Regulators continue review of LNG project reports.

• Author: Persily, Larry
• Position: SPECIAL SECTION: Arctic Oil & Gas

This update, provided by the Kenai Peninsula Borough mayor's office, is part of an ongoing effort to help keep the public informed about the Alaska LNG project.

Pending any possible changes in the project's schedule or work plans under state leadership, federal regulators are continuing to review, ask questions and suggest improvements to reduce the environmental impacts of Alaska LNG's proposed construction and operations plans.

More than thirty state and federal regulatory agency personnel met for an all-day workshop in Anchorage on August 25 with Federal Energy Regulatory Commission staff and the third-party contractor that would help draft the project's federal environmental impact statement. The meeting coincided--coincidentally, not intentionally --with a state legislative committee meeting a few blocks away at which lawmakers were told the state plans to take over the project from its producer partners ExxonMobil, BP, and ConocoPhillips.

After four years of work, including two years under the FERC pre-filing process, and more than half-a-billion dollars in spending, Alaska LNG a month ago submitted its second draft "resource reports," providing detailed design, environmental and logistics planning and impacts of the proposed $45 billion to $50 billion project to move North Slope natural gas more than 800 miles to a liquefaction plant and marine terminal in Nikiski for export.

State and federal regulatory agencies are reviewing the reports--ten in all, totaling thousands of pages--looking for data gaps and providing recommendations to improve the project by reducing its environmental effects.

Agency comments are due to FERC by September 26. The purpose of the draft reports during a project's pre-file status is to reduce the need for additional data requests after final resource reports are filed with a project application, said Jim Martin, FERC's environmental project manager for Alaska LNG.

The EIS contractor August 25 asked state and federal agencies to tell FERC what works in the project plans, what doesn't work, what could be improved, and what are considered best practices for construction in Alaska.

Not covered at the workshop was Report No. 11, Safety and Reliability, which Alaska LNG submitted to FERC on September 1.

State Takeover Possible

Alaska LNG has been working to prepare final resource reports for submission with a complete application to FERC, possibly early next year. The state's project development agency, the Alaska Gasline Development Corp., told legislators that it plans to take over the leadership role and submit an application in its name to FERC in early January 2017, depending on how much more work is required after agencies send in their comments on the second draft resource reports.

The North Slope producer partners this year have expressed growing concerns over the weak global market for new LNG supplies and favored slowing down development spending on the Alaska venture. After ExxonMobil, BP and ConocoPhillips told state officials the companies were not inclined to proceed next year with a complete application to FERC and expensive final engineering and design work--at an estimated cost of $1 billion to $2 billion in additional spending the governor decided Alaska would take the lead to keep the project moving on a faster schedule. The governor wants to see if state control could reduce the project's financing costs and avoid federal taxation.

A successful state takeover would require several agreements between all parties:

* Designating the state as the sole applicant with FERC, (The pre-file currently is in the names of the four individual partners.)

* Transferring or assigning Alaska LNG's federal export authorization to the state. (The state was not a party to the 2015 Department of Energy authorization approved for ExxonMobil, BP, and ConocoPhillips.)

* Contracting or otherwise making available North Slope gas for the project...