Announcements

By: WIlliam Doyle

On March 31, 2010, TC Alaska received approval with modification from the FERC for its detailed plan for conducting an open season to make binding commitments for initial capacity on its natural gas Alaska pipeline project.

TC Alaska plans to issue its open season notice no later than April 30, 2010 and expects to close it 90 days later on July 30, 2010.

Two options will be submitted for shipper assessment in the open season. The first option is a 1,700-mile line from Alaska's North Slope to Alberta, from where the gas could be delivered on existing pipeline systems to the US. The second option would transport gas 800 miles from ANS to Valdez, Alaska, where it would be converted to LNG in a facility to be built by others and then delivered by ship to North American and other international markets.

Both options would allow off-take by Alaskan customers. Both also would include a gas treatment plant and a 58-mile pipeline from Point Thomson fields to the plant and main transmission line.

The Alaska Pipeline Project (APP), as it is called, is being advanced on behalf of TC Alaska by TransCanada Alaska Development Inc. (TransCanada Alaska Development) and ExxonMobil Alaska Midstream Gas Investments Inc. (EMAMGI), along with a respective affiliate of each company in Canada (collectively, the "APP Parties" or "project sponsors")

TC Alaska's Open Season Timeline as proposed:

The FERC order pertaining to the APP Parties issued on March 31, 2010 is summarized below:

• With respect to some of the objections and concerns raised by some of the potential shippers FERC states:  "It was not the Commission's intent in establishing the open season procedures to create a forum in which to pre-litigate issues that may arise during certificate and rate proceedings.  Rather, the intent of the pre-open season review is to determine whether potential bidders will be treated in a non-discriminatory manner.  Consequently, we agree with those parties who urge a relatively limited review of TC Alaska's filing. . . In any case, BP Exploration's objections do not demonstrate discrimination and are thus not within the scope of our review here."
• The FERC Commissioners noted: "Moreover, we are not persuaded by BP Exploration's assertion that unless the issues it raises regarding the rates, terms, and conditions of service are resolved during the pre-approval process, the resulting economic uncertainty will render prospective bidders either unable or unwilling to make informed bids. . . There is no basis to question TC Alaska's interest in resolving any issues that would preclude prospective shippers from bidding on its proposal, given the time, effort and expense involved. TC Alaska is also mindful, no doubt, that another prospective applicant has announced its intention to soon file its request for pre-approval of an open season plan.  Thus, if TC Alaska is unable or unwilling to satisfy the informational requirements of any prospective bidders, those potential bidders will be presented with another option to consider for meeting their needs."
• There were also questions raised by prospective shippers regarding credit worthiness.  On the count, the FERC found:  "While the creditworthiness provisions in Exhibit B to the precedent agreement state that the project sponsor will determine a shipper's creditworthiness in its sole discretion, the Commission does not believe this to be discriminatory since Exhibit B provides clear criteria for determining whether a shipper is creditworthy."
• BP Exploration asked the FERC to require TC Alaska to include a means for shippers to include in their bids the volumes of incremental firm capacity that will be available along with any firm capacity awarded in the open season. BP Exploration asserts that TC Alaska has neither provided information to enable bidders to assess the amount of seasonal capacity other than their MDQ, nor provided a way for shippers to include that seasonal capacity in their bids.  On this FERC ruled :  "This is clearly an issue that fall outside the scope of the open season pre-approval process, as is reflected by our treatment of a similar question in Alliance Pipeline, L.P.  . . . Only operational experience can determine the volume that a pipeline can consistently deliver on year-round basis to determine available pipeline capacity."
• Based on access to information concerns, the FERC will require that TC Alaska immediately open its data rooms to allow inspection of documents and information.  FERC will not require that TC Alaska change its planned open season commencement date of April 30, 2010.  Should TC Alaska promptly open the data rooms, there will be no reason to alter the proposed open season schedule.  If, however, there is an undue delay in opening the rooms and any party makes a showing that it has been significantly disadvantaged as a result, FERC will consider requiring an appropriate delay in the commencement date of the open season or extending its closing date.
• FERC accepted TC Alaska's March 16, 2010 explanation of the Dempster Lateral and the Canada Open Season process as acceptable.  Dempster is a dead issue and the Canada Open Season process is fine.
• The State of Alaska expressed concerns about standards of conduct. This issue is related to ensuring that a project applicant conducting an open season functions "independently from any affiliated organizational units involved in the production of natural gas" in Alaska or marketing or selling natural gas from Alaska so that affiliates do not have unfair advantage in an open season. TC Alaska is not a gas producer or marketer, but the standards are applied to ExxonMobil, and compliance procedures in the open season plan "spell out ExxonMobil's structural separation, as well as the firewalls and standards of conduct that are in place."
• APP Parties state that once the FERC approves the open season plan, they intend to issue the open season notice no later than April 30, 2010. 
• APP Parties state that the open season will run for the minimum of 90 days required by the FERC's regulations and, thus, is expected to close on July 30, 2010.
• APP Parties state that actual notice of the open season will be provided to the FERC, the State of Alaska and to the Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects, as required by the FERC's Open Season regulations.
• Reading rooms will be located in Houston, Texas; Anchorage, Alaska; Whitehorse, Yukon and Calgary, Alberta.
• To be considered a bona fide bid, the precedent agreement must be signed by an authorized representative of the bidding company or entity.  Each potential shipper must meet and continue to meet the creditworthy requirements appended to the precedent agreement.  In the precedent agreement, the potential shipper must state the maximum daily quantity that it wants to transport on the pipeline and, if desired, the maximum treatment quantity that it might want to process at the gas treatment plant.  The potential shipper must also name the primary receipt and delivery points it seeks to use and whether it intends to pay recourse rates or seek negotiated rates.  The potential shipper can also request a primary term for such services (20-25, 30, or 35 years for negotiated rates and 25 years for recourse rates).
• APP Parties state that shippers that make commitments to use capacity of at least 200,000 British thermal units (MMBtu) per day (about 200,000 Mcf per day) will be considered foundation shippers.
• Within five business days after the close of the open season, the project sponsors will notify each bidder whether it has submitted a conforming bid and will provide a written explanation to those bidders whose bids have been rejected as non-conforming.
• Potential shippers will be notified by September 1, 2010, whether the project sponsors intend to proceed to design, permit and construct either of the alternative projects. 
• There will be no continuing obligations with respect to a alternative route not selected by the project sponsors.
• On or before October 31, 2010, the project sponsors will notify conforming bidders of the impact on the project of the total aggregated capacity from conforming bids for the selected route.
• After the close of the open season, the project sponsors plan to seek mutual agreement with potential shippers on negotiated rates and other conditions proposed to the precedent agreements.
• On or before November 30, 2010, the project sponsors will provide conforming bidders with the final version of the precedent agreement that must be executed no later than December 31, 2010.
• Within 10 days after precedent agreements have been executed by both parties, the project sponsors will make public the name of the prospective shipper(s), the amount of capacity awarded, and the term of the agreement(s).
• Within 20 days after precedent agreements have been executed by both parties, the project sponsors will submit to the FERC copies of each precedent agreement and copies of any relevant correspondence with bidders who were not allocated capacity, identifying why such bids were not accepted.

