Forgotten Nikiski LNG targeted West Coast

1970s proposal, a project of California utilities, had full environmental review under the new National Environmental Policy Act

Bill White

Researcher/writer for the Office of the Federal Coordinator

The plans called for a new liquefied natural gas plant along the industrial strip at Nikiski, Alaska.

Teams of scientists sampled soils, measured historic tsunamis, unfurled maps of seismic faults and described how to place a pipeline across Alaska’s roiling Cook Inlet to feed the export plant with natural gas.

Engineers detailed how to build an LNG plant and dock safely, and calculated probabilities of a tanker accident.

The project wasn’t the ConocoPhillips LNG plant that exists today at Nikiski. That plant was built years before.

And it isn’t the multibillion-dollar Alaska LNG export project that the big three North Slope oil and gas producers are working toward today.

This plant was called the Western LNG Project. It looked south, not west, for its customers. The ConocoPhillips plant sent Cook Inlet gas to Japan. Western LNG would send Cook Inlet gas — a lot of it — to California.

And although it was the sort of mega-project that causes Alaska economic boosters to salivate — it would have cost more than $1 billion in 1970s dollars and was in play for a half dozen years or so in an infrastructure-starved state — few Alaskans seem to recall ever hearing of it.

That’s likely because an even bigger Alaska gas project eclipsed Western LNG during its life: the $7 billion Alaskan Northwest proposal to pipe North Slope gas through Canada to Lower 48 consumers. Western LNG was the scrawny kid brother of the star high school quarterback.

The Western LNG and bigger Alaskan Northwest projects almost exactly overlapped in time. Both were born in the mid-1970s. Both died by the early 1980s. They sprang from the same perceived need: A shortage of North American natural gas supplies. They withered under the same merciless economic force: Price deregulation that pumped competing, less-expensive gas production from other fields into Lower 48 utilities.

But in its day, Western LNG got something no other proposed large-scale U.S. liquefaction plant had ever received: Full environmental impact study scrutiny under the then-new National Environmental Policy Act. (The existing ConocoPhillips plant was built in the 1960s before NEPA became law.)

The proposed $45 billion to $65 billion producer-led Alaska LNG project also is targeting Nikiski for its LNG plant site. It plans to be much more ambitious than the Western LNG project — more expensive, more production, more footprint at Nikiski.

It also would need an environmental impact statement before proceeding to construction.

EIS writing has evolved since the 1970s. New laws, court rulings, more data about the environment and the experiences of those drafting them all have tended to make the documents longer and more detailed to cover more issues and to head off challenges that they are incomplete.

But the core goal of NEPA remains intact: Federal agencies should understand, consider and disclose the environmental consequences of their decisions.

And the Western LNG EIS is an instructive glimpse into whether there are any obvious environmental tripwires ahead for siting Alaska LNG’s plant at Nikiski.

Starved for gas?

In the early 1970s, an energy crisis of oil embargoes, soaring prices and lines at gasoline stations surprised and stressed Americans. Although natural gas production was peaking, the industry and its pricing were regulated stiffly. Exploration stagnated and reserves shrank. The experts’ consensus: Brace for shortages.

On Nov. 11, 1974, Pacific Alaska LNG Co. filed with the Federal Power Commission for authority to build the project. As part of it, they separately filed to build terminals in California to receive Alaska LNG as well as gas from Indonesia, which was then developing its first LNG export plant.

The Alaska plan evolved over the ensuing several years. The changes included a new governing body in 1977, when the FPC segued into the Federal Energy Regulatory Commission, which today oversees construction and operation of LNG plants. But basically here was the deal:

Pacific LNG was a partnership of Pacific Lighting, a major Southern California utility, and Pacific Gas and Electric Co., a major Northern California utility.

The partnership would:

•Buy 431 million cubic feet a day of natural gas from about two dozen existing and still-to-be-developed Cook Inlet-area fields. This is about double the amount of natural gas Southcentral Alaska utilities consume today.

•Install a 292-mile pipeline network from the fields to its Nikiski LNG plant.

