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Gaining access Access to gasline addressed in U.S. Senate energy bill; explorers say provision adequate, but proposed state law further encourages access Steve Sutherlin PNA Managing Editor
The energy bill passed by the U.S. Senate in April contains language designed to ensure access to an Alaska gas pipeline for new gas discoveries, and that language is probably adequate to safeguard explorers who will need the line to get future discoveries to market, Mark Hanley told PNA in early May. Hanley is Alaska public affairs manager for Anadarko Petroleum Corp.
The Senate bill, which must go through joint conference committee and full congressional vote before becoming law, allows owners of newly discovered gas to ask the Federal Energy Regulatory Commission for a hearing on expansion of the line to accommodate new shipments. The commission then may order the expansion of the project if it “determines that such expansion is required by the present and future public convenience and necessity.”
The expansion provision is crucial, Hanley said, because the Alaska gas transportation project is likely to be the only way to get gas off the North Slope for the foreseeable future. In other states, most gas finds are close enough to the grid that a pipeline can be economically built from the well to the network if a deal can’t be made with nearby pipeline owners. Pipeline owners would be asked In the case of gaining access to the Alaska line, Hanley said the first step would be to go to the owners of the pipeline and ask for an expansion. Ideally that would be all the explorer would need to do. However, in the event the explorer is unable to make satisfactory arrangements with the pipeline owners for transport, the FERC hearing provision in the Senate energy bill is additional assurance that explorers can get gas to market.
He said Senate Bill 360 now under consideration in Juneau contains similar provisions to the federal bill, and that state laws would likely involve the Regulatory Commission of Alaska in pipeline governance.
The federal law is most crucial for the explorers, Hanley said, but he added that state language gives further encouragement to access, and adds weight to the effort to expand the project.
“There will be more explorers if there is more access,” he said. “It helps to have a forum here in the state.”
Hanley said the state bill is also important because the federal bill hasn’t passed yet and could be changed in conference.
Scott Ransom of EnCana Corp. said the federal bill provides a framework for access and expansion but that further details need to be worked out. Language in a state bill would ideally further advocate access and provide key steps for implementation of access provisions. FERC must ensure no harm to line owners Under the language in the Senate bill, FERC must ensure that the line owners and existing shippers won’t suffer financially if an expansion is ordered. The commission must approve or establish rates for expansion service that allow line owners to recover, on an incremental or rolled-in basis, expansion costs including a reasonable rate of return on investment. The rates must be set at a level that doesn’t require existing shippers to subsidize expansion shippers, and the proposed facilities must not interfere with the contract rights of existing shippers to previously subscribed certificated capacity.
Proposed facilities must not adversely affect the financial or economic viability of the project, or impair the overall operations of the project. FERC must also find that adequate downstream facilities exist or are expected to exist to deliver incremental Alaska natural gas to market.
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