Contact William Doyle, Director of Permits, Scheduling & Compliance at wdoyle@arcticgas.gov

Attachments: 

APP Open Season Fact Sheet

This submission serves as the comments of the Office of Federal Coordinator for Alaska Natural Gas Transportation Projects (OFC) in response to the National Marine Fisheries Service (NMFS) proposed rule and request for comment regarding Endangered and Threatened Species; Designation of Critical Habitat for Cook Inlet Beluga Whale [Docket No. 090224232-91321-03] published in the Federal Register on December 2,2009.

The Office of Federal Coordinator for Alaska Natural Gas Transportation Projects (OFC) is an independent agency in the Executive Branch, pursuant to the Alaska Natural Gas Pipeline Act (ANGPA) of2004 (P.L. 108-324) with authorities derived from that law and the Alaska Natural Gas Transportation Act (ANGTA) of 1976 (P.L. 94-586). OFC has a specific congressional mandate to ensure federal agencies act in a manner that leads to expedited permitting, construction and operation of an Alaska natural gas transportation system.

The Alaska natural gas transportation project is a proposed high pressure 48" gasline that over its lifetime will carry trillions of cubic feet of natural gas from the North Slope of Alaska to the lower 48 states. The project will be the largest private sector funded infrastructure project ever undertaken in North America with construction value estimated as high as $42 billion dollars. The pipeline will extend approximately 1,700 miles with over 700 miles in Alaska and over 950 miles in Canada. Building it will require 2.5 million of tons of steel, hundreds of pieces of heavy equipment and thousands of workers. Indeed, over its lifetime it will generate tens of thousands of direct, indirect and induced jobs in Alaska, the lower 48 states and Canada. Much of the steel, equipment and other supplies for this project will to move through ports in the Cook Inlet for transportation and staging. Moreover, one or more ports in the inlet might need to expand to accommodate project materials and related work. The project will also generate increased ship movements of various types through the Inlet...