•Build a two-production-train plant that would make about 3 million metric tons per year of LNG, the equivalent of about 400 million cubic feet a day of gas once it had been warmed back into a vapor in California. (Some of the purchased gas would get consumed in making LNG.) The plant would be located on a 59.3-acre site just south of the existing ConocoPhillips LNG plant at Nikiski; a fertilizer plant would stand immediately between them. But the Western LNG plant would be bigger, capable of producing twice as much LNG as the ConocoPhillips plant made in its heyday.

•Construct two 130,000-cubic-meter tankers to ferry LNG between Nikiski and a receiving terminal the partners would build at Point Conception, Calif., northwest of Santa Barbara.

$1.2 billion — The price tag for the project’s Alaska portion, plus tankers.

Early 1982 — Estimated date for the first tanker shipment of LNG. Full production about a year later.

FERC published its final environmental impact statement for Western LNG in October 1978. The commission concluded: The project would have “limited adverse impact on the environment,” especially if Pacific Alaska met 24 environmental stipulations.

An economy in play

The spark was the 1968 discovery of Prudhoe Bay, North America’s largest oil field and one of its largest natural gas reservoirs. Nothing about the 9-year-old state was the same after wildcatters struck this bonanza.

By 1974, Prudhoe’s dazzling potential was becoming tangible to Alaskans.

That spring, crews broke ground on the trans-Alaska oil pipeline’s three-year construction. Almost simultaneously, two gas-pipeline groups filed competing proposals to pipe Prudhoe Bay gas to Lower 48 markets. (That was even before Western LNG and Alaskan Northwest plans surfaced. These earlier entrants also failed.)

Well over $10 billion in oil and gas projects circled the state waiting for turns to land. This in a place whose entire gross state product — the value of all its goods and services — was $3 billion in 1973. Thousands of workers rushed into Alaska to lay roads, dig trenches, weld pipe, drive trucks, cook food and perform myriad other jobs related to spending all those billions.

Alaska was in full play. And at the end of that historic year, Western LNG proposed its LNG plant down at Nikiski ... on the Cook Inlet bluff ... far away from the oil-pipeline axis.

At just about any other time in Alaska’s previous history, such a $1.2 billion development could have been expected to make noise.

But Western’s buzz got lost as the Prudhoe Bay cacophony echoed through Alaska.

A difference of scale

The first, 334-page volume focused exclusively on the Alaska project. The other two volumes covered the California LNG receiving terminal, public comments and backup studies.

Some big differences in scale between the Western LNG project as proposed in 1978 and the Alaska LNG project as conceived today become evident right away when reading the EIS.

First, Western LNG’s project involved a nearly 300-mile regional pipeline network that would feed the LNG plant from 20-plus Cook Inlet fields arrayed to the north, west, south and east. Much of the EIS discusses the impacts of this network, its pipes crossing many rivers, streams and wetlands. By contrast, Alaska LNG contemplates a single, 42-inch trans-Alaska mainline from the North Slope directly to its plant — though much longer at 800 miles.

Another key difference is the LNG plant itself. Western LNG planned to process about 400 million cubic feet per day of Cook Inlet natural gas at a plant occupying a 59.3-acre site. Alaska LNG preliminarily is planning to process five to six times that volume — 2 billion to 2.4 billion cubic feet a day of North Slope gas — at a plant site more than 10 times that size — 600 to 800 acres.

Also, out in Cook Inlet, Western LNG would have built a jetty that could dock one tanker at a time. Alaska LNG is planning for a two-berth terminal.

An industry finding its way

Federal agencies, environmentalists and the courts were still sorting out how to assess and disclose environmental impacts of federal actions adequately.

Congress passed the legislation that mandated environmental studies — the National Environmental Policy Act — in 1969. President Nixon signed it into law on Jan. 1, 1970, calling it a “particularly fitting” first official act for the new decade.

Through the 1960s, Americans had soberly discovered that pesticides that improved crop yields also poisoned rivers, western dams that stored water for farms and made electricity for cities also flooded once glorious canyons, factories that created jobs also belched toxins from their smokestacks.

Satirist Tom Lehrer put it this way in his mid-1960s song “Pollution”:

“The breakfast garbage that you throw into the bay

“They drink at lunch in San Jose.”

NEPA was one of a string of reforms Congress enacted in that era to try to redress the nation’s environmental abuse.

