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Yukon Pacific tried to take gas pipeline to Kenai, but failed
Kristen Nelson
Yukon Pacific Corp.’s success in obtaining permits for a gas pipeline to Valdez and a liquefied natural gas plant at Anderson Bay has been taken to mean two things, the company’s president, Jeff Lowenfels, told the House Special Committee on Oil and Gas March 23: If Yukon Pacific could get permits then others could get those same permits; conversely, if Yukon Pacific could permit a gas pipeline to Valdez and an LNG plant at Anderson Bay, then others could permit other routes — such as a gas pipeline to Kenai and an LNG plant on the peninsula.
But the route to Valdez is not what Yukon Pacific proposed to the 22 state and federal agency who permitted the project beginning in 1984, Lowenfels said.
“I should tell you that my goal, when I was hired for the job by Gov. Wally Hickel, was to take this project to Kenai,” Lowenfels said. “And I failed. Because the federal agencies and the state agencies determined that it was more environmentally acceptable to take this project to Valdez in the existing corridor.”
“We tried to go to Kenai. We failed. … In fact,” Lowenfels said, “I like to tell people I never got yelled at more in my life then when Wally Hickel found out we could not go to Kenai.”
Lowenfels and Yukon Pacific Vice President Wayne Lewis told PNA April 7 that it has been a struggle to explain the project’s permits partly because no similar project has ever been permitted under the National Environmental Policy Act — which requires an environmental impact statement and an evaluation of alternatives.
“There’s nothing … necessarily wrong with the Cook Inlet route,” Lewis said, “except that it will always be environmentally inferior to the established route to Valdez.” And that, Lewis said, is not what Yukon Pacific decided — it is what the permitting state and federal agencies decided.
“It (the Cook Inlet route) lost the beauty contest to the Valdez route,” Lewis said.
And, Lowenfels noted, “since it lost that beauty contest, the (Cook Inlet) route’s gotten uglier. I’ll give you a couple of examples… beluga whales, …regional haze, …the Cook Inlet sandhill crane.”
The YPC hurdle Yukon Pacific’s permits, Lowenfels told the committee, are a double hurdle for the Kenai route. The permitting agencies are on record rejecting Kenai. And another route would have to demonstrate that, not only is the Kenai route environmentally viable, but that the agencies must have made a mistake when they issued permits to Yukon Pacific calling the existing pipeline corridor to Valdez the environmentally preferable route.
Then there is the LNG plant site: The Department of Energy “specifically rejected Kenai and four other sites in the state of Alaska” for an LNG plant. “In fact, if we wanted to do this project at the Alyeska terminal in Valdez we would not be able to do so,” Lowenfels said. “The only place is Anderson Bay in Valdez.”
In addition to prior agency rejection of a gas pipeline to Kenai, Lowenfels said Yukon Pacific “would definitely fight efforts to permit this project away from the Valdez route.”
Asked by Rep. John Harris, R-Valdez, how long it would take to permit a different route, Lowenfels said, “I may not be the right person to fully answer this question, because I don’t believe that the permits are duplicable.” The Phillips Petroleum Corp. LNG plant at Kenai, he said, was built prior to all of these regulations and is grandfathered.
“I am the only person in the world who has done this,” Lowenfels said. He estimated it would take seven to nine years to try to duplicate the permits. If other permits were challenged in court, he said, it could be an additional one to three or four years.
Lowenfels said that while he did not believe it would be possible to permit a gas pipeline from the North Slope to Kenai, “I do believe, on the other hand, that it is possible to get additional permits to put a spur line in from Glennallen from the line going down to Valdez, to Wasilla, to provide the entire Southcentral area with ample quantities of gas from the North Slope.”
Process has changed As far as duplicating the permits Yukon Pacific already has, Lowenfels told the committee that the permitting process has changed since Yukon Pacific got its permits. The company has grandfathered rights to a tiered permitting process that no longer exists, he said.
The tiered process is significant, Lowenfels said, because this project requires hundreds of permits. While a lot of the 860 individual permits are repetitive — like putting together sanitary facilities at camps, there are 12 major permits that make the rest of the project possible.
“And under our tiered system, we have the assurances of the federal and state government, having gotten those permits, having gone through the environmental impact statement process twice now, that in fact the other 840-some odd permits, are available based upon the work we’ve already done.”
Permitting players To help explain Yukon Pacific’s permits, Lewis has analyzed the company’s eight major export project permits by the amount of time it took to get each and the responsible agency. Twenty-three percent of the permitting time was spent on state permits, 77 percent on federal permits. Seventeen percent of the permitting time was spent on three Joint Pipeline Office coordinated permits; 83 percent on non-JPO permits. Forty-five percent of permitting time was spent on three unique federal permits required only for an LNG export project: a presidential finding; a Department of Energy export license; and a Federal Energy Regulatory Commission place of export. Fifty-five percent of permitting time was spent on permits such as rights-of-way which are commonly required for projects.
Lewis told PNA that much of Yukon Pacific’s permitting discussion “ends of sounding like ego, when in fact, we wrote the book.”
It is difficult to find someone to comment on the permits, he said, is because agencies have only been aware of their piece of the permitting pie. Another interesting thing about the permits, Lewis said, is that they are interrelated. The final EIS, he said, incorporates by reference portions of the draft EIS. And, Lowenfels noted, once the Department of Energy Office of Fossil Energy said that Anderson Bay was the only place North Slope gas could be exported, then the Federal Energy Regulatory Commission was limited to Anderson Bay and couldn’t look at other sites.
“One way of looking at this,” Lewis told PNA, “is because YPC did it, it therefore is doable. Replicate-able. I mean it’s evidence that it can be done. The flaw in that kind of thinking is, they don’t understand that because it was done, it can’t be replicated. I’m not saying you can’t get permit one and seven and nine. You don’t get to play unless you get ‘em all.”
In discussions with the committee, Lowenfels noted that Yukon Pacific has more than permits for the project. “We have a tremendous amount of engineering,” he said. “And by that I mean a GIS system and a fully mapped route, one inch to the mile… We’ve got a patented system for operating a pipeline in permafrost and discontinuous permafrost… We’re not just permits. But all of those things tied together would be available to either the port authority and/or the sponsor group — should the sponsor group decide to move forward down into the Valdez area.”
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