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Download Full Announcement

This submission serves as the comments of the Office of Federal Coordinator for Alaska Natural Gas Transportation Projects in response to the U.S. Fish and Wildlife Service’s (“Service’s”) proposed rule designating critical habitat for the polar bear (Ursus maritimus) in the United States (the “Proposed Rule”) pursuant to Section 4 of the Endangered Species Act (“ESA”), 16 U.S.C. § 1533. See 74 Fed. Reg. 56058-86 (Oct. 29, 2009).

I appreciate your expressed strong support for the Alaska natural gas transportation project (Project) and the project’s potential to help ensure energy, environmental, and economic security for North America. This is consistent with support for the project by the Administration and findings by the Congress that the project is in the nation’s interest.

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Read Full Comment

WASHINGTON – Today, President Barack Obama announced his intent to nominate the following individuals to key administration posts:

• Larry Persily, Federal Coordinator for Alaska Natural Gas Transportation Projects
• Patricia A. Hoffman, Assistant Secretary for Electricity Delivery and Energy Reliability, Department of Energy
• Mari Del Carmen Aponte, Ambassador to the Republic of El Salvador, Department of State
• Donald E. Booth, Ambassador to the Federal Democratic Republic of Ethiopia, Department of State

President Obama said, “The depth of experience these individuals bring to their roles will be valuable to my administration as we work to bring about real change for the American people. I look forward to working with them in the months and years ahead.”

President Obama announced his intent to nominate the following individuals today:

Larry Persily, Nominee for Federal Coordinator for Alaska Natural Gas Transportation Projects
Larry Persily has worked for more than a decade on oil and gas issues for three Alaska governors and the Alaska State Legislature. Mr. Persily currently is an aide handling oil and gas issues for to Alaska State House Finance Committee Co-Chair Mike Hawker. Mr. Persily previously served as Deputy Commissioner at the Alaska Department of Revenue until 2003 and returned in 2004 to assist the state and North Slope oil and gas producers with developing a natural gas pipeline to serve North American consumers. He later worked in the Office of the Governor of Alaska in Washington, D.C., assisting with oil and gas, Arctic, commerce, transportation and tax issues. Mr. Persily has represented the state at oil and gas conferences and presented on Alaska oil and gas and fiscal issues. Mr. Persily is known statewide for his bipartisan credentials — he has worked for Democrats and Republicans — and his knowledge on oil and gas matters, particularly the history of the 40-year effort to develop a North Slope natural gas pipeline. Mr. Persily served as editor of the Department of Revenue’s 2002 report, “State Financial Participation in an Alaska Natural Gas Pipeline.” Mr. Persily earned a B.A. from Purdue University.

Patricia A. Hoffman, Nominee for Assistant Secretary for Electricity Delivery and Energy Reliability, Department of Energy
Patricia A. Hoffman was named Principal Deputy Assistant Secretary for the Office of Electricity Delivery and Energy Reliability at the United States Department of Energy in November 2007.  The focus of her responsibility is to provide leadership on a national level to modernize the electric grid, enhance the security and reliability of the energy infrastructure and facilitate recovery from disruptions to the energy supply both domestically and internationally. Patricia has 14 years of experience at the Energy Department developing and managing technology research programs critical to the electric sector for the Office of Electricity Delivery and Energy Reliability as well as the Office of Energy Efficiency and Renewable Energy. During her tenure, she managed efforts that resulted in the longest demonstration of ceramic components operating in an industrial gas turbine.  Additionally, under her leadership, the Department demonstrated the first recuperated, industrial gas turbine for distributed generation applications. Ms. Hoffman holds a Bachelor of Science and a Master of Science in Ceramic Science and Engineering from the Pennsylvania State University.

