State signs on to cover costs of FERC-approved contractor for EIS.

• Author: Persily, Larry
• Position: OIL & GAS

As part of taking over sole responsibility for the Alaska LNG project, the state has signed an agreement to cover the costs of the contractor that will assist federal regulators in preparation of the project's environmental impact statement (EIS).

The Federal Energy Regulatory Commission (FERC) selects a third-party contractor to help with each project's EIS and directs the contractor's work. Project applicants pay all of the contractor's fees and expenses.

In other news of the state-led venture, Alaska Governor Bill Walker has sent a thirty-two-page packet to President Donald Trump, proposing multiple congressional and executive branch actions intended to lower the cost, limit federal oversight, and ease the regulatory burden on the Alaska project. Among the requests is a federal loan guarantee to cover almost the entire cost of the $45 billion development.

Regardless of the outcome of the governor's request to the president, the environmental review process will continue at FERC. ERM, a forty-year-old global firm with almost $900 million in revenues last year, with offices in Alaska and thirty-five other states, has been assisting FERC with preparations for the Alaska project's EIS. Work on the actual EIS would begin after the project sponsor files a complete application with federal regulators.

The state agency in charge of the project, the Alaska Gasline Development Corporation (AGDC), has said it is working toward filing the application with FERC in June for the $45 billion development to move North Slope gas through an 804-mile pipeline to a liquefaction plant and marine terminal in Nikiski, with LNG (liquefied natural gas) export sales to Asian markets.

When FERC selected the EIS contractor in 2014, the project applicants were North Slope oil and gas producers ExxonMobil, BP, and ConocoPhillips, along with the state of Alaska as a 25 percent partner. The state paid its proportional share of the costs. Then last year, the state started to take over full management of the project after the companies opted not to proceed to the costly next stage of development and FERC application due to weak market conditions amid a global oversupply of LNG.

Contractor Expenses Will Depend on State Effort

FERC had requested that AGDC negotiate an agreement with ERM for the state to take over full responsibility for the contract. The state corporation on February 23 signed a memorandum of understanding with FERC and ERM and then separately signed a...