC, to "complete discussions to examine consolidation prospects", and "to have selected a project concept and developed an associated work schedule with a timeline for completion."
- In a sponsor statement of his bill, HB 9, earlier this year, Chenault said, "Nearly two years ago, the Legislature passed House Bill 369 advancing an instate natural gas pipeline. Since that time, the Alaska Gasline Development Corporation has made tremendous progress developing a project along a solid timeline. It is imperative to maintain that momentum in pursuit of instate gas for Alaskans, while keeping open all options for participating in an aligned project. Committee Substitute for House Bill 9 (FIN) will refine a solid, early proposal into a plan. This legislation does not call for construction of an instate gas pipeline, but allows AGDC to advance a commercial project to that stage. The bill also provides AGDC the tools to be a strong, participating partner on behalf of Alaskans in a large-diameter export gasline project. Since HB 9 did not pass the Senate or become law, a number of expediting features it embraced are not in place to support the planning timeline.
- Even if the Legislature passes useful enabling legislation next session, will the producer/TransCanada consortium want to use the ASAP Route? If not, a new EIS will be required. Even if the same ASAP route is used, should a larger pipeline be desired, the FEDS will require a new or revised EIS approval.
- Selecting a project concept, as noted in the Governor’s linked page above, involves a high degree of cooperation and consensus:
- Will the majority of legislators — and leaders in critical positions — come together to expedite and support progress?
- Will private sector parties want to work with a government pipeline entity that could involve unknown, future regulatory, legislative and/or administrative complexities?
- Does anyone yet know what kind of pipeline will be proposed?
- Depending on composition of the gas in the pipeline, does anyone know how the Alaska Oil and Gas Conservation Commission will rule. That is, will AOGCC be convinced that extraction of gas is more valuable to the state and conserving to the resources than using natural gas and gas liquid injection to enhance oil recovery? Are we right to assume this big inch line will move all available ‘wet’ gas with AOGCC approval or some combination thereof. Without knowing the composition, how should the pipeline and conditioning facilities be correctly designed and properly financed?
- Will proponents want a 42" to 48" line from the ANS to tidewater in Cook Inlet (i.e. Beluga or Nikiski?) or to Valdez?
- If the big inch line goes to Valdez, what about Southcentral consumers? Will the southern section of ASAP’s project evolve from an ANS ‘bullet line’ to a Fairbanks ‘spur line’, moving gas from Interior Alaska to Southcentral? Will that be a separate project not involving producers/TransCanada? Will it involve a state subsidy? If so, will other parts of the state demand compensating subsidies? Would the new ASAP ‘spur line’ move gas to consumers and industries requiring gas liquids? This is a big deal, for if no liquids would be moved on the spur line from Fairbanks to Southcentral, a conditioning plant at Fairbanks would be required that would also produce pipeline quality residential gas for Fairbanks. Who would pay for the conditioning plant? Who will be paying for an expanded Fairbanks distribution system? How would development of this project affect Enstar’s investment into its CINGSA storage facility (Note: Scroll down to note Enstar’s presentation this Friday in Anchorage)? If CINGSA costs are paid by Southcentral consumers, how would consumer rates be affected when ANS spur line rates are added? Or will those be subsidized? And, at what cost? To whom?
- We observe that these questions are merely the tip of a big iceberg of a challenge for those drafted to meet the mandates of elected officials, but mercifully stop in deference to brevity.
- Natural Gas Shortage. Long before Anchorage Mayor Dan Sullivan’s Energy Task Force began educating Alaskans about the growing shortages of gas for industry, business, home heating and electric power generation, decision makers were aware of Cook Inlet’s declining supplies. The Regulatory Commission of Alaska failed to capture a unique window of opportunity for stabilizing both the supply and price of Cook Inlet Gas through 2016, as we recall here (i.e. costing Southcentral consumers as much as $1/2 billion or more in rates — to date — than the rejected Enstar/Marathon contract would have provided). Legislators have created incentives for Cook Inlet exploration and production. So far, no discoveries capable of offsetting the huge decline in both deliverability and supply have materialized. The CINGSA storage project will help once it is filled to capacity, hopefully by next fall. Delivery during the coldest months is a current threat that will be partially accommodated by CINGSA, but not in the long run. Soon, supplemental supplies will be needed from either the North Slope or LNG imports. Remember that while the CINGSA project helps with winter deliverability problems it cannot overcome overall supply shortages. Meanwhile, the Cook Inlet shortage is forcing Fairbanks entrepreneurs to look direct to Prudhoe Bay for their own unique supply of gas, by trucking liquefied natural gas (LNG) south on the dangerous Haul Road, at someone’s expense. Readers can see how this local gas shortage reality contributes to the complexity of the larger ANS gas pipeline concept challenge.
• November 2 – Colleen Starring, President, ENSTAR
• November 9 – Larry Persily, Federal Coordinator, Alaska Natural Gas Transportation Projects
• December 7 – John Barnes, Senior Vice President, Exploration & Production, Hilcorp Alaska, LLC
• December 14 – Lisa Parker, Government Relations Manager, Apache
Nov 11th, 2012 8:00 AM EST
The 124th Annual NARUC Meeting brings together all the major players in the utility sectors under one roof. Hear from experts on cyber security, hydraulic fracturing, new environmental rules, emergency response, and much, more more. Featured speakers include Maryland Gov. Martin O’Malley, Exelon Executive Vice President Mayo Shattuck III, Environmental Protection Agency Assistant Administrator for Air and Radiation Gina McCarthy, and members of the Federal Energy Regulatory Commission. In addition, the nation’s State utility commissioners will set new policies on numerous crucial issues facing the utility industries. You can’t miss this event! Your author will be there. -dh