Mari Del Carmen Aponte, Nominee for Ambassador to the Republic of El Salvador, Department of State
Mari Del Carmen Aponte is currently an attorney and independent consultant with Aponte Consulting. From 2001-2004, Ms. Aponte was the Executive Director of the Puerto Rican Federal Affairs Administration (PRFAA). Prior to that, she practiced law for nearly twenty years with Washington D.C. based law firms. Ms. Aponte also served as a member of the Board of Directors of the National Council of La Raza and the Puerto Rican Legal Defense and Education Fund. She is also a member of the Board of the University of the District of Columbia and Rosemont College. She served as president of the Hispanic National Bar Association; the Hispanic Bar Association of the District of Columbia; and is a member of the District of Columbia Judicial Nominations Commission. In 2005, she was also elected to the Board of Directors of Oriental Financial Group (NYSE-OFG). In 1979, as a White House Fellow, Ms. Aponte was Special Assistant to the United States Housing and Urban Development Secretary Moon Landrieu. Ms. Aponte has a B.A. in Political Science from Rosemont College, a M.A. in Theatre from Villanova University, and a J.D. from Temple University.

Donald E. Booth, Nominee for Ambassador to the Federal Democratic Republic of Ethiopia, Department of State
Donald E. Booth is currently the United States Ambassador to the Republic of Zambia.  Prior to that, Ambassador Booth served three years as Ambassador to the Republic of Liberia. Ambassador Booth previously served as Director of the Office of Technical and Specialized Agencies at the State Department’s Bureau of International Organization Affairs. Prior to this position, he served as Director of the Office of West African Affairs. He has  also served in other positions at the State Department including Deputy Director of the Office of Southern African Affairs, the Economic Counselor in Athens, and the Division Chief for Bilateral Trade Affairs;  desk officer in the Office of Egyptian Affairs and the Office of East African Affairs; and various roles while stationed at embassies in Bucharest, Brussels and Libreville. Ambassador Booth earned a B.A. from Georgetown University, an M.A. from Boston University and an M.A. in National Security Studies from the National War College.

Delegations from the United States and Canada met this month at the annual Energy Consultative Mechanism [ECM] meeting in Ottawa. The meeting provides a forum for both countries to review bilateral energy trade and to explore mechanisms for strengthening and deepening the largest bilateral energy relationship in the world.

For the past three years, the Department of State has requested that the Office of the Federal Coordinator (OFC) present the Alaska natural gas pipeline update at the bilateral discussions.

“Our relationship with Canada is vitally important on many levels,” said Federal Coordinator Drue Pearce, “and the OFC has been working diligently with our counterparts in Canada to coordinate all pipeline-related issues between our two countries. Both applicants proposing to build the Alaska natural gas pipeline are offering routes that will stretch over 1,000 miles through Canada, more than the distance in Alaska, and our participation in this year’s meetings in Ottawa was just one of many steps we take to provide information on what will be North America’s largest private construction project.”

OFC Director of Permits, Scheduling and Compliance William Doyle represented the OFC and told the gathering that the project will create tens of thousands of good paying, green jobs and a new source of clean North American energy. He reported on the progress made by both applicants – Denali—The Alaska Gas Pipeline and The Alaska Pipeline Project– as well as the work being done by the OFC. Specifically, Doyle said the OFC is:

• Leading a Technical Review Team (TVT) that discusses the challenging technical issues and includes representatives from federal and state of Alaska agencies;
• Creating a Permit Matrix which will list the federal and state agency data needs for each U.S. permit and authorization that applicants will need to secure;
• Drafting the consolidated implementation plan for each applicant;
• Managing conflicts among federal agencies and between the applicants and federal agencies; and,
• Meeting regularly with the U.S. federal interagency team, the FERC staff, the State of Alaska, and officials with the Government of Canada;

When completed, the 1,700-mile pipeline would deliver enough natural gas to supply about 7 percent of America’s annual consumption of natural gas.

The Office of Federal Coordinator for Alaska Natural Gas Transportation Projects (OFC) is creating a Google-like reference system along a 20-mile stretch of the proposed natural gas pipeline route at Atigun Pass that, if successful, would be expanded for the entire route to provide a consistent and integrated source of information and mapping for the pipeline project.

The prototype of the OFC's Geospatial Information System (GIS) will use a base map from Light Detection and Ranging [LiDAR] technology and a range of existing documents, studies and research from private sector and government sources to create a web-based data source that can be used by federal and state agencies involved in permitting the gas pipeline.

The Atigun Pass GIS prototype, using the LiDAR data, should be completed by the end of 2009, and will allow agencies to click on any point along that stretch of the pipeline to extract and view relevant mapping and report data. If the prototype is successful and assists agencies in expediting the permitting process, the GIS will be developed for the 750-mile pipeline route from Prudhoe Bay to the Canadian border.

