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Providing coverage of Alaska and northern Canada's oil and gas industry
March 2009

Vol. 14, No. 9 Week of March 01, 2009

FERC, Murkowski on Alaska gas project

Alaska’s senior senator draws reaction to assertions that single line, fiscal certainty needed now; FERC wants TC Alaska pre-file

Kristen Nelson

Petroleum News

Alaska’s senior U.S. senator, Republican Lisa Murkowski, addressed the Alaska Legislature Feb. 19, the day before the Federal Energy Regulatory Commission submitted its seventh semiannual report to Congress on progress on the Alaska gas pipeline project.

Both echoed old themes, with Murkowski telling legislators — as she and former Sen. Ted Stevens have in the past — that the state needs to get on with the gas pipeline.

FERC described progress in the last six months including the fact that it is still waiting for TransCanada to pre-file for its certificate of public convenience and necessity, something the Denali project has done, but TC Alaska has not.

Murkowski said, as she has in the past, that she continues to be asked in Washington, D.C., why Alaska “can’t get its act together and deliver its gas to Lower 48 markets.”

She called for “a consensus on a single pipeline project now,” not after “an uncertain open season next year.” That requires bringing the competing pipeline proponents, the producers, the state and the federal government to “the same table,” she said.

And she called for fiscal certainty.

“This is one case where we cannot blame the federal government for delays in a major Alaska capital project,” she said. When asked, the federal government has stepped up, by mitigating financial risk, streamlining permitting and opening the federal coordinator’s office.

“Perhaps there is more the federal government could do to help the gas line, but I need to see a unified, committed plan of action on the project before I can hope to succeed with my colleagues and the White House,” Murkowski told the Legislature.

At a press conference following her address Murkowski said she wasn’t saying anything she hasn’t said in years past.

“I do believe that we should begin moving on a gas line sooner rather than later; and in order to do so you’ve got to have everybody who is a stakeholder to be engaged and a participant.”

Asked whether the federal government would step in and take over building a line, Murkowski said there have been discussions about that, “I don’t know how substantive or serious they are, but it is recognized that that could be one of the paths.”

She said she was not a proponent of the federal government building the line.

“I don’t think that the federal government is best poised to be advancing this gas line. And should they do so, it worries me a great deal about what their terms for the State of Alaska would be.” She said she didn’t want it to reach that point, but there are conversations about it.

Fiscal term issues

Asked if she favored fiscal terms similar to those proposed by her father, former Gov. Frank Murkowski, the senator said she was going back to comments TransCanada made before they were the state’s Alaska Gasline Inducement Act licensee, that financial issues needed to be resolved.

“If you go back to the comments made by TransCanada when they first became involved and looked to the producers, they used the same terminology — we need to resolve fiscal terms.

“There’s an acknowledgement that that must be done; far be it from me to define what those fiscal terms are. I think that’s what the producers, TransCanada, the entity that wants to build the line, and the state need to determine and define.”

Two Anchorage members of the state Senate, Hollis French and Bill Wielechowski, both Democrats, wrote Murkowski Feb. 20, concerned about her suggestion that consensus is needed now on a mainline pipe.

“We as a Legislature have done just that through the AGIA process, which we completed in August 2008.”

They said the state “made a deal with TC Alaska and it would seem like a step backwards to try to undo that deal now.”

“We are concerned that your comments may be detrimental to moving this project forward,” they told Murkowski.

“Alaska has never before been as unified and committed to this project as now,” French and Wielechowski said.

On the fiscal terms issue, they said “legislators studied this very carefully last summer,” and were told that based on a wide range of future gas prices and costs, “this pipeline penciled out nicely every time.”

Nikiski Republican Mike Chenault, the House Speaker, had a different take when asked Feb. 23 about Murkowski’s call for work on fiscal terms.

“I don’t think we’ll see anything from the TransCanada proposal or the Denali proposal until 2010,” he said, referring to the 2010 open season proposed by both projects.

“But I know that somewhere between now and 2010 and open season ... we’re certainly going to have to address the issue of fiscal certainty to some extent,” Chenault said.

He said he didn’t think legislators know exactly how the issue will be addressed, “but I certainly think that at some point in time between now and that open season of 2010 the Legislature will address fiscal certainty.”

FERC wants TC to pre-file

FERC, in its seventh semiannual report to Congress on the Alaska gas pipeline project, said TC Alaska has briefed FERC staff and the federal interagency team, but has not yet requested FERC accept the project into the pre-filing process.

FERC said that if TC Alaska begins the pre-filing process before it begins substantial field work that would allow FERC staff to ensure the field work is done in a manner that meets FERC’s environmental requirements and would help “avoid unnecessary delays in the processing of a future license application by TC Alaska.”

FERC also said that while such a pre-filing would be given its own docket number, many of FERC’s “pre-filing activities for TC Alaska could be combined with the existing pre-filing activities of Denali. The proponents of the two projects also might benefit by coordinating some of their pre-filing activities.”

FERC also noted the Alaskan Northwest Natural Gas Transportation Co. was dissolved and surrendered the last of its permits and approvals for the original Alaska natural gas pipeline. The agency said it received a Dec. 15 notification from ANNGTC, supplemented Jan. 23, notifying it that the underlying owners and partners in ANNGTC had concluded it “was no longer a viable entity” and could not pursue the Alaskan Natural Gas Transportation System pipeline project approved by President Carter, as modified by President Reagan, under the Alaska Natural Gas Transportation Act.

In the filings ANNGTC surrendered the conditional certificate granted by the commission in various orders issued from 1977 through 1982 under ANGTA for the Alaska pipeline segment and for the gas conditioning facility on the North Slope.

FERC issued a notice recognizing surrender of the certificate and terminating proceedings concerning ANNGTC’s applications Feb. 6.

Denali continues with pre-filing

The Denali project has pre-filed and FERC said its staff “has been working closely with Denali and the cooperating agencies, exchanging information, and coordinating activities to ensure a timely and efficient application development and review process.”

FERC said its staff has reviewed the Denali project north of Fairbanks “where there are potential construction-related constraints at Atigun Pass in the Brooks Range and at the Yukon River crossing.”

Denali formally filed with the Bureau of Land Management in October for pipeline right of way across federal lands in Alaska, estimated to be about one-third of the 730-mile-long route in Alaska.

In December Denali filed a summary report of outstanding Alaska resource data issues needed to support its applications and field study plans over the next field seasons to obtain that information.

Denali awarded an engineering contract in February for preliminary front-end engineering for the gas treatment plant.

FERC said with both Denali and TC Alaska working toward holding open seasons, they “are expected to keep most of their information and decisions internal,” but will work with and inform with various levels of government and other stakeholders about the projects.






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