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FERC Cites 'Substantial Progress' on Alaska Pipe Project

In its sixth report to Congress, FERC said there has been "substantial progress towards development" of an Alaska natural gas pipeline since it last submitted a report earlier this year.

"Two proposals for a mainline Alaskan natural gas pipeline from Alaska into Canada have emerged and advanced into the early, but detailed, planning and project development process. A possible related secondary project to move some of Alaska's gas to an LNG [liquefied natural gas] export terminal is still under consideration," the Federal Energy Regulatory Commission (FERC) said in its 11-page, semi-annual report, which is mandated by the Energy Policy Act of 2005.

"Given the magnitude of an Alaska gas pipeline, it is very unlikely that more than only one of these mainline projects would ever be built. However, it is not unusual or detrimental at this stage that two projects are [proceeding] forward," the agency said.

Both Denali and TC Alaska, sponsors of 1,750-mile pipeline projects from Alaska's North Slope, expect to file applications at the Commission in 2011, with both seeking a FERC certificate in 2013 (see NGI, Aug. 4).

"The competition among Denali and TC Alaska and a potential LNG project is a positive indication of serious interest by major industry players, which should be resolved ultimately in the energy and financial markets. At this juncture, the FERC, as the neutral siting agency, has no basis to prefer one project over another," the agency said.

However, given the statutory deadlines imposed on FERC for review of an Alaska gas pipeline application, "we continue to seriously caution that reviewing multiple projects throughout the complete federal regulatory process would greatly challenge the Commission staff, the other agencies on the federal interagency team and state agencies. We believe it to be in the public interest to avoid the consequences of a prolonged, duplicative regulatory review in a competitive situation, especially during the application phase," the Commission noted.

"We understand and accept that both Denali and TC Alaska each desire to move forward and complete their open seasons; however, in the event that multiple projects continue to move forward after that, the Commission may have to consider unique and unusual procedures to meet ANGPA's [Alaska Natural Gas Pipeline Act of 2004] deadlines."

Denali, a partnership of BP and ConocoPhillips, plans to build a 48- to 52-inch diameter pipeline to move 4 Bcf/d of gas from the North Slope to the Alberta Hub in Canada for North American consumers. The Alaska segment would be about 750 miles in length and would generally follow the Trans Alaska Pipeline System from Prudhoe Bay to Fairbanks and then follow the Alaska Highway to the Alaska/Yukon Border. At the Canadian border, the proposed pipeline would connect to a new pipeline, to be constructed by Denali affiliates in Canada, that would be about 1,000 miles long from the international border to Alberta.

The Denali pipeline project already is in the midst of the prefiling process at FERC. It plans to hold its open season before year-end 2010. Assuming a successful open season, it said it expects to submit its application for the $600 million project in August 2011, with plans to bring gas to market by mid-2018.

Similarly, TC Alaska proposes to build a 48-inch diameter pipeline to deliver 5 Bcf/d of gas from the North Slope to major markets in North America via the existing Alberta Hub. It also would be about 1,750 miles long from a gas treatment plant near Prudhoe Bay to Alberta. TC Alaska has not yet begun the prefiling process at FERC, but agency staff said it has been briefed on the TC Alaska proposal.

TC Alaska initially planned to conduct its open season in 2009 (for completion by September 2009), request FERC to begin the prefiling process in June 2010, and file an application by December 2011, with operation targeted for November 2017. But the dates are subject to change, according to the Commission.

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