Gasline Partners Take Steps Toward Permitting, Marketing Of Project

The partnership to build a natural gas megaproject has initiated the environmental review process.

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BP, Exxon, ConocoPhillips, Transcanada and the Alaska Gasline Development Corporation submitted paperwork to the Federal Energy Regulatory Commission on Friday, notifying the agency that they plan to finish collecting safety and environmental data on the project by 2016. They’re aiming for federal permitting to be completed by 2018, with construction to begin shortly after.

The partners described the pre-filing as a “major milestone” in the development of a liquefied natural gas export project that could cost upward of $45 billion. Natural Resources Commissioner Joe Balash agrees that this is a good early step for getting North Slope gas to market.

“The fact that the project has achieved certain steps to this date – they are largely on time and on budget – we are satisfied with that. We think it’s indicative of continued success and progress, but there are still many, many, many more steps to go.”

The Alaska LNG Project would involve an 800-mile pipeline extending from the North Slope to Nikiski, and early scoping work for its development began this year. The gasline would be capable of transmitting more than 2 billion cubic feet of gas a day. While some of that gas could be utilized by Alaska consumers, the partnership plans to market most of it to Asia.

To that end, the Parnell administration is courting nations along the Pacific Rim. Balash is currently in Tokyo, where he signed an agreement with the nation’s economic ministry on Monday to exchange information related to a gasline. He says it shows Japan’s government is taking the project seriously.

“It’s a signal from the [Ministry of Economy, Trade and Industry] to Japanese buys that this project and the State of Alaska are credible,” says Balash.

Balash will travel to China and South Korea next, but is not expecting any immediate government-to-government agreements to come out of those visits.

Larry Persily is the federal coordinator for the Alaska Gas Pipeline office. He says the arrangement with Japan is a positive development, but that it’s still a ways from a real deal.

“It’s not the same as saying Tokyo Electric signed the binding contract,” says Persily.

Persily says that of the two recent developments on the LNG project, the diplomatic commitment has less force behind it.

“The memorandum of cooperation is an agreement to keep in touch, whereas the pre-file is the beginning of a long and costly process that is required to get this thing built,” says Persily.

But even so, Persily says “we’ve been here before” with natural gas projects in Alaska. BP and ConocoPhillips entered the pre-file process with their Denali pipeline proposal in 2008, before abandoning it three years and over $100 million later. Exxon and TransCanada went through a similar and even more costly effort, while supported by the Palin-era Alaska Gasline Inducement Act.

The development of an LNG project has been a focal point for both of the major candidates for governor. Republican incumbent Sean Parnell sent out a press release heralding both the pre-filing with FERC and the memorandum of cooperation with the Japanese ministry of economy as positive developments. Independent challenger Bill Walker said in a phone interview that he’s “happy to see any activity associated with a gasline” but that the state is still a long way from “pipe being ordered” and that the state should have “more control” over the project’s timeframe.