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June 2008

Vol. 13, No. 25 Week of June 22, 2008

FERC ready; Denali applies to pre-file

Office of Energy Projects officials ready to process application; will work with all comers, let market decide what project built

Kristen Nelson

Petroleum News

Mark Robinson and Jeff Wright, director and deputy director of the Federal Energy Regulatory Commission’s Office of Energy Projects, told Alaska legislators June 16 they are ready to process an application for an Alaska gas pipeline. The FERC’s process for certificating natural gas pipelines is in place and all aspects of the process have been challenged and tested.

“We are ready and our process works,” Robinson said.

Since 2000 some 12,000 miles of large-diameter natural gas pipelines have been completed: “We do get gas pipeline in the ground and our process works to do that,” he said.

The pre-filing process has been in use at FERC since 1995, Robinson said: “We developed it and we invented it” and it is now used at the state level and has been mandated by Congress for liquefied natural gas projects.

Pre-filing requires all stakeholders to get involved early, he said.

It’s the opposite of “bring me a rock” where an agency says bring me an application and then tells the applicant it’s not the application needed. The solution is to get all agencies involved at the beginning — not in the acceptance of an application, but in making sure that the application meets agency needs, Robinson said.

He said they are not advocates for projects, but are working instead on getting the best application possible, for the best project possible.

Once an application is accepted then the application is evaluated on a public policy basis.

Issues solved early

National Environmental Policy Act issues are also scoped as the application is developed. Robinson said one goal of the pre-application process is getting issues addressed when they come up, rather than having them become imbedded in an agency’s data storage, to resurface at every point along the way.

That way when the application is accepted, issues that can be solved along the way have been taken care of, and the five FERC commissioners, who are appointed by the president, can deal with major policy issues.

The pre-application process requires that agencies get together and work through issues that can be solved early on.

Robinson said FERC’s timeline is dependent on pre-filing; the critical path starts with pre-filing. To get an Alaska gas pipeline into service in 2018, he said, pre-filing should happen in June, allowing the commission to be ready to act in August 2011.

He said he knew there was a lot of concern in Alaska about open season issues, but said from the commission’s perspective the most crucial thing was to start the pre-filing process so that issues can be aired and solved.

Pre-applications begun

Robinson said they expected to see a pre-application from Denali — The Alaska Gas Pipeline, the joint venture established earlier in the year by BP and ConocoPhillips.

In a letter dated June 15, newly named Denali President Bud Fackrell applied for approval to use the FERC’s pre-filing procedures.

Fackrell said the request was being submitted earlier in the process than normal because of the scope of the project. He said it “will require a much longer time period” than typical and specified 36 months.

He said the pre-filing request was suggested by FERC staff during an initial visit so that Denali and FERC can “exchange information and coordinate planning and activities to insure a timely and efficient application development and review process.”

The project will include transportation lines to take gas to the Denali system, a standalone gas treatment plant on the North Slope and “a 48- to 52-inch pipe capable of transporting approximately 4.0 bcf/d of gas at approximately 2,500 psi,” Fackrell said. The line will “generally follow the Dalton Highway south to Fairbanks where it will follow the Alaska Highway southeast to the Canadian border.”

TransCanada Alaska, the project being evaluated for an Alaska Gasline Inducement Act license, has not yet applied for pre-filing.

Robinson said expansion is an issue that is 10 years out.

It will be 10 years before we have Alaska gas flowing, he said, and while the commission has had expansions during construction that has happened because the market changes. With the Alaska project Robinson said he expects to get through the process and get the pipeline in place before it is expanded.

How long would it take to get an expansion through? During the California energy crisis expansion was authorized in about six weeks, including miles of looping, he said.

The important first step, he said, is to create an environment where someone will come in and spend the first dollar.

You can’t expand without a pipeline to expand, Wright added.

Multiple certificates possible

The history of the commission has been to certificate more than one project where there are multiple applicants; the market will pick the one that is most efficient, Robinson said.

Asked about a situation where there were two applications for different pipeline sizes — a 36-inch line fully compressed which would close the basin to any new explorers, vs. a 48-inch line which would open the basin, Robinson said the commission could consider that in looking at the applications.

Wright said the commission generally doesn’t regulate gas treatment facilities — those are upstream of transmission — and its authority probably starts at the tail-end of the GTP.

But Robinson said that given the unique nature of the Alaska gas pipeline, the GTP could be presented to the commission if it might be used to limit production of gas.






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