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Federal regulators move on gas line Departments of Energy and Interior, Federal Energy Regulatory Commission give update on Alaska gas pipeline project Kristen Nelson Petroleum News
The Alaska gas pipeline project may be stalled in Juneau, but it is moving ahead in Washington, D.C.
Officials from the departments of Energy and Interior, and from the Federal Energy Regulatory Commission, gave a federal update at the second annual Alaska Oil and Gas Symposium in Anchorage Sept. 18.
Mark Robinson, director of the Office of Energy Projects at the Federal Energy Regulatory Commission, said that in its July report to Congress on the Alaska gas pipeline FERC stressed this is a critical time for the project.
That, he said, is because there is so much gas in the world.
Alaska natural gas is expected to meet about 6 percent of domestic U.S. needs when it begins flowing, a demand which could be met by liquefied natural gas if the Alaska project doesn’t happen.
FERC has 16.1 billion cubic feet a day of LNG receiving terminal projects pending, Robinson said: 10 new sites and three expansions. Current delivery of LNG is 5.8 bcf a day with 22.8 bcf per day approved at 11 new regasification sites and two expansions, five under construction. The total is 44.7 bcf of potential LNG deliverability, mostly in the Gulf of Mexico.
And a couple of weeks ago, he said, a major oil and gas company came in to talk about two new LNG receiving sites for which there is not yet an application. Receiving capacity — and receiving terminals are the cheapest part of the LNG chain — will always exceed liquefaction capacity, he said, because LNG owners want to be able to ship to the best markets.
By 2010, $34.8-$74.4 billion will be spent worldwide on LNG infrastructure, a 12 bcf per day increase in world capacity.
And capacity is going up: LNG ships were built to carry 147,000 cubic meters; now they are built to carry 250,000. And LNG terminals used to be sized to handle 1 bcf a day, but are now up to 4 bcf.
Robinson said not only liquefaction but delivery costs continue to come down, making LNG more attractive to energy buyers.
DOE has done pre-scoping for government project James Slutz, U.S. Department of Energy deputy assistant secretary for oil and natural gas, said while the U.S. currently receives only 3 percent of its natural gas supply from LNG, the North American gas market is so large that every LNG player worldwide is looking for an opportunity to have a presence here.
As for the Alaska project, DOE had hoped a contract for an Alaska gas pipeline would be in place by now, Slutz said.
The Alaska Natural Gas Pipeline Act passed by Congress in October 2004 mandated that if FERC did not receive an application for an Alaska natural gas transportation system within 18 months, April 2005, the secretary of Energy “shall conduct a study of alternative approaches to the construction and operation of such an Alaska natural gas transportation project.” The study was to consider establishing a federal government corporation to construct the Alaska gas pipeline project.
Slutz said the department has done some “pre-scoping work” on such a study, but said it is not a simple matter to do that work.
While the Department of Energy hasn’t gone to Congress on the cost of such a study, he said it did start the pre-scoping work in April, after the mandated deadline passed without an application.
The Department of Energy is also responsible for the federal loan guarantee, he said, and money has been allocated in the 2007 budget to begin detailed work in that area.
Federal coordinator Drue Pearce Drue Pearce, senior advisor to the secretary of the Interior for Alaska affairs, was nominated as the Alaska natural gas pipeline federal coordinator June 9 and confirmed Aug. 3 by the U.S. Senate.
Pearce has not yet been sworn in. She said she first has to find the manual that tells you how to set up your own bureaucracy; the Office of Federal Coordinator is a separate agency of the federal government, “so I’ll be setting up an entire agency,” she said.
The federal coordinator is a “termed position,” she said, “and the term for the federal coordinator is until one year after construction of the pipeline.” When he heard that, U.S. Congressman Don Young, R-Alaska, called it “a death sentence,” Pearce said.
She reviewed planning federal agencies are doing for the project.
On the Alaska side, in addition to a fiscal contract, the state has infrastructure needs that must be met before the project is built. Pearce said that the producers did the study of what those needs are, but have not said they are going to build that infrastructure. It includes roads, bridges, railroads, ports and airstrips which need to be improved or replaced.
There are some “huge infrastructure needs,” Pearce said, and work on those should be under way before an application is submitted to FERC.
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