Federal coordinator’s office in question

President removes funding from 2015 budget; Begich introduces bill to extend role of facilitating North Slope gas pipeline

Alan Bailey

Petroleum News

President Barack Obama, in his budget for the 2015 financial year, has proposed eliminating federal funding for the Office of the Federal Coordinator for an Alaska gas pipeline. The federal coordinator office was established in 2004 to coordinate the federal permitting of a major natural gas pipeline from the North Slope to the Lower 48. That legislation also established a loan guarantee for funding of pipeline construction.

Since the passage of the 2004 act the concept of building a pipeline to the Lower 48 has been abandoned, its viability destroyed by the emergence of cheap North American shale gas. Plans are now focused on the possible export of North Slope gas to Asia as liquefied natural gas.

But Sen. Mark Begich, D-Alaska, sees a continuing need for the federal coordinator role and has introduced a bill to Congress to extend the provisions of the 2004 act to an all-Alaska liquefied natural gas export project, to enable the coordination of the permitting conducted by the 22 federal agencies likely to be involved in the massive LNG project.

“Recent events in Ukraine show just how delicate the balance can be between supplier and consumer,” Begich said in a March 7 press release announcing his proposed bill. “Alaska has trillions of cubic feet of natural gas both onshore and off. With these massive reserves, we can create valuable jobs at home and help allies abroad.”

Begich said that the bill would also enable expedited licensing for the export of LNG to NATO countries and Japan — current law restricts expedited licensing to countries that have free trade agreements with the United States. The bill would also set expedited timelines for environmental reviews and permitting for the Alaska LNG project, while also mandating grants for the training of Alaskans to work on the project.

Larry Persily, the current federal coordinator, told Petroleum News March 11 that his office is fully funded in the 2014 financial year through to the end of September, but that the office has some additional unspent funds that would carry it through beyond Oct. 1, thus allowing an orderly shutdown after that date.

The proposed closure of the office reflects the fact that the project for a gas pipeline connection from the North Slope to the Lower 48, the project that his office was established to support, no longer exists, Persily said.

“We don’t have that authority now,” he said.

If the Begich bill becomes law, the Office of the Federal Coordinator could perform a valuable role in facilitating the federal permitting for an Alaska LNG project, trying to ensure that the federal government “doesn’t make an already difficult project any more difficult than it needs to be,” Persily said. But the loan guarantee established in 2004 would not apply to a gas line carrying gas to Southcentral Alaska for export, regardless of whether the Begich bill passes, he said.

In addition to its role in coordinating federal permits, Persily’s office has acted as a clearing house for information relating to the monetization of North Slope gas — the office regularly distributes reports and articles on this topic.