|
ANGDA resolves EIS project description Authority’s board approves moving ahead with Beluga to Fairbanks gas line permitting work, exclusive agreement on propane project Kristen Nelson Petroleum News
The Alaska Natural Gas Development Authority, the U.S. Army Corps of Engineers and the Bureau of Land Management appear to have come to an agreement on a project description of ANGDA’s Beluga-to-Fairbanks gas pipeline project for its environmental impact statement, and on its authority to permit rights of way for the project.
At a Dec. 14 meeting the board discussed a revised project description and approved the authority of CEO Harold Heinze to speak for the board on the B2F gas pipeline project; it also authorized moving ahead with the authority’s propane project through solicitation of a partner or partners for development of a propane extraction facility.
ANGDA and the federal agencies had been at loggerheads over what one agency described as a moving target for the B2F project description in the authority’s EIS application and what another agency described as a question of ANGDA’s authority to permit a right of way for the line.
The B2F right of way crosses 265 miles of state land, 73 miles of BLM-managed federal land, 53 miles of Native land, 31 miles of federal military land and 25 miles of private land.
Serena Sweet, the Corps of Engineers manager for the EIS, also said at a Nov. 23 meeting that the description in ANGDA’s EIS application was at odds with how ANGDA was describing its proposal to the public, a concern to the corps as its scoping process is based on the project description it is given by the applicant.
Heinze said at the November meeting that the project was always more than just a line to Fairbanks — it was also storage for gas to serve Southcentral in times of high winter demand and would serve as a spur line to Southcentral from a North Slope line to market, once that mainline was built.
Revised project description A revised project description was provided to the agencies after workshops involving the ANGDA board, staff, contractors and the federal agencies.
The version available at the Dec. 14 meeting gave the following description of the project purpose: “Initially the B2F pipeline will deliver gas from Cook Inlet to the Copper Valley, Glennallen, Delta Junction and Fairbanks, and will provide gas storage for Southcentral use. The ultimate purpose of the B2F pipeline will be to serve as a spur pipeline to a major ANS gas pipeline, when one is built, to move ANS gas into Southcentral Alaska markets, with a connection at either Delta Junction or Glennallen.”
Deputy Commissioner of Revenue Marcia Davis said the agencies had concerns at the last board meeting — BLM over the authority for the right of way and the corps over concern about disclosures. The wording of the project description was reworked, she said, and sent to the federal agencies. Davis said that in addition to a finalized project description, Sweet also wanted a cover letter stating that this was the final project description.
Ron Dunton, BLM’s gas pipeline project manager for the Alaska Division of Lands, said that the agencies had seen the new wording and were confident with the purpose as described.
Heinze told the board he was concerned whether ANGDA remained an independent utility under the revised description. He said if the federal agencies determined that ANGDA did not have a project that makes sense without the mainline they wouldn’t let the authority proceed as an independent utility and its project would get thrown in with the big line.
“If we get into that trap it’s a bad trap,” he said, and would require that ANGDA get in line at the Federal Energy Regulatory Commission behind the big projects.
Davis said she talked with the FERC manager for big projects and was told that as long as ANGDA was not building a line for liquefied natural gas export it would not be subject to FERC jurisdiction.
Focus on flaws Board member Bill Jeffress asked if the corps or BLM had identified any other areas where the project wasn’t adequately described.
Dunton said the agencies were comfortable with the rewrite as far as the purpose and need went, but said the corps would do an in-depth project review.
Sweet said she was comfortable with what she’d heard but would need to see it in writing.
Board member Kate Lamal asked about sending a copy to Gene Therriault, Gov. Sean Parnell’s senior energy advisor, and Davis said a copy had been sent to Therriault.
Heinze said the board had legitimate concerns and said if the board was comfortable it would be appropriate for the board to tell ANGDA’s staff it could continue; if the board was uncomfortable there are other options, he said.
Davis said Heinze had an earlier resolution, and said she thought the board needed to “put a bow” on its agreement with the project description with a written resolution referencing the cover letter and the new description.
Dunton said the resolution is a BLM requirement; a resolution authorizing Heinze to act for the board is one of the things BLM asked for.
The four members of the board participating in the meeting voted unanimously on a resolution directing Heinze to act on behalf of the board regarding the B2F system.
Sweet said that the corps didn’t see any other major shortcomings in the project description but might need to talk to the EIS contractor about needed information.
