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Port Authority reconsideration denied Administration will look at LNG alternative as part of evaluating TransCanada’s proposed overland gas-to-market proposal Kristen Nelson Petroleum News
The state has rejected a reconsideration request by the Alaska Gasline Port Authority for its Alaska Gasline Incentive Act application. But liquefied natural gas — the project the Port Authority put forward — will be evaluated before “determining whether a pipeline that goes through Canada will sufficiently maximize the benefits to the people of Alaska and merits issuance of a license,” Commissioner of Revenue Pat Galvin and Commissioner of Natural Resources Tom Irwin told Bill Walker, general counsel for the Port Authority, in a Jan. 30 letter.
In a letter the same day to former Gov. Walter Hickel and David Gottstein, co-chairmen of Backbone II, Gov. Sarah Palin also promised an LNG evaluation.
“My administration recognizes and shares your interest in a comparison of ‘an overland route and a route to tidewater and LNG.’ You are absolutely correct that this comparison is of critical importance to the state,” the governor said.
Alaska has an LNG facility on the Kenai Peninsula which has been exporting liquefied Cook Inlet natural gas to the Far East since 1969. A proposal to commercialize North Slope natural gas via an LNG project — with a liquefaction facility in Valdez — was first floated in the 1980s.
Request rejected Galvin and Irwin said in their denial of the Port Authority’s request for reconsideration that they understand “that the Port Authority was in a very difficult position due to the alleged actions of its associates and former partners.” (See story in the Jan. 27 edition of Petroleum News.) But, they said, “it would be inconsistent with the provisions of AGIA, the RFA and the critical considerations of fairness and equal opportunity in the competitive process established under AGIA, to permit one applicant to materially supplement and amend its application and substitute a ‘substantially modified application’ 18 days after the application deadline.”
Port Authority Chairman Bert Cottle said in a Jan. 31 statement that the authority is disappointed with the state’s decision and has decided to pursue its voter mandate — to build or cause to be built an all-Alaska gas line — even without state incentives.
“There’s no doubt that our project proposal is the best for Alaska and we’ve heard from many members of the public and the Legislature who are outraged that there’s no all-Alaska gas line proposal on the table,” said Port Authority board member Merrick Peirce.
The LNG evaluation Palin said her administration would “undertake a detailed evaluation of likely LNG project designs before determining whether a pipeline that goes through Canada will sufficiently maximize the benefits to the people of Alaska and merits issuance of a license.”
Galvin told the Senate Resources Committee Jan. 30 that the evaluation would look at more than one LNG option to ensure that the best LNG option was compared to the TransCanada overland application.
If LNG is determined to be the better alternative, he said, one way forward might be a request for applications specific to LNG.
Information from applications At a Jan. 30 press conference, Galvin said that in making the decision on the Port Authority there were two issues: what to do within the AGIA process; and separate from that, how does an LNG project fit into an analysis of the TransCanada application. The administration is making clear through its response to the Port Authority and to Backbone that while the Port Authority application remains incomplete and the request for reconsideration is denied, the administration is making a commitment to “fully evaluate” an LNG project compared to TransCanada, he said. The obligation under AGIA is to ensure that the best project goes forward and Galvin said he didn’t think that could be done without a full airing of the LNG option.
Irwin said TransCanada also included LNG as an alternative if there were issues with the line through Canada or insufficient volume. This won’t be a simple analysis, he said. Net present value and likelihood of success will be compared. Irwin also said it would be a logical question for legislators to ask: Have you looked at alternatives like LNG?
As to what LNG project will be evaluated, Galvin said they’ve asked the gas line team to put together the most competitive LNG project they can.
How long to a decision? The public comment period closes March 6 and then the administration will complete its evaluation and issue a finding. If it decides to issue a license, then the Legislature will have 60 days to review and approve that license.
How long will it take once the public comment period closes?
Galvin said it could be three weeks and it could be three months depending on the complexity of issues raised in the public comment period.
One reason we don’t know how long it will take, Galvin said Jan. 30 in the House Majority Caucus, is the issue of identifying a sufficient collection of LNG options for the analysis.
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