The proposed natural gas pipeline to the Lower 48 got a boost this week from federal regulators.
The Federal Energy Regulatory Commission, or FERC, put producers and land owners on notice that it is preparing to study the potential environmental impact of the project.
“Liken it to building a house. You need a building permit,” says Larry Persily, Alaska’s Federal Pipeline Coordinator.
And while you also need the financing, Persily says it won’t do you any good if you don’t have the building permits.
“It’s a benchmark. We are now starting the next stage of this,” said Persily.
To prepare for this next stage, Persily says TransCanada and its partner, Exxon Mobile Corp., have budgeted about 200 million dollars in field studies this year.
“People should be excited, or at least hopeful, that they’re spending 200 million dollars this year,” says Persily. “That part of the deal, the building permit, if you will, is proceeding on schedule -- and it’s a serious effort.”
But supporters of a liquefied natural gas line from the North Slope to Valdez say they’re troubled by what they found in the August 6th edition of the Federal Register. In FERC’s announcement, there’s a small footnote that says the environmental review won’t include the LNG route, because it does not have enough information to proceed.
“My take on it, is, that TransCanada has no interest in a line to Valdez,” says Bill Walker, a former candidate for governor. Currently, Walker is general counsel for the Alaska Gasline Port Authority.
“It’s no surprise from what I’ve seen from FERC at all. It’s further acknowledgement that we are left in the dust, when it comes to the energy race.”
Walker and other proponents of the LNG line to Valdez say TransCanada and Exxon have their own agendas. Walker says it’s in TransCanada’s interest to bring the gas to its system in Canada, while Exxon is busy developing projects all over the world and the Alaska gas is not a priority.
“Why would they look at a line into Valdez, when in fact they don’t have to. We’ll continue to pay them under AGIA,” said Walker.
Under the Alaska Gasline Inducement Act, TransCanada and Exxon can get reimbursed by the state for up to a half a billion dollars in expenses.
Persily says the producers will probably recover about 160 million from the state for their expenditures this year. Even so, he says the outstanding balance says a lot about their commitment to the project.
“If you have no expectations of this project happening, you would never spend 40 or 50 million dollars for show,” says Persily. “You’d go spend it elsewhere.”
Persily also says TransCanada has likely not had any bidders in the LNG line.
"The customers determine where it gets built, and obviously there weren't enough customers out there willing to commit their balance sheet, their assets, their checkbooks for an LNG line."
Persily’s considers FERC’s announcement on Friday a milestone of sorts.
“We’ve never gotten this close before,” says Persily. “The Federal Energy Regulatory Commission, for the first time, it’s saying, ‘Here’s the notice. Here’s the calendar.'”
To meet FERC’s timetable, TransCanada and its partner, Exxon Mobile, will have to submit eleven detailed studies by December, reporting on resources that might be affected by the pipeline -- from the soil and water to the socio-economic consequences.