Currently, agencies use different sets of data and systems when studying the pipeline route, and those data sets are incompatible. The new resource system will remove those inconsistencies and incompatibilities by giving every agency involved in the pipeline project use of the same geospatially referenced baseline data on fault and landslide hazard detection, wetlands, and stream crossings to lay a foundation for streamlining permitting activities and aid land and resource management. It also will help with analysis of climate change impacts in the pipeline corridor.

LiDAR technology -- an active remote sensing system analogous to radar that uses laser light as the measurement source -- can provide range and other information that gives users an overview of broad, continuous features that would be otherwise indistinguishable. The system measures the roundtrip time for a pulse of laser energy to travel between the sensor and a target. Specific LiDAR applications for the OFC GIS include: base mapping, pipeline corridor mapping, hydrologic and hydraulic modeling, floodplain mapping, terrain unit mapping, land-cover classification, transportation and transmission corridor mapping, and urban modeling.

In other applications, LiDAR has been used in Eureka, Nunavut to help scientists study the processes associated with radiative exchange. LiDAR systems also are being used to collect data and analyze the effects of climate change by monitoring the subtle movement of glaciers, degradation of coastal areas and to establish models that can be used in the study permafrost in changing environments.

The OFC has partnered with the State of Alaska to make sure all specifications are appropriate and the data obtained will be a valuable asset that can be used to expedite permitting. Leveraging state funds with matching federal funds will be key to decreasing the cost of the overall GIS project.

Congress directed the Office of the Federal Coordinator to manage the activities of more than 20 federal agencies, Canadian authorities, the State of Alaska and private stakeholders to expedite the regulatory process for making this crucial natural gas supply available to domestic markets.

The OFC continued engagement with Canadian authorities on key issues regarding the construction of a natural gas pipeline when leaders met in June to discuss workforce development on both sides of the border as well as to map out critical permitting timelines.

Federal Coordinator Drue Pearce and Deputy Federal Coordinator Tom Barrett met in early June with Michael Wilson, Canadian Ambassador to the United States to explore the issues critical to both nations' pipeline systems, and later that month with the heads of agencies including natural resources, project management, environmental assessment and the northern pipeline agency on myriad issues.

In July, Director of Permitting , Scheduling and Compliance, William Doyle, met in Ottawa with the director s of two Canadian agencies to discuss Canada's regulatory process under the Major Projects Management Office (MPMO) and the Northern Pipeline Agency (NPA). Denali's application will be handled by the MPMO, while TransCanda's will be handled by the NPA. In September, OFC staff will meet in Calgary with Canadian officials and TransCanada on the First Phase Consolidated Implementation Plan.

Timely, open communications between the U.S. and Canada are essential in addressing key issues such as how the Alaska pipeline will dovetail and enhance smaller pipeline projects in Canada, including the Mackenzie natural gas pipeline in the Northwest Territories, permitting and timeline issues and the development of infrastructure and employment on both sides of the border.

On June 9, 2009, the OFC completed the first phase of the Consolidated Implementation Plan (Plan) specific to the Denali—The Alaska Gas Pipeline, LLC (Denali) proposed project. The first phase includes the time period from the Federal Energy Regulatory Commission's [FERC] Pre-filing Process to deeming Denali's application "complete."

The second phase of the Plan will cover the Environmental Impact Statement and be done prior to Denali's complete application being accepted by FERC.

The OFC began writing the Denali Plan in November 2008. Four rounds of comments with 20 agencies and a review by the Executive Office of the President were included. Read The Denali First Phase Consolidated Implementation Plan (PDF) on the OFC website.

The OFC currently is working on a First Phase Consolidated Implementation Plan that is specific to the TransCanada Alaska proposed project and expects to complete it by the end of 2009.

Office of the Federal Coordinator for Alaska Natural Gas Transportation Project Federal Coordinator Drue Pearce today issued the following statement:

"Today I announce my intention to step down as the Federal Coordinator for Alaska Natural Gas Transportation Projects effective January 3, 2010. The President requested my resignation.

"It has been an honor to stand up a new federal agency and to serve as the first Federal Coordinator. I am a passionate supporter of the agency’s mission to bring Alaska natural gas to North American markets. I leave an effective and efficient agency with a highly skilled team of professionals actively pursuing our mission. It has been a profound privilege to lead this innovative team."

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Full Statement

Federal Coordinator Pearce announces President Bush's $9 million FY2009 budget request for the OFC. This request allows the OFC to expand staff, establish an office in Alaska, and continue work with the federal, state and Canadian governments to further the progress towards an Alaska natural gas transportation project.

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