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September 2008

Vol. 13, No. 36 Week of September 07, 2008

FERC’s 6th gas pipeline report positive

Cites ‘substantial progress’ on development of Alaska gas pipeline over past 6 months; still concerned over multiple projects

Kristen Nelson

Petroleum News

As FERC issued its sixth semiannual report to Congress on progress on an Alaska gas pipeline Aug. 29, Federal Energy Regulatory Commission Chairman Joseph Kelliher called progress “substantial” but said the agency was still concerned about the challenge of reviewing multiple applications.

“We have seen substantial progress on development of the Alaska pipeline over the past six months, more progress than in any other reporting period,” Kelliher said in a statement accompanying the report. “The competition for the project is a positive indication of serious interest by major industry players. This should all be resolved, ultimately, in the energy and financial marketplaces, and FERC stands ready to act once that takes place.”

FERC is concerned about handling multiple applications for a certificate for an Alaska gas pipeline project.

Kelliher said reviewing multiple projects “would greatly challenge the Commission staff, the other agencies on the federal interagency team, and state agencies. Clearly, everyone must work together with the shared goal of getting a project built.”

FERC said in its report that it is neutral and “has no basis to prefer one project over another.”

It suggested, however, that its “pre-filing process, which has now begun, may be the best forum” for the competing projects — TransCanada Alaska, Denali and liquefied natural gas sponsors “and all other stakeholders to work together under the FERC staff’s guidance to move forward with a project of this magnitude.”

FERC noted the formation by BP and ConocoPhillips of the Denali pipeline project; the announcement by Alaska Gov. Sarah Palin that TransCanada Alaska would be the preferred applicant for a license under the Alaska Gasline Inducement Act — and the approval of that license by the Alaska Legislature; and the addition of new partners by the Alaska Gasline Port Authority and the State of Alaska’s announcement that it would assist the port authority with developing its LNG project.

Denali doing gap analysis

Denali began the pre-filing process for a FERC certificate of convenience and necessity in June. That request was approved by FERC’s director of the Office of Energy Projects, the commission said, enabling Denali and FERC staff to begin exchanging information and coordinating activities.

FERC staff issued a data request to Denali July 25, seeking information on the content, timing and results of Denali’s ongoing resource data-gap analysis, an assessment of relevant existing information to identify “environmental resource data gaps and determine which studies, tasks, and other work are needed to enable Denali to submit complete environmental resource reports” to FERC in support of its certificate application.

FERC said Denali’s data-gap analysis began Aug. 1 and is expected to be complete by the end of the year “with the development of a summary report.” That report will be reviewed by FERC staff which will provide direction and guidance “so that data collection activities accurately target the requirements of the environmental resource reports needed for Denali’s FERC application.”

TransCanada hasn’t filed

FERC said TransCanada Alaska hasn’t begun the pre-filing process, but has briefed FERC staff on its Alaska Gasline Inducement Act proposal. The commission said its staff believes that TransCanada Alaska should begin the pre-filing process before it does any substantial field work “to ensure that the field work is performed in a manner to meet the Commission’s environmental requirements.”

FERC said that while such a pre-filing request would receive its own docket number, “many of the staff’s pre-filing activities for TC Alaska could be combined with the existing pre-filing activities for Denali. The proponents of the two projects also might benefit by coordinating some of their pre-filing activities.”

Authority over LNG

FERC also reviewed other projects.

The Alaska Gasline Port Authority, proposing a liquefied natural gas project, acquired Mitsubishi Corp. as a co-sponsor in June, and Sempra LNG in July, the commission said.

Gov. Palin signed an administrative order in August directing state agencies to continue assisting LNG project sponsors such as the port authority in the feasibility and permitting process.

FERC said it would have regulatory jurisdiction over any Alaska LNG project.

In July the governor announced the formation of a public-private partnership among the Alaska Natural Gas Development Authority, Enstar Natural Gas Co. and the State of Alaska to consider building the first phase of an intrastate pipeline to move Alaska gas to Alaskans within the next five years.






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