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Public comment closes on Denali OS plan BP, ConocoPhillips, ExxonMobil, State of Alaska all ask for some clarifications, urge FERC to move ahead on open season for Denali Kristen Nelson Petroleum News
The public comment period on the open season plan from Denali – The Alaska Gas Pipeline closed April 30. The Federal Energy Regulatory Commission has said it plans to act on Denali’s proposed plan by June 7 and Denali has said that with FERC approval of its plan, the open season will begin July 6 and end Oct. 4.
BP, ConocoPhillips, ExxonMobil and the State of Alaska all commented, asking for clarifications on some points but also asking FERC to move ahead with Denali’s open season schedule.
“We are pleased that all of the parties who commented urged expeditious FERC approval of Denali’s open season schedule,” Denali spokesman Dave MacDowell told Petroleum News in an April 30 e-mail.
“We will be preparing a formal reply to FERC that addresses specific comments we feel require a response from Denali,” he said. That reply will be submitted by May 13, MacDowell said, and will be public.
BP asks for clarifications BP Exploration (Alaska) submitted the most detailed comments on the Denali plan. The company said its comments identify both “bidding and process deficiencies that should be corrected to reduce the uncertainty surrounding the bidding process.” BP characterized these as primarily “internal inconsistencies and ambiguities in and between” Denali’s precedent agreement and its indicative tariff.
For example, BP said there is inconsistent treatment of maximum daily quantity, with the indicative tariff stating that MDQs may vary by season, quarter, month or any other basis, while the firm service agreement bid sheet in the precedent agreement “does not provide for MDQ variance on a seasonal, quarterly, monthly, or any other basis, but simply indicates that the bidders should bid a set MDQ.”
BP also said the precedent agreement “contains an unacceptable and unreasonable provision that requires a bidder to resubmit its bid and a PA in the event that FERC requires Denali to hold a revised open season.” BP said this “effectively requires a bidder to commit now to accept unknown changes the Commission may impose.”
Conoco has specific concerns ConocoPhillips said while it believes Denali has provided necessary information on the open season process, there are specific issues that require “further explanation and clarification.”
Many of those issues can be addressed in commercial discussions with Denali, ConocoPhillips said, but there some questions the company wants FERC to address.
For example, “design capacity” is used in the precedent agreement but not defined and ConocoPhillips asked FERC to clarify the use of design capacity in the PA.
The company also asked for procedures under which Denali would notify shippers of reduced maximum daily quantities “or provide them with an option to decline reduced MDQs.”
In-state clarification asked ExxonMobil Gas & Power Marketing Co. said the Denali open season plan includes all of the categories of information required by FERC regulations, but “a few matters require further clarification.”
The company said Denali’s plan refers to estimated rates for in-state deliveries, but “its rate exhibits do not indicate how Denali would segregate Alaska and outside-Alaska costs in establishing rates,” and Denali does not state that its rates are based on the “In-State Study,” a regulatory requirement. ExxonMobil said Denali needs to discuss how it has complied with the requirement that in-state needs be based on the “In-State Study.”
ExxonMobil also said Denali should further explain how it would allocate oversubscribed capacity to nonconforming bids and how it will determine which nonconforming bids it deems acceptable.
State access to reading rooms In its comments the State of Alaska also recommended approval of the Denali open season plan on the company’s timeline, but expressed concern on several issues, including state access to open season reading rooms.
The state said that through its confidentiality agreement Denali “proposes to limit access to the reading rooms only to certain categories of ‘eligible parties,’ and to impose explicit restrictions on what constitutes ‘permitted use’ of the information in the reading rooms.”
The state said the requirements would “unreasonably deny access” to state representatives with a legitimate interest in the reading room materials.
Access would be limited to potential shippers able to meet certain creditworthiness requirements, the state — but only in its capacity as a shipper — and regulatory agencies with jurisdiction over the open season process.
Information cannot be shared with any other Alaska pipeline project, representatives of any other Alaska pipeline project or representatives of any agency involved in the oversight or licensing of a project licensed under the Alaska Gasline Inducement Act.
The state said it commits to not sharing information from the reading rooms with competing Alaska gas pipeline projects, but said the Denali proposal would restrict individuals representing legitimate interests of the state, such as its interests as a royalty owner and tax collector.
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