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AGDC in OBO discussions with Enbridge Canadian pipeline company could be owner-builder-operator for ASAP, the Alaska Standalone Pipeline, state’s ‘plan B’ if AKLNG fails Kristen Nelson Petroleum News
The Alaska Gasline Development Corp., the state’s operating arm for the proposed Alaska North Slope liquefied natural gas project, continues work on the original project for which it was established in 2010, an in-state gas pipeline project, the Alaska Standalone Pipeline, referred to as ASAP.
With separate funding provided by the Legislature for the two projects, AKLNG and ASAP, AGDC is in discussions with Canadian pipeline company Enbridge to be the OBO, owner-builder-operator, of the in-state line.
The in-state line is the state’s fallback position to get natural gas to Alaskans if the larger project, which is premised on shipping LNG to Asia, is not built. AGDC is also charged with getting gas to communities which would not be on a North Slope to tidewater line.
Previous Enbridge involvement in state Enbridge is not involved in the AKLNG Project, but it had discussions a decade ago with the Murkowski administration under the Stranded Gas Development Act. The project being considered at that time would have taken North Slope natural gas through Canada to the Lower 48. The Murkowski administration eventually limited its pipeline company negotiations to TransCanada.
Enbridge did not participate in the Palin administration’s AGIA, Alaska Gasline Inducement Act, project, saying at the time that it believed a project needed to involve the North Slope producers, who did not participate in AGIA. Enbridge was involved in discussions with BP and ConocoPhillips for the Denali project, a producer-backed alternative to AGIA.
The Legislature authorized state work on an in-state gas pipeline in 2010, creating a subsidiary of the Alaska Housing Finance Corp. to produce a plan for an in-state project.
In 2013, the Legislature continued the existence of AGDC, but changed it from an AHFC subsidiary to a public corporation of the state charged with developing ASAP. Legislation passed this year made AGDC the state’s operating arm for the Alaska LNG Project.
Owner-builder-operator Miles Baker, AGDC vice president for external affairs and government relations, told Petroleum News July 10 that the Legislature gave AGDC the ability to look at different ownership models for an in-state gas pipeline, and after “some fairly extensive financial analysis” the corporation determined that an owner-builder-operator would be the way to go.
According to published board meeting minutes, owner-builder-operator was discussed in a board executive session at a mid-March meeting.
Minutes from a May 8 board meeting say the owner-builder-operator process was addressed by Joe Dubler, AGDC’s vice president of commercial operations. Dubler put forward a motion that the board, “direct staff to continue working with the apparent successful bidder on the OBO process with an end towards executing a partnership agreement sometime in the next 6 to 9 months,” the minutes say.
John Burns, chairman of the AGDC board, asked for “a motion to move forward with Enbridge discussions.”
A motion passed unanimously, that “Based upon the analysis presented by the staff, the AGDC Board of Directors hereby directs staff to begin preliminary discussions with Enbridge, Incorporated regarding their potential role as an owner/builder/operator in the ASAP project.”
Continuing discussions Baker said the motion basically gave management the board’s approval to continue conversations with Enbridge, do due diligence, share documents as necessary - steps in the process of determining whether AGDC would want to formalize the relationship.
There is currently no legal or commercial agreement between AGDC and Enbridge, Baker said.
Enbridge is looking at potentially coming in and taking an equity position in ASAP and would want to be involved in both the filing of a recourse tariff for ASAP and planning for an open season, currently scheduled for the second quarter of 2015, he said.
The relationship with Enbridge is not exclusive, Baker said. He said if AGDC didn’t move forward with Enbridge it would probably pursue another company.
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