For the first years of NEPA, agencies were kind of on their own in structuring environmental reviews, using the law itself as their guide on what to consider.

NEPA created the Council of Environmental Quality in the White House to formulate “national policies to promote the improvement of the quality of the environment.” In November 1978 — one month after FERC completed the Western LNG EIS — the council finally issued its first regulations that agencies must follow for their environmental reviews. FERC published its detailed NEPA regulations used today in 1987.

Still, even without CEQ’s detailed guidance, the Western LNG statement followed the basic EIS format used today, including description and discussion of:

•How the project might affect soils, vegetation, wildlife, wetlands and waterways, communities, economies, recreation areas and other land use, archaeological and historical sites, air quality and so on.

•How the LNG plant, tanker terminal and pipeline could be damaged by earthquakes, tsunamis and Cook Inlet’s notoriously wicked tides, currents and ice floes.

•Steps that could mitigate potential environmental problems.

•Alternatives to the project that might be undertaken instead.

The EIS process also included soliciting input from affected groups and agencies, circulating to the public a draft of the impact statement for purposes of collecting public comment, and publishing the feedback received.

Surprise at the Nikiski site

Some of the biggest concerns pertained to the nearly 300 miles of pipelines popping in and out of streambeds and rivers. Bank erosion and instability could be worrisome if those crossings were done haphazardly, in the wrong locations or at the wrong time for spawning salmon, the EIS said.

The pipeline network from the 20-plus gas fields targeted in Cook Inlet would have made about 94 crossings of 65 watercourses, large and small, the impact statement said. As was mentioned, that’s far more stream crossings than the proposed Alaska LNG single pipeline from the North Slope to Nikiski would make in the area.

Most impacts to soils, vegetation and wildlife would have come from pipeline construction, and most could have been managed by routing around problems, carefully choosing stream crossings and trenching the ground and burying the pipe during winter when the ground is frozen, the EIS said.

The LNG plant and its proposed site was a more focused topic than the far-flung pipeline network.

Interestingly, after FERC started the EIS, the Western LNG sponsors bulldozed the site. That probably wouldn’t happen today before environmental approval. Here’s what the EIS said:

“The proposed 59.3-acre LNG plant site located on the northwestern coast of the Kenai Peninsula was vegetated until recently with 40 acres of spruce-hardwood forest. The remainder of the site had been cleared by a previous owner. Since the DEIS [draft environmental impact statement, dated April 1978] was issued, it has come to the attention of the environmental staff that the site has been completely cleared and surfaced with gravel. Only a smattering of spruce trees remains around the periphery of the site.”

FERC had few seismic concerns, as long as the plant was designed well. No known earthquake fault scars the site.

During Alaska’s powerful 1964 earthquake, some “cracking of the ground surface due to lurching or compaction of unconsolidated sediments was common within the Kenai Lowland.” The nearest was about two miles from the plant site. “Most of this type of disturbance is restricted to a relatively thin surface layer and would have little or no effect upon the facility. ... Ground rupture of any kind is not considered to be a significant hazard at the proposed LNG plant site.”

However, the 1964 earthquake shook a wide area of Alaska, and critical portions of the proposed plant should be designed to withstand the possibilities (sparing readers the EIS’s geotechnical terminology): A nearby magnitude 6.5 earthquake with extreme ground movement, or a farther away magnitude 8.5 earthquake with intense ground movement.

A big quake might cause some slides on the Cook Inlet bluff, but the plant would be far enough back and unaffected, the impact statement said. The transfer pipelines and trestles leading to the tanker berth would have been fine, too, “if properly anchored.” A tsunami wouldn’t have been a problem for the dock because any tanker berthed there would have enough warning to set sail. “The same is not necessarily true for waves generated due to faulting in the inlet, but there is no evidence that such waves have occurred to date.”

For the most part, the EIS foresaw little environmental impact from the project provided proper precautions were taken. The words “minimal” or “minimally” appear 15 times in the document.

Part 2 of this story will appear in the March 16 issue. Editor’s note: This is a reprint from the Office of the Federal Coordinator, Alaska Natural Gas Transportation Projects, online at www.arcticgas.gov/forgotten-nikiski-lng-proposal-had-full-environmental-review