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September 2010

Vol. 15, No. 36 Week of September 05, 2010

FERC issues 10th semiannual report

Kristen Nelson

Petroleum News

In its 10th semiannual report to Congress on Alaska gas pipeline progress, the Federal Energy Regulatory Commission said both Denali and TransCanada Alaska have concentrated on preparing for and holding open seasons.

Both project sponsors are deferring field work until project certainty is confirmed in the open seasons and for “studies that require more than one year of data gathering and analysis … delaying the initiation of this work could also delay the filing of a complete application with the Commission,” FERC said in late August.

The commission said it continues to execute its National Environmental Policy Act and Natural Gas Act certificate application responsibilities for both Denali and the TC Alaska project, with focus on producing environmental impact statements for the projects.

FERC is the lead agency for compliance with NEPA, and commission staff continues to coordinate with the federal interagency team in accomplishing “early-on work necessary for each agency to successfully execute their responsibilities on the projects.”

Since the summer of 2009, FERC said, “both Denali and TC Alaska have directed the majority of their resources towards completing the preliminary engineering and cost estimating tasks necessary to support their respective Open Seasons. Both project sponsors have deferred the rigorous gathering of environmental data until project certainty is confirmed by the results of their respective Open Seasons.”

FERC said that while project development is continuing, “there are major impediments to the successful completion of an Alaska pipeline,” including long lead time for approvals and construction, high cost, unique environment and international scope.

“Because it is very unlikely that more than one Alaska gas pipeline would ever be built, the project sponsors are being encouraged at the federal and state level to join together in a single effort, thereby avoiding the consequences of a prolonged, duplicative regulatory review,” the commission said.

FERC also discussed what authority it has over other Alaska gas projects.

The Alaska Gasline Port Authority is the sponsor of an Alaska liquefied natural gas proposal which would ship gas to Valdez and liquefy it for shipment on tankers to markets in Asia, on the West Coast of the U.S. and Mexico and in Hawaii.

FERC said it would have regulatory jurisdiction over any Alaska LNG terminal and over any pipeline or pipeline lateral dedicated solely to serving an Alaska LNG terminal.

The commission also said it had responded to a question from the State of Alaska on jurisdiction over an in-state pipeline.

FERC said its analysis found that “under most circumstances” it would “likely not have jurisdiction over an in-state pipeline,” but said it told the state it “would not be able to rule on the question of jurisdiction until it is presented with a specific. Alternatively, a party could request that the Commission make a determination via a declaratory order.”

In May, FERC ruled on a request by Yukon Pacific Co. for another extension of its timeframe to begin construction of Anderson Bay LNG facilities, denying the extension. It said the director of its Office of Energy Projects issued a letter order stating that the findings of the 1995 final EIS “were outdated and can no longer be used to support the authorization of Yukon Pacific’s Anderson Bay LNG project.”

While Yukon Pacific no longer has authority to construct an LNG export facility at Anderson Bay, FERC said that “will not have any direct bearing on any future consideration of an LNG export terminal option for the eventual marketing of Alaskan natural gas outside of the state, including the refilling of an application for Yukon Pacific’s project.”






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