9-12-18 Special Commentary For Oil & Gas Decision Makers, Custodians of Shareholder Wealth

FERC approves Kenai Borough as intervenor in Alaska LNG

By Larry Persily
Sept. 12, 2018

All three Alaska municipalities vying for a multibillion-dollar natural gas liquefaction plant and marine terminal are now intervenors in the federal regulatory process, giving each the legal right to challenge Federal Energy Regulatory Commission (FERC) decisions on the proposed Alaska LNG project. …  Scroll down for Persily’s full story below (Larry Persily, Northern Gas Pipelines photo by Dave Harbour)

Our comment: In Alaska only the oil & gas industry must pay a special, state-wide property tax — in addition to a production tax, a corporate income tax and a royalty payment.  The state transfers the tax from a proportionate share of oil & gas property within a local municipality to that local government.  Therefore, local governments can be attracted to having oil & gas activity for the jobs, tax revenue and general economic benefits offered.  -dh



Oh, Canada!

Carolyn Bennett vows government ‘will do better’ on duty to consult following Trans Mountain …  CBC.ca … the third now on life support,” he said, referring to the Mackenzie Valley natural-gas pipeline in 2006 and the Northern Gateway oil pipeline in 2016.

Who says the oilsands is history? Colossal Fort Hills mine could be blueprint for survival Calgary Herald   Calgary Herald Homepage … Pipes leading to a processing unit at Suncor Fort Hills facility in Fort McMurray Alta, which opened on Monday. … In a forest clearing roughly the size of Cleveland, building-sized trucks dump … While the Calgary-based company doesn’t plan to invest in a new mine for at ..

Varcoe: Oilpatch ‘boiling over’ as energy CEOs tackle pipeline impasse with premier Calgary Herald  It was near the end of an hour-long meeting Thursday on the 21st floor of a downtown Calgary office tower when junior oil producer Doug Bartole …

Bell: Jason Kenney skewers Justin Trudeau  Calgary Herald “If Justin Trudeau is concerned about the dumbing-down of politics, that … For Kenney, Trudeau is no supporter of pipelines or the oilpatch or those …

Federal minister takes conciliatory tone on carbon pricing in the face of pushback from provinces Calgary Herald  Intergovernmental Affairs Minister Dominic LeBlanc wouldn’t say which provinces missed the deadline, but said ‘some very positive and very effective …


Oh, US!

by

Dave Harbour

As climate change looms large for the oil industry, what could that mean for Alaska? This spring, ExxonMobil held a meeting with investors.  (See our editorial addressing this issueHere’s a detailed analysis.  And here’s one more)


We can understand a company becoming politically neutral on the issue of “climate change”; but supporting a carbon tax — as ExxonMobil has — redistributes more wealth to anti-fossil fuel government and civilian constituencies and gains no ‘creds’ for industry.  It is a suicidal, anti-shareholder blunder.

Industry should by now know not to provide any kind of support or funding to anti-fossil organizations/activists.  Why?  Their goal is to kill capitalism and the fossil businesses consisting of primarily conservative voters.  Climate statutes and regulation make more jobs and redistribute more money to liberal lawmakers and regulators and restrict free enterprise advocates and prosperity. 

Please remember recent headlines featuring attacks on big Canadian and U.S. oil and gas pipelines!  Please do not forget how vigorously activists have and continue to oppose and kill pipelines, thus severing the link between production and markets. 

Quit being naive, industry leaders! Some of you are making decisions that are like embedded time bombs designed to destroy your businesses.  Alaska’s current governor has devised a way to put control of natural resource permitting into the hands of a “cabal” of some 230 “sovereign” tribes and local governments, heavily influenced by environmental activists. 

Earlier this summer we asked the question, Will Alaskans Let A CABAL Kill Their Economy?  Did Alaska’s great oil companies heed the warning even as they now deal with a dangerous anti-development voters initiative scheduled for the November Ballot?  We hope so, for even if a new governor nixes this climate change initiative, the activists will continue looking for another way to destroy fossil businesses.  Remember: social activists and anarchists never compromise vs. traditional citizens who ALWAYS tend to compromise.  This process is like slowly raising the temperature of water in the pot as the politically correct frog is slowly cooked.