Discussion with port authority At a Nov. 4 board meeting the board asked Heinze to meet with Bill Walker, project manager for the Alaska Gasline Port Authority, to discuss how the two organizations might cooperate on a project to bring propane off the North Slope, a project on which ANGDA has been working.
The port authority is involved in a project to produce liquefied natural gas on the North Slope; propane could be produced as a byproduct of the LNG project.
Heinze told the board Dec. 14 that he didn’t have enough information as a result of the telephone meeting Nov. 10 with the port authority to allow him to make a recommendation to the board. He said there is a confidential relationship among the port authority, Fairbanks Natural Gas and Golden Valley Electric Association and said if that relationship is finalized he believes ANGDA needs to advance its project outside GVEA, and define the propane project more independently.
Board Vice Chairman Don Benson asked Heinze about the administration’s request, through Gene Therriault, that ANGDA get involved in some way with propane from FNG.
Heinze said he would suggest that ANGDA “be very careful in associating ourselves with a project we know nothing about” and said ANGDA needs more information, information which it hasn’t received.
He also said he didn’t believe there was anything ANGDA could do to advance the LNG project.
The port authority became involved in North Slope facilities development when it announced Sept. 29 that it intended to buy Fairbanks Natural Gas and develop a North Slope liquefaction plant that would produce LNG to be trucked to Fairbanks, a project FNG has been working on since 2006. FNG currently liquefies Cook Inlet natural gas and trucks it to Fairbanks, but has had problems with it supplies of natural gas since Aurora Gas terminated a contract in 2006. In 2008 FNG contracted with ExxonMobil for up to 10 billion cubic feet of natural gas a year from the North Slope.
In April FNG President Dan Britton told the ANGDA board that its plans for a propane facility on the North Slope were undercutting FNG’s attempts to sell North Slope LNG to Interior markets.
Both FNG and ANGDA have looked to Golden Valley Electric Association as a customer — for LNG in the case of FNG and for propane in the case of ANGDA.
Heinze told the board that if ANGDA was in the past creating a problem for the port authority and FNG with GVEA, “we’ve backed away from that.”
He said he was unable to define any advantage of putting the project together — probably it would be the reverse.
Heinze and Mary Ann Pease, ANGDA’s propane consultant, participated in the Nov. 10 meeting, as did Therriault, Walker and Britton, along with other port authority representatives.
Propane partner sought The board passed a resolution authorizing competitive solicitation of a private sector partner, or team of partners, to develop a North Slope propane extraction facility. The board said ANGDA may commit to an exclusive relationship with the private partner during the pre-final development and operations contract phase of the propane extraction project, not to last longer than 18 months.
The resolution states that ANGDA may negotiate exclusively with the competitively selected private partner to reach agreement on the terms of a development and operations contract.
The expectation, the resolution said, is that the 18-month period will result in a development and operations contract between ANGDA and private partners to advance the propane extraction beyond the contract phase and into the next step.
The board retained authority to review and approve any final contract prior to execution.
Assistant Attorney General Jim Cantor said the resolution allows ANGDA to deal with one private party exclusively, reassuring that party that if it spends money moving to the next step ANGDA won’t go deal with other entities.
Optimization of offtake
ANGDA has been looking at a facility which would produce 2,500 barrels per day of propane and Pease said a reduction of 2,000 bpd has a potential to increase costs by 12 percent or more. (The 500-bpd difference is the amount of propane FNG said it could produce as a byproduct of its proposed LNG facility.)
The cost of the facility could be reduced significantly by finding a more optimal location, Pease said.
Heinze said discussions have centered on taking gas from the discharge side of the Prudhoe Bay Central Gas Facility, where the gas stream is the leanest. The input stream, by comparison, has almost twice the propane and there are streams where the amount of propane would be 10 times as high. He said the comparison is 2 percent propane in the stream coming out of the plant; 3.5 to 4 percent in the input stream; and more than 20 percent propane in the miscible injection stream.
ANGDA is working with its producer at Prudhoe Bay on taking gas from a location with a higher concentration of propane.
The cost numbers for the facility have gone up since ANGDA started working on the concept in June, Heinze said. But what’s occurring now is the other side of the curve, where you drive cost down by optimization, he said: That stream, with 10 times the propane, would drive the cost down significantly.
| 