FERC's 15-year-old approval of a developer's proposal to construct a liquefied natural gas (LNG) liquefaction and export facility in Alaska is outdated and no longer valid, the Commission said. However, the project could be reauthorized if additional information is provided.

Yukon Pacific Co. LP, a unit of CSX Corp., received approval from the Federal Energy Regulatory Commission (FERC) in May 1995 for its Anderson Bay project in Southcentral Alaska provided that construction began within three years. Yukon sought and received four extensions, but not a fifth. The last extension expired last Saturday.

FERC's Office of Energy Projects told Yukon's lawyer in a letter recently that findings of the proposed facility's final environmental impact statement are outdated and can no longer support the project.

"The background ambient air quality data, marine vessel traffic data, and the biological and cultural resource surveys and protocols are more than 15 years old and do not [reflect] the current status of the affected environment," the letter said. "There have also been numerous changes in regulatory requirements since 1995, from both an environmental and safety perspective, that must now be addressed."

The letter noted that the federal safety standards for LNG facilities and seismic design requirements have been revised since the project was first considered. Existing analysis of the engineering design, safety, and exclusion zones for the terminal do not address current standards, it said.

"Further, the marine safety, security and navigational impacts must be re-evaluated with respect to the U.S. Coast Guard's current facility security requirements and its waterway suitability review process," the letter said.

The Trans-Alaska Gas System project, which the Commission approved in 1995, called for the siting and construction of liquefaction and associated facilities at Anderson Bay, Port Valdez in Alaska for the purpose of exporting LNG to Japan, the Republic of Korea and Taiwan. The proposed facilities were intended to liquefy gas received over a proposed intrastate pipeline originating on Alaska's North Slope.

Since that time Alaska has seen the advancement of two competing proposals for a pipeline that would tap the North Slope to serve Canada and Lower 48 gas markets. One of these projects -- proposed by TransCanada Corp. and ExxonMobil Corp. -- includes an option to carry gas to Valdez for liquefaction and export by another party that would be responsible for constructing liquefaction and export facilities (see NGI, Feb. 1). BP plc and ConocoPhillips have a competing project, known as Denali, that does not include an LNG option, but the partners have said such an option could be provided should the market support it (see NGI, April 12).

Additionally, others have been at work in Alaska to develop an in-state gasline that would serve the needs of the state's Southcentral region, where gas supplies are running low (see NGI, March 29).

Moving Alaska gas to Asian markets in the form of LNG still holds appeal for many. Two years ago an Alaska contingent traveled to China to investigate the opportunities for exporting LNG to that country (see NGI, May 19, 2008). Alaska already has one liquefaction plant, which has been sending LNG to Japan since the 1960s (see NGI, April 28, 2008; Jan. 7, 2008).

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