Fossil businesses are the foundation of American and Alaskan economies.  The least such companies should do for their country and shareholders is stop contributing money to activist and non-profit interests intent on their destruction and on the downfall of freedom itself.    -dh  References: It’s Time to Stop Investing in New Oil and Gas Pipelines – Scientific …World Bank to end financial support for oil and gas extraction …

-end-



Alaska LNG project gets fast-tracked by regulators, environmental groups oppose  KTUU.com The Alaska Gasline Development Corporation says that, while it’s a good sign that Alaska LNG is advancing, the one month advance won’t impact the …

Another Big Step For Alaska LNG  COMPRESSORtech2  The Alaska LNG Project has taken a second major step as it announced that ExxonMobil Alaska Production Inc. (ExxonMobil) and Alaska Gasline 

ExxonMobil signs gasline agreements with stateAlaskajournal.com The announcement with ExxonMobil means ConocoPhillips is the only major North Slope producer to not yet sign a preliminary gas deal with AGDC.

US federal authorities streamline LNG project review process LNG World Shipping US federal authorities streamline LNG project review process … LNG, Jacksonville Eagle, Annova LNG, Plaquemines, Jordan Cove and Alaska LNG


Continued from above....

FERC approves Kenai Borough as intervenor in Alaska LNG
 

By Larry Persily paper@alaskan.com
Sept. 12, 2018

Larry Persily. Northern Gas Pipelines photo by Dave Harbour

All three Alaska municipalities vying for a multibillion-dollar natural gas liquefaction plant and marine terminal are now intervenors in the federal regulatory process, giving each the legal right to challenge Federal Energy Regulatory Commission (FERC) decisions on the proposed Alaska LNG project.

 

FERC on Sept. 11 approved the Kenai Peninsula Borough’s late motion to intervene in the proceedings. The commission in February approved a late motion to intervene from the Matanuska-Susitna Borough. The city of Valdez also is an intervenor, after it filed its motion on time in May 2017.

 

The Alaska Gasline Development Corp. (AGDC), which is directing the state-led project, filed its application with FERC in April 2017, starting the lengthy safety and environmental review that is scheduled to reach a draft environmental impact statement in February 2019.

 

The development team for the proposed $43 billion North Slope gas pipeline and Southcentral Alaska gas liquefaction plant, after considering more than two dozen possible locations, in 2013 settled on Nikiski, in the Kenai Borough, as its preferred site for the LNG plant and marine terminal. The Matanuska-Susitna Borough believes its property at Port MacKenzie would be a better location, just as Valdez has long advocated it would be the best site for the development that would cover hundreds of acres and create thousands of construction jobs and hundreds of permanent positions.

 

Only parties to a proceeding have the right to request a rehearing of a FERC order and to challenge a final commission order in federal court.

 

In its Aug. 10 motion to intervene, the Kenai Borough said it filed with FERC to protect its interests against the Matanuska-Susitna Borough’s advocacy of Port MacKenzie.“Siting the Alaska LNG project within the Mat-Su Borough would be to the detriment and prejudice to the citizens and businesses of the Kenai Peninsula Borough,” said the Kenai Borough’s motion to FERC.

 

“Right now we have Valdez and Mat-Su hemming and hawing for this project, and they’re intervenors,” John Quick, the mayor’s chief of staff, told the Kenai Borough’s advisory committee on the project Aug. 6. “I think this will put us in a better position to have a bigger voice from the borough and do everything we can to make sure this project lands in Nikiski.”

 

All three sites would provide year-round access for LNG carriers to load up for deliveries to overseas buyers. Nikiski, on the eastern shore of Cook Inlet, is about 65 air miles southwest of Port MacKenzie at the upper end of the inlet. Valdez, about 170 miles east of Nikiski, in Prince William Sound, is home to the trans-Alaska oil pipeline and its marine terminal.

 

Valdez for decades has advocated for construction of a gas pipeline roughly along the oil line right-of-way to an LNG project in the community that is heavily dependent on property tax revenue from the oil terminal. The Matanuska-Susitna Borough has long promoted industrial development at its financially ailing port across Knik Arm from Anchorage, in recent years showing strong interest in attracting an LNG plant to the site.

 

Alaska LNG’s preferred site in Nikiski is across the road from the state’s largest oil refinery, which is next door to a dormant, small LNG plant that was operated by ConocoPhillips. The plant loaded its last export cargo in 2015 and was sold earlier this year to Andeavor which, a few months later, was purchased by Marathon Petroleum. In the same neighborhood is a large-scale fertilizer manufacturing plant that closed in 2007 due to a lack of affordable, long-term gas supply.

 

There are multiple reasons why Port MacKenzie is not the best location, AGDC, which is leading the state-financed development push, reported to FERC in July. Federal regulators had instructed the state team to specifically review the port location.

 

A week after AGDC’s filing, the Matanuska-Susitna Borough told FERC it had “identified several aspects of AGDC’s response with which it disagrees,” and said it would file detailed information at a later date.

