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Gas distribution for Nuiqsut approved Regulatory Commission of Alaska denies pipeline operation from Alpine as utility, opens docket to consider as pipeline Kristen Nelson Petroleum News
Nuiqsut is edging closer to using natural gas from the Alpine field for heat and power.
On May 14 the Regulatory Commission of Alaska granted the North Slope Borough a certificate to operate the natural gas distribution system in Nuiqsut as a utility.
Although it denied the borough a certificate to operate the natural gas pipeline from Alpine to Nuiqsut as a utility it did grant temporary operating authority for the line and opened a pipeline docket.
RCA said the borough holds utility certificates for electric, water, sewer and refuse service. “NSB has operated these utilities successfully under local regulation since they were first certificated by the commission.” Based on that history and on the borough’s application, RCA concluded “that NSB is fit, willing, and able to operate the gas distribution system.”
Pipeline more complicated The pipeline issue is more complicated.
RCA said its predecessor, the Alaska Public Utilities Commission, granted the borough a temporary certificate in 1999 to construct the natural gas pipeline; that certificate expired in 2000.
In 2001 RCA granted a request that the natural gas pipeline be regulated as a public utility, conditioned upon a complete application. The required application was never submitted and that docket was closed in 2005.
RCA said that when it agreed in 2001 to regulate the pipeline as a public utility, it was unaware that the borough and the State of Alaska had signed a right-of-way lease for the natural gas pipeline in 1999 which required that the pipeline be regulated as a common carrier pipeline. “Public utilities are not common carriers,” RCA said. “In order to be regulated as a common carrier, the natural gas pipeline must be regulated” as a pipeline, not as a utility.
Because of the terms of the right-of-way lease, the borough’s natural gas pipeline must be regulated as a pipeline, so the borough’s request for a certificate of public necessity and convenience as a utility is denied.
Public hearing required
RCA said it will “construe” the borough’s application for a certificate as an application under the pipeline statute and open a docket.
A public hearing is required before such a certificate can be issued. RCA is required to rule on a pipeline certificate within six months after filing of a complete application but said its regulations allow it to extend that time for “good cause.”
“There is good cause to extend the time to rule on the pipeline application for three months to allow time to conduct a public hearing and issue an order on the application,” RCA said, and extended the time to rule on the application to Aug. 14.
The borough requested “immediate temporary operating authority” for both the Nuiqsut distribution system and the pipeline from Alpine. RCA said the borough said the temporary operating authority would allow it to begin testing and startup operations of the gas-fired electric generators of the distribution system so that when RCA grants final operating authority, the Nuiqsut distribution system “will be operational on the day gas sales are anticipated to begin in order to commence service to the community of Nuiqsut.”
The borough told RCA that once the transition from pre-startup to full operations begins, bringing the system offline while waiting for a final certificate would be expensive and impractical.
RCA said it has previously granted temporary operating authority when it was in the public interest to do so.
Economic regulation also an issue
The borough also requested exemptions from economic regulation as a municipality for both the pipeline and the gas distribution systems. Under state law municipal utilities are exempt from economic regulation unless the governing body of the utility requests that the utility be regulated, RCA said, and because the distribution system is already exempt under statute that request is moot.
The gas pipeline, however, is another matter.
Under state statute there is no provision for pipelines to be exempted from economic regulation, RCA said, but noted it is “considering regulations that would allow qualifying pipelines to make simplified pipeline tariff filings.” The commission said it would consider how to address the request in the pipeline docket.
Final connections this spring, summer The borough told the Alaska Oil and Gas Conservation Commission late last year that facilities were in place and last details were being worked out with the state (see story in Dec. 3, 2006, issue of Petroleum News). The borough began working on the project in 1997. Gas to Nuiqsut is a byproduct of the development of the Alpine field, whose facilities are on surface land belonging to the Nuiqsut village corporation, Kuukpik Corp. Natural gas for Nuiqsut was a part of the deal the field operator ARCO Alaska (now ConocoPhillips Alaska) cut for use of the land.
For its part of the deal, Nuiqsut had to provide the pipeline and facilities for processing the gas and Nuiqsut turned to the borough. The borough analyzed the cost and determined that in spite of high infrastructure costs it would save a considerable amount of money by using natural gas rather than diesel.
The borough funded the transportation system through bonds; the distribution system was funded by National Petroleum Reserve-Alaska impact aid grant funds.
The transportation system was completed last year; homes were expected to be converted in late spring or early summer.
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