Providing coverage of Alaska and northern Canada's oil and gas industry
January 2018

Vol. 23, No. 3 Week of January 21, 2018

Mat-Su disputes site selection process

Applies to FERC to intervene prior to issuance of draft Alaska LNG EIS; argues Port MacKenzie unfairly excluded from site selection

Kristen Nelson

Petroleum News

Nikiski was chosen as the lead site for the gas liquefaction plant for the Alaska LNG project back in October of 2013, when project proponents included ExxonMobil, BP, ConocoPhillips and TransCanada. The companies said that in addition to site selection factors, having the LNG facility at Nikiski “results in a pipeline route that provides an access opportunity to North Slope natural gas by the major population centers in Fairbanks, Mat-Su Valley, Anchorage and the Kenai Peninsula.”

Valdez, the terminus for the trans-Alaska oil pipeline, has continued to argue that the LNG facility should be in Valdez, which would require routing the gas pipeline down the Richardson Highway into Valdez.

Now the Matanuska-Susitna Borough has lodged a formal complaint with the Federal Energy Regulatory Commission, asking to intervene and arguing that the borough’s site at Port MacKenzie, across Cook Inlet from Anchorage, has been unfairly cut from site consideration for the liquefaction facility.

In response to a question from Petroleum News, Jesse Carlstrom, communications manager for the Alaska LNG project’s current lead, the Alaska Gasline Development Corp., said when AGDC took over as lead on the project at the end of 2016 it inherited work already done on the FERC reports. The Matanuska-Susitna Borough location was not considered, Carlstrom said, because of the conflict between a public dock at the port and a large LNG facility.

Issues from the FERC report

In its Dec. 29 appeal to FERC the Matanuska-Susitna Borough focused on a list of reasons included in Resource Report No. 10 for site exclusion.

The Matanuska-Susitna site is called “Point Mackenzie” on the list; the site the borough has been promoting is Port MacKenzie. The borough said it has been “in dialogue with AGDC and other project proponents regarding the ability to site the liquefaction facility at Port MacKenzie within the Borough’s jurisdiction” for several years. “AGDC assured the Borough on numerous occasions that Port MacKenzie would be considered as an alternative site for the liquefaction facility in its application for the Project,” the borough said.

The borough said it pointed out to AGDC and other project proponents that the draft environmental analyses were not correct regarding Port MacKenzie, and “AGDC ensured the Borough that these mistakes would be rectified before the application was filed.”

When Resource Report No. 10 was filed, however, Port MacKenzie was excluded and after review the borough determined “that AGDC did not actually consider Port MacKenzie at all in its alternatives analysis,” but instead considered Point MacKenzie, “a completely separate location with different attributes” than those at Port MacKenzie.

Point MacKenzie

The borough told FERC that over the course of several years AGDC and the ExxonMobil project manager repeatedly said that Port MacKenzie was the same as Point MacKenzie, and from 2014 through December 2017, the borough said it frequently told project representatives they were not the same. The borough said that when it raised the issue it was told that the FERC reports would be updated. But, the borough said, “Point Mackenzie” shown on a map in the resource report is a plot of land north of and adjacent to Knik Village, some 3 miles north of Port MacKenzie.

In excluding Point MacKenzie from further analysis the resource report lists first that “the site is located on Native Village (Knik) lands.” The borough said it owns 14 square miles of land, 8,940 acres, at Port MacKenzie.

The dock issue

The borough said the existing dock at Port MacKenzie, and the ability to add docks, were factors in favor of further consideration of Port MacKenzie for the LNG facility.

The dock was not listed among the major reasons for exclusion of MacKenzie from further analysis, but AGDC’s Carlstrom addressed it in an email to Petroleum News.

“The Alaska LNG project team did not consider the Port site because of incompatible land use between a public dock and a large (20 Mtpa) LNG plant and terminal,” he said.

“However, the Point Mackenzie site was included in the screening process but did not advance as a viable site for a large LNG plant due to geographic, marine, environmental, and other considerations.”

Existing information

On the issue of information in the resource reports, Carlstrom said:

“AGDC took the lead of Alaska LNG in December 2016. In the transition, AGDC inherited approximately $600 million dollars in pre-FEED study. This included the information presented in Resource Report 10 regarding Alternative selections and where the Nikiski location was identified as the preferred site for the liquefaction facility.”

The borough as moved to intervene out-of-time and told FERC that while any interested party can intervene once the commission has issued a draft environmental impact statement, the borough seeks to intervene now to ensure FERC’s draft EIS “is not based on the errors contained in the current Resource Report No. 10.”

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