 

Though the Matanuska-Susitna Borough did not object to the Kenai Borough’s late motion to intervene, it did chide the borough for taking so long to file its motion and suggested the Kenai Borough already has AGDC on its side. “In general, it appears to the Matanuska-Susitna Borough that AGDC is making every effort to support an LNG terminal location in the Kenai Peninsula Borough,” the Matanuska-Susitna Borough said in its Sept. 5 filing with FERC. “It appears that the Kenai Peninsula Borough’s interests with respect to that location (Nikiski) are being well represented by AGDC.”

 

Regardless of intervenor status and filings in support of specific communities, federal law requires the FERC-led environmental impact statement to consider alternatives for the LNG plant site, pipeline route, waterway crossings and other project decisions — all focused on finding the “least environmentally damaging practicable alternative.”

 

An intervenor’s opportunities for input during preparation of the EIS are pretty much the same as for anyone else — file comments with FERC to put issues, questions and objections on the record. An intervenor does not gain any additional access to the EIS preparation and review.

 

“The Matanuska-Susitna Borough seeks only a full, fair and honest evaluation of the actual site at Port MacKenzie,” the borough said in its Sept. 5 filing with FERC.

 

“Ultimately, the Kenai Peninsula Borough motion highlights the importance of the commission ensuring that all interests, including the general public’s, are thoroughly considered in evaluating AGDC’s application,” the Matanuska-Susitna Borough told FERC. “This standard cannot be met until AGDC provides a thorough and accurate analysis of Port MacKenzie as an alternative location for the Alaska LNG project.”

 

In addition to the three competing municipalities, other intervenors in the FERC proceeding are North Slope oil and gas producers ExxonMobil, BP and ConocoPhillips; Alyeska Pipeline Service Co., which operates the trans-Alaska oil pipeline; the Chickaloon Native Village Traditional Council (the tribe said the pipeline route “overlaps with the tribe’s traditional and customary use area”); and the Sierra Club, Center for Biological Diversity and Northern Alaska Environmental Center.

 

The proposed gas pipeline would cross the oil line at multiple locations and come within 200 feet of the oil pipe at 17 locations, raising safety and security issues that Alyeska told FERC last year warrant its participation in the proceedings.

 

FERC’s draft EIS for the project is scheduled for release in February 2019, with a final EIS in November 2019 and a commission vote on the project application in February 2020.

 

While working with federal regulators, the state-led project team continues its negotiations to strike deals to buy gas from all three major North Slope producers, find customers for the LNG that the AGDC terminal would produce, and line up investors and lenders. AGDC is looking at going on the road to visit with potential investors late this year and early next year. The state corporation is working off past legislative appropriations but could need new money next year to continue with its permitting, design, commercial and financial efforts.

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About the Author:

Dave Harbour, publisher of Northern Gas Pipelines, is a former Chairman of the Regulatory Commission of Alaska, a Commissioner Emeritus of NARUC, NARUC's Official Representative to IOGCC and Vice Chairman of NARUC's Gas Committee. He served as Gas Committee Chairman of the Western Conference of Public Service Commissioners. He also served as commissioner of the Anchorage Bicentennial Commission and the Anchorage Heritage Land Bank Commission.He earned a Bachelor of Arts Degree: English, at Colorado State University, a Master of Science Degree: Communications-Journalism at Murray State University and graduated from Utility Regulatory School for Commissioners at Michigan State University. He served as a Vice President for Communications and Public Affairs at Alaska Pacific University, taught bank marketing classes at the University of Alaska and was an English teacher at Los Alamos High School.Harbour served in ranks of Private - Captain during a 4-year assignment with the Army in Korea, Idaho, Georgia and Fort Meade and received the Meritorious Service Medal among other commendations.Harbour is also a past Chairman of the Alaska Council on Economic Education, the Alaska Oil & Gas Association Government Affairs Committee, the Anchorage Chamber of Commerce, the Export Council of Alaska and the Department of Commerce's District Export Council. He is a past President of the Alaska Press Club, American Bald Eagle Foundation, Consumer Energy Alliance-Alaska and Common Sense for Alaska.Harbour was instrumental in founding the American Bald Eagle Research Institute (UAS), the Alaska Support Industry Alliance, the Downtown Anchorage Business Partnership, and Arctic Power.He also served as CEO of several small Alaska organizations, including the Anchorage Parking Authority and Action Security, Inc. Harbour is also Chairman Emeritus of the Alaska Oil & Gas Congress.Harbour's wife, Nancy, is a professional, performing arts administrator and his three boys, Todd, Benjamin and William work in the fields of environmental management, energy marketing and medicine.