Export permits in hand, busy summer ahead for AK LNG

It will be a busy summer for work on the Alaska LNG Project.

Engineering and environmental teams are at work, aiming to complete a $500 million pre-Front End Engineering and Design, or pre-FEED, study by later this year. This will include a revised cost estimate, currently about $45 billion to $65 billion, for the project that would transport North Slope gas for state use and exports through an 800-mile pipeline to Nikiski.

The Alaska LNG Project is being planned by consortium of the three major North Slope producers, the State of Alaska as a 25 percent partner, and pipeline company TransCanada; ExxonMobil Corp. as the project manager. The state partnership is through the Alaska Gasline Development Corp., or AGDC.

The pre-FEED work will set the stage for a decision next spring on whether to proceed to the more advanced Front-End Engineering and Design, or FEED, stage. That decision is planned for mid-2016.

Two important efforts underway this summer include an integrated logistics plan, being done by Alaska-based PRL Logistics, that will indicate areas needed for pipe laydown yards, work camps and fuel storage. The plan will also describe how pipe will be moved and modules built for the giant project.

Completion of the PRL Logistics study is scheduled for the end of the year.

Meanwhile, Bechtel, a major engineering and construction firm, is working on a labor needs study that will include an inventory of available construction-related skills in Alaska. The company began work in April.

The project team will also bring a small jack-up rig to Cook Inlet later this fall to do marine soil-sampling for a marine terminal at Nikiski, on the Kenai Peninsula, the site of the large proposed LNG plant.

Work is also underway on the regulatory front, with a draft environmental impact statement, or EIS, being led by the Federal Energy Regulatory Commission. The EIS is part activity now underway that will allow FERC to license the project.

The agency will begin “scoping” sessions with the public in November for the draft EIS, said Ann Miles, FERC’s executive director, who was in Alaska May 28. The scoping process officially started in early March, when FERC issued a formal Notice of Intent to begin the EIS.

A second, more complete drafts of resource reports for the project are due to be released next February. A formal, detailed application to the FERC is expected in September 2016 and the final approval has been requested by July 2018, Miles said.

Miles appeared at a “roundtable” on the project in Anchorage that was chaired by U.S. Sen. Lisa Murkowski.

In a major step forward, on May 28 the U.S. Department of Energy issued a conditional approval for the project to export LNG to non-Free Trade Agreement countries, a category that includes potential big purchasers like Japan, Taiwan, India and China.

Exports to countries that have signed a Free Trade Agreement with the U.S. was approved last November. Except for South Korea, which is an FTA nation, most nations on that list are not significant LNG buyers.

DOE’s conditional approval for non-FTA buyers is significant because it allows LNG marketing activities by the North Slope producers to get underway officially. It is also the first form of approval for the project by the U.S. government, which is important for potential customers in Japan.

Larry Persily, an oil and gas advisor to the Kenai Peninsula Borough and the former federal natural gas coordinator, said the Department of Energy is giving Alaska special treatment, allowing it to jump the line ahead of pending Lower 48 LNG export projects.

“The Alaska LNG partners applied for export authority 10 months ago; some Lower 48 projects have been waiting three years for Energy Department approval,” Persily said in a written analysis. “What is also significant is that the permit is for 30 years, 10 years longer than the DOE has allowed in most export applications.”

DOE would allow exports of up to 2.55 billion standard cubic feet of gas per day. Final approval of the export permit is conditioned on the completion of the EIS and final approval by FERC.

Meanwhile, a lot of fieldwork and other activity is underway with the project. Persily reported, in his analysis, that more than two dozen Alaska LNG and contractor team members met with 60 federal, state and municipal officials May 12 to discuss the latest revisions on the project and the most recent planning for the pipeline route.

For about half of the 800-mile route, the gas pipeline parallels the existing trans-Alaska Pipeline System, but planners are working to keep the high-pressure gas line at least 200 feet from the oil pipeline to allow space for construction equipment to maneuver. There will be pinch points in some constricted areas, however.

The summer field season includes bore-hole drilling and soil testing, stream surveys, wetlands mapping and cultural resource surveys. AGDC will be conducting bore-hole drilling and other geotechnical work on behalf of the project.

In his analysis, Persily said 51 streams will be surveyed this summer, adding to water-flow and fisheries data already collected on 253 streams. About 30,000 acres of wetlands will be mapped, adding to mapping already done on 153,000 acres of wetlands, Persily said.

All in all, there will be 446 waterbody crossing including rivers, stream and lakes and including a 30-mile underwater section crossing the Inlet to Nikiski.