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AGDC board OKs AFE, hears warning on funds
DOE has given final approval for Alaska LNG to export to non-free trade countries; earlier approval was conditional on FERC order Kristen Nelson Petroleum News
The Alaska Gasline Development Corp. continues to work toward a year-end goal of designating a new project sponsor and transitioning to new project leadership by June 30, and as its board approved an authorization for expenditure through June 30, it heard a warning voiced by ex-officio board member Sen. Cathy Giessel, R-Anchorage, that in the state’s present dire economic circumstances, the funds which AGDC has from the state may not be secure.
The Legislature and administration may reduce the funds available to AGDC, she told an Aug. 25 board meeting, suggesting it would be appropriate to have contingencies in place to deal with that eventuality.
AGDC did note this issue in its Aug. 24 authorization for expenditure for capital projects for fiscal year 2021, July 1, 2020, through June 30, 2021.
The last on a list of project risks is: “Alaska Legislature can appropriate AGDC’s funds to apply to other State priorities or can re-define AGDC’s abilities through new legislation.”
DOE approval On Aug. 20 the U.S. Department of Energy issued a final order authorizing Alaska LNG to export liquefied natural gas to non-free trade nations. AGDC had received a 30-year authorization from DOE previously, AGDC President Frank Richards told the board, but it was conditioned on receipt of Federal Energy Regulatory Commission authority to build the project, which was received in May.
AGDC received export authorization to free trade nations in November 2014; the conditional non-free trade agreement was issued in May 2015.
Major permits from the National Marine Fisheries Service, the U.S. Fish and Wildlife Service, the U.S. Coast Guard, the Alaska Department of Environmental Conservation and the Alaska Department of Natural Resources are in progress, with some proposed or final rules published and estimated dates for receipt ranging from September to the fourth quarter.
New project sponsor(s) The goal of the current board, appointed by Gov. Mike Dunleavy, is to move the Alaska LNG project from state leadership to private leadership. The strategic plan which the AGDC board approved earlier in the year calls for designating a new project sponsor or sponsors by the end of the year and a transition by June 30, 2021.
AGDC has been working with unnamed strategic parties to obtain increasing commitment and is responsible for drafting and approval of cooperation and funding agreements between the parties to cover the fiscal year 21 period.
AGDC said it will be seeking additional project sponsors as necessary through a request for proposals process in the second half of FY21.
AGDC established 8-Star, a limited liability company, in 2018, providing a vehicle for the corporation to transfer project ownership to the private sector. AGDC said it will establish an initial 8-Star operating agreement to guide transition activities through FY21 and will complete an equity option agreement to be offered to strategic parties by the end of the year. AGDC will also develop an optimal longer-term 8-Star equity structure and finalize ownership and structure and designation of a project sponsor or sponsors by the end of the year.
Activities The Committee on Foreign Investment in the United States, CFIUS, reviews certain transactions involving foreign investment and certain real estate transactions by foreigners to determine impact on U.S. national security. “Since the Alaska LNG Project may lead to ownership by foreign entities, AGDC will work with strategic parties to complete the CFIUS process,” AGDC said.
Work isn’t completely done, with a spring 2021 field program for “further investigation of cultural resource sites,” focused on gaps in current data for planned areas of disturbance along the mainline pipeline.
AGDC said it will be completing state and federal right-of-way negotiations and update detailed Alaska LNG project land plans for handover to FEED, front end engineering and design.
Because of schedule uncertainty, “AGDC plans to defer acquiring remaining private land (real property) for the LNG Plant,” including roughly 200-220 acres of proposed acquisition and 30-50 acres of established ROW and utility easements within the planned plant boundary, along the proposed re-route of the Kenai Spur Highway and remaining portions of the mainline ROW.
FERC challenges AGDC is anticipated that interveners may initiate legal challenges to FERC’s final order, following FERC’s July 22 denial of rehearing requests from the Matanuska-Susitna Borough and the Center for Biologic Diversity and Earthjustice and said it would work with legal counsel “to identify potential intervener legal strategies and take preemptive actions to mitigate intervener delay or adverse effect to the Project.”
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