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ANGDA works on open season gas line bid Alaska Natural Gas Development Authority steps away from EIS, rights of way, for Beluga to Fairbanks gas line; hands over to AGDC Kristen Nelson Petroleum News
The Alaska Natural Gas Development Authority board took two significant votes at its June 23 meeting in Fairbanks: It authorized Chief Executive Officer Harold Heinze to bid for natural gas capacity in the Alaska Pipeline Project (TransCanada and ExxonMobil) and Denali (BP and ConocoPhillips) open seasons; and it voted to withdraw its application for an environmental impact statement for the Beluga to Fairbanks natural gas pipeline.
The board discussed withdrawal of the B2F EIS and permit applications at its May meeting and according to minutes of that meeting Heinze said then that the National Environmental Policy Act process was more difficult than ANGDA had thought going in and that the authority was running out of resources to pursue the B2F project.
The Beluga to Fairbanks project was begun under former Gov. Sarah Palin, with the initial goal of encouraging further exploration and development of Cook Inlet natural gas for shipment to Fairbanks. The line would carry Cook Inlet natural gas from the area of the Beluga gas field on the west side of Cook Inlet north to Fairbanks.
Once a main line bringing natural gas from the North Slope was in place, flow on the B2F line could be reversed and it would serve as a spur line, bringing North Slope natural gas to Southcentral Alaska; the line was also designed to provide storage for Southcentral, which experiences spikes in natural gas use during the winter.
Agency issues Issues between ANGDA and federal agencies surfaced last year, with the U.S. Army Corps of Engineers, the lead agency for the EIS, and the Bureau of Land Management, which issues rights of way across federal lands. The corps was concerned about what the project really was, a standalone pipeline or a spur line, and BLM questioned whether ANGDA had legal authority to permit rights of way for the project.
After meetings and discussions at board meetings near the end of the year, ANGDA and the federal agencies appeared to have come to an agreement on a project description for B2F and on ANGDA’s authority to permit rights of way.
ANGDA provided a revised project description after workshops with ANGDA board members, staff, contractors and the federal agencies.
Withdrawal of B2F EIS In discussing withdrawal of the B2F EIS and permit applications at the June 23 board meeting, Heinze said it had become clear that finishing the process would require more time and more resources. But no additional funds were appropriated for the project in the last legislative session. Heinze said ANGDA was tapped out. “We’re down to small change,” he said.
Some of the issues the agencies want addressed are technical issues that would require a higher level of engineering than ANGDA is prepared to do at this point, he said.
Heinze said he didn’t see the end of the pathway and doesn’t see that ANGDA has the funds.
But there is an opportunity, he said.
House Bill 369 provided an opportunity to take what has been completed and pass it along to the Alaska Gasline Development Corp. established under that legislation. That process is fully funded, he said.
Heinze said he told the board at the May meeting that he would talk with URS, ANGDA’s contractor for the EIS, to make sure they could package the work and pass it along to AGDC and that discussion had been held. He said he also talked with the federal agencies.
A motion to withdraw the B2F EIS and permit applications passed unanimously.
Open season bid The board also passed unanimously a motion to authorize Heinze to participate in open seasons for North Slope to market gas line projects by submitting non-binding precedent agreements, a move which would allow ANGDA a seat at the table beyond the close of open seasons on the lines.
Participation in an initial open season provides an opportunity for a 30-40 percent discount for in-state shippers, Heinze told the board. By participating in the Federal Energy Regulatory Commission-sponsored open season, ANGDA can lock up the ability to take gas off the line in-state, he said.
But to continue to work with the gas line sponsors beyond the end of open season, ANGDA has to bid in the open season, he said.
An open season bid would reserve transportation rights for a volume of gas consistent with the in-state gas demand study and would be subject to final approval by the board in December.
In a description prepared for the board Heinze said following a successful open season for the main line, ANGDA could take gas deliveries in Delta or Glennallen and pursue a spur line which would deliver gas to Southcentral. Treatment and transportation costs are estimated to be between $5 and $7 per million British thermal units. The description noted that various spur line options and estimates have been evaluated for throughputs ranging from 200 million to 500 million standard cubic feet per day.
It said ANGDA’s open season bid would be for transportation rights for a volume of natural gas consistent with the in-state demand study.
No gas yet Heinze said a lot of the bid is clear to ANGDA at this point, but it doesn’t yet have a source of gas. He said there have been active discussions with three suppliers, all of whom are deciding whether they will tender their gas. Heinze said ANGDA wouldn’t bid for pipeline capacity in an open season without some encouragement that it had a gas source.
“We don’t have that today,” he said.
But the suppliers may wait until the last minute to tell ANGDA they will supply gas, and a judgment will have to be made in the last week when it could be very tough to round up the board and make business decisions, he said, in explaining the request that the board authorize him to submit a bid.
Heinze said ANGDA won’t have a gas supply contract when it submits a bid, but would be looking for some indication of intent from one of the suppliers that they would supply ANGDA, whose gas would be a very small volume in the big picture.
Asked about use of the state’s royalty gas for in-state needs and as the basis of ANGDA’s bid for pipeline space, he said ANGDA chose to deal with commercial entities, but if there are three reject letters that would provide the basis to go back and petition the Department of Natural Resources for the state’s royalty gas.
But Heinze said he wouldn’t want to go to DNR without knowing that no commercial gas was available. He said his gut feeling was that somebody was going to be interested in being the in-state gas supplier.
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