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Feds project first gas from Alaska in 2016 If state decision made by December, earliest FERC approval would be late 2009, GAO says in report on small business participation Kristen Nelson Petroleum News Editor-in-Chief
Assuming that Alaska makes an award for an Alaska North Slope natural gas pipeline project under its Stranded Gas Development Act in December, the U.S. Department of Energy believes pipeline construction would not start until 2012, with first gas delivered in 2016.
DOE projects an open season in March of 2006, and thinks the line’s builders would begin an 18-month pre-filing process in June 2006, and not actually file an application with the Federal Energy Regulatory Commission until December 2007.
FERC then has 20 months to do an environmental impact study. A final FERC order is projected for August 2009, and over the next year the project sponsors would obtain permits and purchase pipe and compressors. Camps would be staged and pipe delivered and actual construction would begin in 2012 and run through 2015. The agency then projects about a year to produce and treat the gas and fill the pipeline, with the line going into service in August 2016.
All of this, the agency noted, assumes that Canada completes permitting within the same timeframe.
In other federal work on the project, the U.S. Government Accountability Office has completed a report, mandated in the Alaska Natural Gas Pipeline Act, to study small business participation in oil and gas pipeline construction in response to a “sense of Congress” provision in the pipeline act that the project should maximize participation of small business. It is, GAO said, not a legal requirement. Earliest FERC approval in late 2009 The GAO concluded that with the time required for state and federal approvals, “the earliest that construction can begin on the Alaska natural gas pipeline is late 2009.” The GAO timeline only goes through 2009, ending with FERC issuance of a final order in August 2009, so apparently the GAO defines as construction all activity after issuance of a FERC order. The complete DOE project timeline assumes the project sponsors would begin obtaining permits and purchasing pipe and compressors after the FERC order is issued.
In addition to state approval, federal requirements include conducting a study of gas consumption needs and delivery points in Alaska and holding an open season. The sponsors have been “strongly encouraged to submit a prefiling request to FERC,” allowing the sponsors to begin the environmental review process prior to submitting a formal FERC application.
Project sponsors would then submit an application to FERC for a certificate of public convenience and necessity. Once FERC determines the application is complete, it has 20 months to prepare an EIS and issue a final order.
“According to FERC officials it could take several years to complete the above steps before actual construction of a pipeline can take place,” but the project sponsors must first begin the process, GAO said, “.
Tracking small business problematic GAO said neither state nor federal governments have structures to monitor small business participation in an Alaska gas pipeline. FERC must authorize construction of the line and if sponsors wish to participate in the $18 billion federal loan guarantee they must apply to DOE. FERC told GAO it lacks the expertise to track small business participation and DOE officials said the department does not have a legal requirement to track small business participation under the loan guarantee, and they have no plans to do so. The U.S. Small Business Administration said it has no plans to track small business participation in the project.
The state has listed small business participation as a goal, but has no structure in place to monitor it.
GAO said it talked with representatives of ConocoPhillips, ExxonMobil and TransCanada. Two of the potential sponsors said they track the use of small companies for internal purposes, or track similar information, and could provide some information, but said because of the sheer magnitude of the project it would not be possible to track every aspect of small business participation. A third potential sponsor said the company would be concerned about a small business tracking requirement “because it is their policy to minimize the number of constraints they place on their prime contractors.”
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