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Comments to RCA largely support ANGDA Flint Hills favors proposed repeal of sections of Alaska Pipeline Act; Anadarko largely in agreement; Enstar wants to know more Kristen Nelson Petroleum News Editor-in-Chief
Comments received by the Regulatory Commission of Alaska largely support a request by the Alaska Natural Gas Development Authority (ANGDA) for repeal of two sections of the Alaska Pipeline Act.
The commission held a hearing Sept. 8 on the request (see stories in Sept. 4 and Sept. 18 issues of Petroleum News), which is for repeal of sections on intrastate transportation and on how intrastate service shall be regulated by the commission, and also provided an opportunity for written comments.
Flint Hills Resources Alaska told the commission Sept. 19 that it agrees with the concerns ANGDA expressed “that the statutes proposed for repeal, as currently written, may create an impediment to the expansion of the intrastate (gas shipped within Alaska) North Slope natural gas market” as well as limiting the ability of the commission “to protect the public interest.”
Flint Hills said it agrees with the criticism of AS 42.06.240(f). A portion of a natural gas pipeline “should be available to serve the needs of intrastate shippers,” the company said, but “requiring shippers and customers to enter into three-year take-or-pay commitments is a very heavy burden on the customer.” Concern for later intrastate gas needs Flint Hills also said that requiring the carrier to specify amounts of intrastate gas when it applies for a certificate “leaves out of the North Slope natural gas market those customers who, at the time of initial tender, either could not make such commitments or did not have a need for or have physical access to North Slope natural gas.”
“Finally, as the statute is written, carriers would have no obligation to increase intrastate capacity,” Flint Hills said, leaving those who did not initially secure space on a pipeline with “no redress, and no market access, except by soliciting the carrier” for RCA approval to expand the line. Which, Flint noted, “the carrier has no obligation to do.”
Flint concluded that “the statute is a real impediment to growth of the intrastate North Slope natural gas market, and leaves the discretion to increase the market to the carriers.”
The commission, Flint said, “must be granted greater authority to meet the public demand,” and repealing AS 42.06.240(f) “is a step in that direction.” Statute limits discretion of commission As for the second provision, AS 42.06.370(c), Flint said it agrees with ANGDA that as written the statute, “which requires regulating North Slope natural gas pipeline rates according to the public utility rather than the common carrier rubric, limits the discretion of the RCA and limits the capacity of carriers, shippers, and customers to propose, debate, and develop creative rate models which encompass not only the considerations specific to the North Slope natural gas market but also the lessons learned in other rate-setting environments.”
Flint recommended to the commission that “any rate setting model be detailed and specific, so as to mitigate ambiguities.” Unclear rate models, the company said, leave room for interpretation and lend themselves “to frequent regulatory complaints and litigation. Rate certainty benefits both carriers and shippers, and ultimately natural gas customers, by providing an essential stability (rather than a moving target variable) upon which business and financial decisions can be based,” Flint told the commission. The company also recommended limiting retroactive rate adjustments as another factor in “the same desired outcomes of certainty and limiting system disputes and costs…” Anadarko, Enstar also comment Anadarko Petroleum, commenting through counsel Brena, Bell & Clarkson, said it understands the proposed repeals “will serve to clarify the Pipeline Act and will give the Regulatory Commission of Alaska greater discretion in the resolution of issues related to the intrastate transportation of North Slope natural gas,” and based on that understanding, supports the ANGDA proposal.
Enstar Natural Gas, commenting through attorneys Ashburn & Mason, said “it appears to be ANGDA’s general contention that repeal of these two statutory provisions would make development of North Slope natural gas and its availability to Alaska customers more likely.” Enstar said it “is keenly interested in the prompt and efficient development of North Slope natural gas,” but “is not ready to comment on this specific proposal at this time.”
Enstar said “interrelationships between the statutory and regulatory provisions that will govern development of North Slope natural gas are not simple,” and before it takes a position, Enstar said it “would like to hear a better explanation of both the need for repeal of these sections and the consequences for the RCA’s regulatory oversight over future gas pipelines from ANGDA.”
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