Persily Confirms His "Candid" Credentials - Feds Want Complete ANWR Lockup - McLeod Urges Federal Support

Alaska State Senate Resouces Meeting Today: Alaska Stand Alone Gas Pipeline

Fairbanks News Miner Editorial re: Feds Want To Lock Up ANWR’s 1002 Area. Our Comment: We believe the Alaska National Interest Lands Conservation Act (ANILCA) which created the 1002 area as an oil and gas province violated the Alaska Constititution and Statehood Act. The wild and distructive actions of the U.S. Fish and Wildlife Service and its Salazar/Obama masters will contribute to the dismantlement of the US economy and put one more nail into the coffin of Alaska’s economy–and a 50-year statehood experiment. ANWR, NPR-A and OCS are three of the four possibilities for sustaining Alaska’s economic lifeline, the Trans Alaska Pipeline System (TAPS)…and the Obama-Salazar-EnviroExtremist cabal has blocked energy development in all of those areas. Alaska’s economic survival is truly at stake and, ironically, the feds will not protect any wildlife values by expanding ANWR wilderness designations, since exploration would occur in the winter months when migrating species are absent. Alaskans should prepare for upcoming hearings and here’s how. (See our 5-11-10 ANWR Hearing Report) -dh

Note from reader: Big THANK YOU for —as ever—keeping Alaskans up to date on ANWR and the new public comment opportunities. Keep up the good work! -AVR

NWT’s Bob Mcleod (NGP Photo) urges federal support for Mackenzie Valley Natural Gas Pipeline Project.

Alaska Gas Pipeline Report and Commentary

(See Patti Eppler’s thorough gas pipeline status report in today’s Alaska Dispatch)

Dave Harbour

Friday, the Federal Coordinator of the Alaska Gas Pipeline project to be, told members of Commonwealth North that the Alaska Gasline Inducement Act (AGIA), designed to provide a $500 million incentive, was never designed to produce a pipeline. The Coordinator, Larry Persily (NGP photo) said citizens misunderstood or were misled if they believed incentive legislation could force a pipeline into existence, "AGIA won’t get you a pipeline," he said, "AGIA gets you permits…."

Your author raised the issue of fiscal certainty for those who might desire to invest in the $40 billion project. Persily agreed that the investors could not move forward without fiscal certainty. Your author asked how FERC could issue a certificate if project proponents lacked a financing plan which would require fiscal certainty. He responded that the 2004 Act does not require FERC to evaluate a financing plan but to meet an expedited time deadline. The Act presumes the project to be in the public interest. A review of the state’s analysis of the 2004 act, produces an understanding that the FERC is under heavy obligation to produce project approvals within 20 months of the filing of a "complete" application, assuming lack of a financing plan does not make the application "incomplete" (See Persily’s PowerPoint slides here). (See Bill McAllister’s Channel 11 Television report here. KTVA Photo-Left). Persily added that the Federal Coordinator has the authority to null conditions imposed by any permitting agency which may seem to the Coordinator excessive.

If it is true that the Alaska Natural Gas Transportation System (ANGTS) applicant to FERC will not be required to have approval of a financing plan* to achieve project certification, one line of rationale for an applicant could be:

1. A secure, inviting investment climate is required to induce all significant investments in the state, particularly one on the order of $40 billion.

2. Alaska is an untrustworthy sovereign that has created an insecure, uninviting investment climate for large scale oil and gas development.

3. Assuming FERC does not require approval of a financing plan* to issue a certificate…,

4. …the project management can obtain a FERC certificate then approach the state, saying, "our shareholders will not permit us to act upon the certificate and make this magnitude of investment absent a good faith, fiscal certainty guarantee by the State of Alaska, as follows (i.e. what follows, then, would be the fiscal certainty guarantees required by the investors {and shippers} which would, in turn, require statutory or constitutional approvals.) The state would either provide the necessary guarantees, or the investors would be forced to suspend plans for construction of the ANGTS.

Further observation: This strategy is in no way devious. Beginning a decade ago, the producers have consistently told Alaskans that fiscal certainty would be required before the project could be finally sanctioned by investors. One doesn’t just bury a $40 billion pipe into the ground and hope politicians don’t decide to increase costs through more predatory taxation and regulation. No, one can’t pick up a pipeline if the state becomes unreasonable, and go home. Any prudent investor would require guarantees. As to timing, one could conclude that it would be irrational now to insist upon ‘fiscal certainty’ before filing a complete application with the FERC. Annoying controversy would accompany the application process. No…better to just hunker down, take the $500 million and AGIA reimbursements, successfully file and defend a complete application, then upon its approval raise the fiscal certainty subject. Although, what a credit it would be to elected leaders to take the initiative now: earnestly seek to discover the ingredients of ‘fiscal certainty’ and begin to create that certainty now, before it is absolutely needed for a pipeline! Ironically, creating the certainty now might even increase the liklihood of a gas pipeline if it also improved the investment climate leading to more oil and gas exploration and development earlier…rather than later.

Persily said it best: "You have to have fiscal terms and if you don’t you have no project."

*This whole financing plan discussion could very well revolve around how the FERC and applicant define the financial information required to be submitted to FERC in support of an application.

Persily pointed out that the FERC is moving ahead to determine the perameters of an anticipated project Environmental Impact Statement (EIS). His website, www.arcticgas.gov, describes a scoping process that was triggered by an August 5 FERC notice in the Federal Register.

Your author made reference in the meeting to the 6% annual decline in production and the Trans Alaska Pipeline System (TAPS) CEO’s concern about the potential for an unanticipated winter pipeline shutdown. "Were that to happen and the pipeline to permanently cease operations would the producers, in your opinion, operate the North Slope production area just to produce gas for a gas pipeline?" Persily noted that while an operating gas line will "do as much as anything to get more oil into TAPS…you need the oil to carry the fixed cost of operating the North Slope fields." He observed that it is expensive to operate Arctic oil fields and that, "gas will not do it alone."

Finally, Persily addressed citizen expectations. He said it is unreasonable for, "Alaskans to expect to get filthy, stinking rich off of a natural gas pipeline. But, with reasonable expectations," he said, "jobs, revenue, and an instate gas spur line can be expected."

Event Photos: