Thank you. It's good to be here in the winter, when it's cold. It reminds me why we need a natural gas pipeline.

Fairbanks residents and business cannot afford to keep paying high-priced energy bills to stay warm in the winter.

Rural Alaskans across the state have long known how much it costs to keep the heat on during the Arctic winter. Forget toasty warm, how about just luke warm?

And in the past few years, Anchorage residents have learned what it means to worry about their winter heating bill.

Alaskans are frustrated and impatient and getting angry. They want their gas. The problem is, someone has to pay for the pipeline.

The best project for Alaska is the one that moves the most gas off the North Slope to create the most opportunity for new investment in oil and gas exploration and development - putting the most Alaskans to work.

The best project for Alaska is the one that generates the most public revenues to help ease the budget squeeze that comes with declining oil revenues.

The best project for Alaska is the one that moves gas to in-state customers at the lowest tariff. The economies of scale really do mean something.

A natural gas pipeline from the North Slope to serve Alaskans and Lower 48 markets is possible, but to turn that into probable will take the right market conditions, investors willing to risk tens of billions of dollars and state involvement.

Continuing the trend of converting more of the nation's electrical generating capacity from coal to cleaner-burning natural gas will improve the market for gas. More demand will drive the need for more supply, and that gives Alaska gas a chance.

If investors see demand building, if they see higher prices for gas in the decades ahead, Alaska has a chance. Any project decisions will be based not on today's gas prices but on expectations of prices in 2020 and beyond.

At some point, Alaskans will need to decide how much they want the pipeline and what is fair for the state. In making that decision, Alaskans should think not only of how much wealth they expect from the state's share of natural gas resources but also what our state would be like without any wealth to share.

The oil pipeline will be three-quarters empty by the end of the decade, and that's if the state's projections of new drilling come true. That's a big if.

Those projections include the assumption that half of the oil flowing down TAPS in 2020 will be new oil from fields not in business today - in some cases not even under construction or planned today.

The North Slope has thrived on oil, only oil and nothing but oil for 34 years, but it's not going to continue thriving without a way to get gas to market, too.

The fact is, we're not likely to see any big new fields pumping oil by 2020 - not offshore, not ANWR.

A gas pipeline would make Alaska a much more attractive option for the tens of billions of dollars needed to maintain the aging oil pipeline, pump more oil from older fields and explore for new reservoirs.

Add up the investment dollars, the goods and services bought in Alaska, the jobs, tax and royalty revenues, and a gas line can help provide a strong economy for decades to come. It's not just about counting the last tax dollar; it's about a state with a future or a state running out of oil money. Take your pick.

I know Alaskans are frustrated with the pace of gas line development. I'm sorry, but big projects always take longer than expected and big political promises also take longer than expected to come true.

I also know that many Alaskans like the idea of an in-state pipeline to move North Slope gas to Fairbanks and down the Railbelt to Southcentral. They believe it can be built quickly, or least quicker than a decade.

But even if you can sign up customers to sell more than double all of the natural gas that is burned in the state on an average day - even if you can nail down those large, unknown industrial customers - the in-state line at 500 million cubic feet a day would still need a state construction subsidy estimated at $4.2 billion to deliver gas at the end of the pipe at the same price that Southcentral utilities pay today.

I know, you here in Fairbanks would love to get gas at $7 or $8 per thousand cubic feet like Anchorage. But let's face political reality: Gas for Alaskans is at the front of the political burner tip because Anchorage got burned by higher prices.

Before the state writes a multibillion-dollar check for a small line that won't produce much public revenue, won't spur any exploration and development on the North Slope, and will need a massive subsidy just to deliver gas at tolerable prices - maybe the state should sit down with the producers that will be paying the bill for the larger pipeline and see if the state can do something to tip the economics in favor of the big line.

The bigger line would spur oil and gas development in Alaska; it would deliver gas in state at the lowest tariffs, and it would generate far more public revenues than a small line.

The federal coordinator's office for an Alaska gas line is ready to help with permitting for a pipeline to serve the Lower 48 states. Hundreds of people - including the development teams and state, federal and Canadian regulators - are working on the pipeline. The Federal Energy Regulatory Commission alone has a 14-member team assigned to the project.

President Obama in his State of the Union speech last month called on the nation to draw 80 percent of its electricity from clean-energy sources, including natural gas, by 2035.

The federal government is there with loan guarantees and tax incentives for the Alaska project. Strong support for the project in Alaska is essential to maintaining support in Washington.

The nation's utilities already are turning toward gas-fired power generation in growing numbers. Almost half of the nation's coal-fired power plants are more than 40 years old, creating a growth opportunity for gas.

Shale gas is abundant but is running into community opposition in many areas. And even as shale production grows, it may not be enough to replace the billions of cubic feet of gas per day in declining production from older, conventional gas fields in the United States and Canada.

Alberta, the most prolific of Canada's gas-producing provinces, estimates its conventional gas production in 2018 will be half as much as its peak in 2001.

The North Slope line has a chance, but the economics are tight - and risky. If Alaskans believe in a better future with a pipeline, bringing gas to Alaskans while creating jobs and billions of dollars in new public revenues, it's time (while waiting for the open-season results) to start looking at what the state can do to help move the project's economics in favor of construction.

Not a subsidy or an open-ended financial incentive with nothing in return. Rather, sitting down with all parties to look at the problems and find answers.

The federal coordinator's office is willing to help.

Thank you.

Federal Coordinator Persily spoke at the October 2010 Alaska Support Industry Alliance dinner.  The Alliance is made of the businesses, organizations and individuals that provide the products and services necessary to build the Alaska gas pipeline project.  Persily's message was to give the project time to come to fruition.  Although there are worries about the natural gas market, there is still time.  The economy will recover; demand for natural gas is increasing; and the lower 48 market is shifting from coal to natural gas -- those are Alaska's opportunities.

President Obama acknowledged the role Alaska plays in meeting America's energy needs today and into the future.  Federal Coordinator Persily presented a letter to the 6th Annual Alaska OiRead more...

The topic for today’s panel is too easy.

 

The world knows the Arctic has billions of barrels of oil and trillions of cubic feet of natural gas. But the investors we want to attract — and our competitors for those investment dollars — also know those reserves are far, far away from potential customers. They know what we really lack, what we really want, is a pipeline to move our vast natural gas resources to market.

The oil and gas industry and our political leaders know there are significant hurdles to overcome before we can fulfill our dreams and create economic prosperity for the Arctic region. The environmental concerns are real; the technical challenges are real; the rights and values of indigenous peoples are real; the economic risks of investing in oil and gas development in the Arctic are real — especially when the decision is whether to invest billions of dollars today in the hope that your project comes in on time and on budget, and that natural gas prices will be high enough to cover the costs when that first Btu flows through the pipeline maybe a decade later.

And the industry knows the regulatory process can be longer than an Arctic winter.

All of that is what the oil and gas industry considers when it picks a project for its next investment, and those are our challenges.

All of which also means our competitors, our detractors, and even some of our friends in our own countries find it far too easy to dismiss our potential. Specifically, too many of them believe the Arctic gas pipelines are dreams, not reality.

We need to prove them wrong.

If the people of the Arctic want development to happen, we must be realistic. Many in the oil and gas industry look north and believe we are not always unified in our effort to bring responsible development to the Arctic. They believe government policies are inconsistent at times.

They worry that the region expects too much from industry, that we add too much risk to already risky ventures. We must remember to count the indirect benefits just as we count the tax dollars.

We need to understand the economic risks of Arctic oil and gas development. We have high costs, short work seasons, extreme winters and some of the most environmentally sensitive ground (and waters) on the planet. All of that — and our distance to market, a market oversupplied with natural gas at the moment — is why many are betting against the Arctic gas lines.

Those are the challenges we face, but I believe the federal, territorial, provincial and state governments of the North American Arctic are up to the task.

We are in this together. This is not a race between the Alaska and Mackenzie gas line projects, but rather a test against those who believe the costs and hurdles of Arctic development are insurmountable. The Mackenzie and Alaska projects are partners in studying and passing that test.

The first test is market demand.

Assuming the world can get out of the economic hole we’ve dug for ourselves, I expect we will see an increase in North American demand for natural gas. Shale gas, while presenting a formidable competitor in the market, actually could help build demand for gas by removing the fear of price spikes. Utilities cannot live with the worry that gas could jump to $14 again, as it did two summers ago. Stable pricing could lead to higher demand if power generators select gas as their fuel of choice.

Assuming the world begins to deal more forcefully with greenhouse gases, we will need more natural gas to power our homes and businesses and factories with clean-burning energy. Investors will be more willing to put their money into Arctic natural gas pipelines if they see significant, long-term growth prospects in North American gas markets. That demand growth is essential if Arctic gas is to ever come out of the ground and into a pipe.

Northwest Territories Industry Minister Robert McLeod had it right when he spoke last week at the American Gas Association’s Natural Gas Roundtable. Demand growth will drive investment decisions. "We will require supplies from all potential sources to meet growing energy demand. In this way, Arctic gas could play an important transitional role in moving us toward a greener economy."

In addition to counting on demand growth to sell our gas, we also need to encourage the use of natural gas to save ourselves in the Arctic.

The effects of climate change are felt by the people in the Arctic every day. The Anchorage Daily News reported last week on the effect of global warming on the Inupiat way of life. The people of the North Slope have long relied on the permafrost as a natural freezer for their muktuk. Now, the ground is warming and they can’t count on it to keep their food frozen year-round.

President Obama gets it. He wants Congress to get with it too by passing comprehensive energy legislation to reduce greenhouse gas emissions. He knows natural gas is part of the solution, a cleaner-burning solution. And he fully understands the value of Arctic gas to meeting North America’s economic and energy needs.

I am relatively new to the Obama administration. I was confirmed in March of this year. Although the title of my office is long and convoluted, the mission is not. The Office of Federal Coordinator for Alaska Natural Gas Transportation Projects is responsible for expediting and coordinated U.S. federal permitting for an Alaska natural gas pipeline, stretching 1,700 miles from Alaska’s North Slope to Alberta and stretching investors’ wallets at an estimated $35 billion.

The government can’t control the risks of steel prices, labor costs, weather delays or market prices for the gas, but the job of the federal coordinator’s office is to work with federal agencies to ensure government doesn’t do anything to add to the risks.

 

Our offices in Washington and Anchorage are working with more than two dozen federal agencies (and state and Canadian authorities too) to identify issues early and to resolve them before they have a chance to delay the project.

No one can talk about the regulatory process today without acknowledging that the world changed two months ago when a blowout at the Deepwater Horizon platform in the Gulf of Mexico killed 11 workers. The platform caught fire and sank, ripping away its riser pipe from a high-pressure well on the ocean floor and sending millions of gallons of oil a day into the water.

Regardless what it may take to win investment dollars for Arctic projects, we should never compromise on environmental protection. We should never accept the irresponsibility that we are seeing wash up on the shores in the Gulf of Mexico.

Our governments – federal, state, provincial and territorial – and our people will need to see proof that this can never happen in the Arctic before we can fully tap our resources for the common good.

The president was of the same thought when he ordered a moratorium on new deepwater drilling permits after the Gulf disaster and a halt to existing deepwater drilling operations. The future of offshore exploration and production is forever changed. New rules will be imposed on the industry in U.S. waters for backup plans, environmental protections and financial liability. There will be new expectations of government and its oversight role.

And regardless what happens with the court challenge to the administration’s moratorium on deepwater drilling, Interior Secretary Ken Salazar yesterday reaffirmed his decision that there will be no offshore Arctic drilling permits until 2011.

U.S. politics being what they are in an election year, life is tough, very tough for the oil and gas industry that generally doesn’t like headlines. This will improve in time, but it will take time.

The Arctic is on the minds of many in Washington. The federal government is taking a serious look at its Arctic policy, the oil and gas industry’s spill-response capabilities, the need for a permanent U.S. Coast Guard station in the Arctic, climate and energy policy legislation, and critical wildlife habitat.

The Obama administration last year reaffirmed the nation’s Arctic policy, including seven issues for agencies to follow as they make decisions: national security and homeland security; international governance; extended continental shelf and boundary issues; promoting international scientific cooperation; maritime transportation; environmental protection and conservation of natural resources; and, yes, energy.

I will close with the reminder that the best management is cooperative management between nations, local governments and indigenous peoples. We must manage the Arctic ecosystem to preserve traditional ways of life. That’s a challenge we must honor as we find answers to all of the other challenges we face.

Thank you.

Resource Development Council - Alaska Support Industry Alliance

May 11, 2010 - Anchorage, Alaska

Larry Persily, Federal Coordinator

Alaska Natural Gas Transportation Projects

Thank you for that welcome. I wish I had something equally enthusiastic to offer in return.

I look out and see 200 of you who paid $35 or $40 each to hear my opinions. I've got to tell you, no one has ever paid that much to hear me before. I gave away my opinions for free in newspapers, on radio and TV and at luncheons for years. If I had known you were this loose with your money, I would have started charging long ago.

I wonder - could I get a show on Fox?

Let's talk about the gas line.

I'm not here to tell you it will be built this decade. But I assure you it is not dead; shale gas has not driven a silver stake through the Alaska pipeline; the market has not forgotten us. It may not be paying as much attention as we would like, but that could change.

Patience.

A national commitment to using more natural gas to keep the lights on, computers running and air conditioners cooling could help the outlook for the Alaska pipeline.

The natural gas share of U.S. electrical generation doubled between 1990 and 2009, climbing from 12 percent to 23 percent. Power generators were the only gas customers to increase their use during that period - industrial demand has been dropping for the past 15 years. Commercial and residential demand has been essentially flat, and most analysts expect those trends to continue.

It's that trend in power generation that gives us hope. Cambridge Energy Research Associates forecasts another doubling in gas demand from electrical utilities by 2030.

Anyone who has ever tracked the accuracy of the state's oil price forecasts - especially the ones I worked on - knows the further out they go, they less accurate they are. But Alaska really needs those strong electrical demand forecasts to come true.

Natural gas is cleaner burning than all other hydrocarbon fuels for electricity, except the state-owned Healy coal plant - which isn't emitting any pollution.

A new, combined-cycle natural gas-fired power plant emits one-third as much carbon dioxide as the average U.S. coal-fired plant. And no soot or mercury.

So why haven't all of the nation's electrical utilities abandoned coal and switched to natural gas?

Coal is cheap, abundant, domestic. Its price has been much more stable over the years than gas. It employs an awful lot of workers in a lot of states, plus it has the backing of the railroads that haul all that coal.

You haven't seen an effective lobbying campaign until you have stood in front of a fully loaded coal train pulling out of Wyoming or West Virginia, heading for Congress.

And, yes, the coal industry is working to clean up its emissions. It will continue as a key source of power generation for decades.

Maybe the best political hope for the natural gas industry -the best hope for the Alaska pipeline - is for gas to capture future growth in generating capacity and the conversion of older coal-fired plants ready for retirement.

That is happening. Calpine, which recently purchased several generating plants from Mid-Atlantic power company Pepco, announced it will convert two coal-fired stations to gas. Canada's Atco Power said it would convert its coal plants in Alberta if it can get long-term price stability on gas supply contracts.

The Canadian government is considering making gas-fired power plants the national standard. Canada's environment minister met last month with the owners of 51 coal-fired power plants to talk about converting older units to gas.

The biggest boost to gas demand for power plants could come from the president's energy policy that is built in great part on cleaner-burning natural gas - and domestic sources for that gas.

I have met with the president's top energy advisor and senior White House staff, and I can tell you the president supports the Alaska pipeline and wants his staff to look for ways the federal government can help bring all the players together for success.

I didn't move to Washington for the farm-raised salmon served in East Coast restaurants. I moved there to push the limits of my authority toward helping the project.

Among the pieces that have to fall into place is price stability. As Atco's chairman said, it makes no sense to build a 1,000-megawatt, gas-fired power plant if you don't know what your fuel costs will be.

Utilities like stability; their customers like stability; but the gas market has been anything but stable in the past decade.

Shale gas is changing that. It's making gas buyers feel more comfortable that all that new supply will put an end to price volatility. Alaska gas may be able to come along for the ride. We can grab a piece of the market so long as our gas can be delivered for the market price - nothing more.

North Slope producers, pipeline owners and the state may have to accept less profit from the gas than they would like. If shale is going to hold down prices in North America long term, and if Alaska is to get a pipeline, everyone involved in the project will have to accept the prospect of tighter profit margins. Everyone one at the table will have to acknowledge the risks and share in them.

Looking at the potential pipeline tariffs presented by the two project proponents, it could cost $4 to $4.50 per thousand cubic feet to clean and transport North Slope gas all the way to Lower 48 markets. That doesn't leave much, even if gas recovers to a long-term range of $6 or $7, as many expect.

Construction cost overruns could destroy the margin.

Gas prices below projections could ruin the project's economics.

The pipeline cannot afford any more risk than it already has.

This year's two open seasons to solicit shipper interest in the line will tell us how the market views the project.

One open season closes the end of July; the other is expected to close in early October. Unlike oil and gas lease sale bids, the envelopes will not be opened to the public the minute after bidding closes.

The pipeline developer and potential shippers will enter closed-door commercial negotiations. Those could last several months, without a word publicly of what's going on.

Maybe we'll know something early next year; maybe not.

Alaskans need to understand silence does not mean failure; it just means there isn't any immediate good news.

If shippers and a pipeline developer can reach a tentative, conditioned deal, it would be filed with the Federal Energy Regulatory Commission and subject to public disclosure.

The process is similar to an earnest money deal on a house - you negotiate a price with the seller, conditioned on the appraisal, the engineer's inspection, getting a loan, a move-in date, and whatever else you want to put in the offer.

The open season is just a step.

A couple of points about shale gas before I move on.

Yes, it will be a dominant force in meeting U.S. energy needs for decades to come. The "shale gale," as it is called, is producing close to 15 percent of domestic gas flow.

But shale gas is not perfect.

The U.S. House Energy and Commerce Committee and the Environmental Protection Agency are reviewing the practice of hydraulic fracturing - when drillers inject millions of gallons of water and a blend of chemicals deep underground to fracture the shale so that the gas can escape.

A lot of residents living near shale gas plays are worried about water quality. Nowhere is drilling more controversial than in New York and Pennsylvania, which sit atop the massive Marcellus Shale. The Pennsylvania House voted last week 157-33 to stop any further leasing of state forest lands for gas exploration.

New York State has closed two watersheds to drilling.

Even in Texas, some residents above the Barnett Shale are questioning the wisdom of putting gas wells in residential areas amid worries of air and water quality.

And although shale gas is much closer to market than Alaska, its production costs are much higher.

Dealing with all that water is costly, especially handling produced water from the well. Whether treating it or storing it deep underground - either way it's expensive.

A typical deep shale gas well needs 5 million gallons of water for drilling and fracking - that's as much as an average golf course uses in a month.

Some would say that means golf courses use too much water, but in deference to my golfing friends I'll move on.

Meanwhile, Alaska is not the only player that needs new pipe. Ours may be the longest, and certainly the most expensive, but all that shale gas needs a way to market, too.

Shale gas needs investment dollars. The nation's pipeline companies added $27 billion in new pipe nationwide the past three years, with $6 billion more expected this year.

Those new pipes will move Rockies gas to California and as far east as Ohio, while taking shale gas from Louisiana and Arkansas to market, and moving Marcellus gas to East Coast buyers.

And there is the issue of the Gulf of Mexico oil spill. Some are saying public reaction to offshore drilling will drive public support toward an onshore gas pipeline.

Maybe, maybe not. But so what?

Public opinion will not decide the future of the Alaska pipeline; the market will decide whether it gets built.

A chorus of cheers for onshore gas and a chorus of boos for offshore oil are not going to change the economics of the project.

I'd suggest people stop speculating about how the gulf spill might or might not affect the gas line and return to reality: The project is huge, the risks are massive, and the line needs more than someone else's misfortune to succeed.

The Senate Energy Committee last week recommitted its support for boosting the project's federal loan guarantee to $30 billion, from the old cap of $18 billion. Now we just need to wait for Congress to pass the energy bill - no easy feat, I'll admit.

Meanwhile, officials in Washington and Ottawa are working on the project, making plans for the permit applications they hope will be filed, getting together to identify problems and starting to solve them now, not later.

The Office of Federal Coordinator is ready, too.

In addition to bringing together agencies to ensure that permit applications proceed smoothly, we're working up a prototype of something called GIS mapping. We've taken a 20-mile-long section in the Atigun Pass and built up an incredible amount of data sets, layering them on top of each other to show terrain, geology, cultural sites, ground cover, water, slopes and more. The prototype will soon be available online for everyone to see.

My hope is to push for funding to provide such detailed mapping for the entire pipeline route in Alaska.

That would be a route into Canada and points south. The law that established the Office of Federal Coordinator is clear: The office is to assist in a pipeline that brings North Slope gas to the Lower 48.

An exclusively export project is not entitled to the loan guarantee or permitting assistance of the Alaska Natural Gas Pipeline Act of 2004.

I know, however, that many Alaskans are as enthusiastic over shipping Alaska LNG to Asia Pacific markets as they are pessimistic of a pipeline to the Lower 48.

Let me share some facts with you about an exclusively export market for Alaska gas.

North America consumes three times as much natural gas in an average day as Japan, Taiwan, China, South Korea and India combined. That's not denying that the Asia Pacific market is growing faster than the North America market - it is.

But an Alaska LNG project would have to grab a much bigger share of that growth to be viable than taking a small slice of the much larger U.S. market.

More than 90 percent of the world's gas was delivered by pipeline in 2007; just 8 percent by LNG tanker.

Alaska gas has a lot of low-cost competition in the Asia Pacific LNG market - Australia, Papua New Guinea, Indonesia, Malaysia, Russia and Qatar - none of which need an 800-mile pipeline through the Arctic to get their gas to a liquefaction plant at tidewater.

The Asia Pacific market is in the middle of an LNG supply boom, with new projects totaling 16 billion cubic feet per day coming online between last year and 2015.

Not to mention that China and India are trying to develop their own domestic production, and each has pipeline options to LNG.

And for those who look at past long-term contracts, where gas prices have been linked to oil, generating huge margins for LNG, look again. Spot market and short-term sales contracts now comprise almost 20 percent of the Asia Pacific LNG trade - and growing.

Projections of eternal profits from LNG linked to high oil prices could be wrong.

Remember predictions just a few years ago of a foreign LNG wave hitting the U.S., filling in for declining North American production? Promoters tried selling LNG receiving terminals up and down the West and East Coasts.

They were wrong.

One of the losers was a company that spent six years pushing an LNG receiving terminal near the mouth of the Columbia River; it filed for bankruptcy last week, with $130 million in debts. It had a FERC license, but no gas supply, no gas buyers, no financing.

I can't leave without commenting on the push to build a smaller pipeline to serve Alaskans. While I understand the frustration that has led to the proposal, I caution Alaskans to be careful.

The pipeline right of way from the North Slope is only so wide; there are only so many good spots for construction camps, gravel pits and a gas treatment plant. There also are concerns about a safe separation from the oil pipeline, blast radius, and other issues.

Be careful to make sure one dream doesn't get in the way of another dream.

A large pipeline moving gas out of state is Alaska's best bet for tens of billions of dollars in tax and royalty revenues, the availability of gas for in-state use and the lowest tariffs for in-state deliveries. Anything else comes up short in one of those categories.

For those who have written off the chances of a large steel pipe moving Alaska gas to the Lower 48: What if you're wrong?

ExxonMobil, BP, ConocoPhillips and TransCanada have spent in the neighborhood of $400 million total since 2000 to look at the viability of the project. They're still looking, still spending.

Wait for the open seasons to close, wait for the commercial negotiations that will follow. Wait to see what the producers ask of the state. Wait to see what the White House can do to help.

And wait to see what the nation does about reducing carbon dioxide emissions and turning to natural gas.

If it doesn't work, I'll be the first to admit it. But it's worth waiting just a little bit more.

THE ALASKA NATURAL GAS PROJECT:
WHAT THE FUTURE HOLDS

Presented Sept. 10, 2009
To the Rocky Mountain Mineral Law Conference
Energy Development: Access, Siting,
Permitting and Delivery on Public Lands
Denver, CO

by Drue Pearce
Federal Coordinator
Office of the Federal Coordinator
Alaska Natural Gas Transportation Projects

SLIDE 1: COVER PAGE
Thank you for the kind introduction and for the invitation to be here with you in Denver. I’ll begin this afternoon by telling you that this natural gas pipeline being planned for construction from Alaska through Western Canada to the US Midwest is a complex undertaking encompassing every aspect of my organization’s mission and multiple federal, state and private sector stakeholders.
From the federal perspective, and as an Alaskan, I always chuckle at the characterization that Alaska doesn’t want to have much to do with anyone or anything “outside” the state. Some would have you believe that Alaska is a resource-rich developing country – which is true – with weak institutions, woeful oversight – not true – and a bad habit of referring to every other place on earth with a single word: “Outside.”
OK, so in fact, Alaskans do use that term but I can assure you that with regard to this project Alaska is all about going ‘outside’ its borders to get it done. Through the Office of the Federal Coordinator, Alaska is involved with more than 20 federal agencies, with the Canadians, and many other stakeholders. CLICK

SLIDE 2: GAS PIPELINE ROUTE
So, I’m happy to report to you that we are moving forward. In recent months there has been much progress and even I would say a game changing partnership when ExxonMobil joined the TransCanada Alaska team. CLICK

SLIDE 3: FEDERAL FAMILY IN ALASKA
I was in Alaska last month with eight administration and federal agency officials who are part of the federal family of those 20 plus agencies – all of which have an important role in bringing this project online. Although we had only 8 with us, it was the first time most of them had seen the scope of what it will take to bring arctic gas to North American markets. They gained an important sense of geography and the complexity of the pipeline project as well as its potential importance to U.S. energy security, the domestic economy and the environment. CLICK
SLIDE 4: FEDERAL FAMILY IN ALASKA
We had a very successful outcome in getting them in country, giving them the best briefings by knowledgeable experts and establishing important relationships for the future.
We discussed the challenges and opportunities associated with the natural gas pipeline, and fresh from that trip, I want to review with you where we are today. CLICK

SLIDE 5: U.S. CAPITOL
First of all, in the coming months as the Congress debates climate change, energy security and the need for sources of clean energy, Americans will begin to hear more about the fact that Alaska holds one of the largest known reserves of natural gas in the North America. CLICK

SLIDE 6: MAP OF PIPELINE ROUTES
The 35 trillion cubic feet of proven natural gas reserves will make a significant long-term contribution to the United States’ energy security, and getting a natural gas pipeline built is a priority of the Obama Administration. CLICK

SLIDE 7: JOBS AND OIL FIELD WORKERS
But the pipeline means more than just providing clean energy. It is at least a $26 billion dollar, privately funded stimulus plan. And if we want to generate long-term economic growth, we need the type of private sector created jobs that this project will create. Over the lifecycle of the project, it will provide tens of thousands of jobs to American workers – not just in building the pipeline but indirectly to places like the steel mills where the rolls of steel will be created and in the transportation, security, food and even the banking industries, all of which will be critical in supporting this project. CLICK

SLIDE 8: INTERACTING WITH CANADA
The project also creates a new means to interact with our Canadian neighbors and all stakeholders. And it will help give America the energy security that it needs to help wean the United States off overseas dependence. CLICK

SLIDE 9: TAPS PIPELINE
Today there is a renewed national interest in the Alaska gas pipeline. When the Trans Alaska Pipeline System was being constructed, plans were initiated to build a large diameter pipeline to deliver natural gas to the lower 48. CLICK

SLIDE 10: PRESIDENT JIMMY CARTER
Congress enacted the Alaska Natural Gas Transportation Act and President Carter designated the route, design and project sponsors a transportation system. CLICK

 

SLIDE 11: ANGTA MAP
The ANGTA designated right of way for the natural gas pipeline would have run from Prudhoe Bay to Delta Junction then east into Canada, across the Yukon Territory and finally south to the lower 48 states. In the 1980’s a portion of the pipeline was built from Alberta Canada south to San Francisco, California and Chicago, Illinois. In effect, we are now working to complete the Northern part of the route.
There have been multiple proposals to produce North Slope gas and move it south since the late 1970’s. The current began with Congress passing the Alaska Natural Gas Pipeline Act, known as ANGPA in 2004. That statute created the Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects, and I was sworn in as the Federal Coordinator in 2006. CLICK

SLIDE 12: AGIA LEGISLATION
In 2007 and 2008, the State of Alaska moved forward with the Alaska Gasline Inducement Act (AGIA), creating a $500 million financial partnership with TransCanada Alaska. It is important to note that the AGIA license does not grant an exclusive right to land use and right-of-way permits.
As I mentioned a bit earlier, TransCanada Alaska recently announced a partnership with ExxonMobil and has entered the FERC Pre-file Process. CLICK

SLIDE 13: DENALI LOGO
Last year, Denali, a joint venture of ConocoPhillips and BP, developed a competing project outside of AGIA and was granted the right to proceed in the Pre-File Process with the U.S. Federal Energy Regulatory Commission, FERC. Both proposals follow the same route as contemplated by President Carter in 1977. CLICK

SLIDE 14: OFC LOGO
For those of you who are unfamiliar with our role in the process, let me step back and give you a very brief overview. CLICK

SLIDE 15: OFC DESCRIPTION
The Office of Federal Coordinator for Alaska Natural Gas Transportation Projects (OFC) has a congressional mandate to expedite the federal pipeline’s permitting, construction and operation.
More than 20 federal agencies will participate in the planning and approval process for this pipeline project, and it will be our job to identify and develop strategies to overcome potential regulatory bottlenecks and otherwise expedite regulatory approvals.
Federal law prohibits federal agencies from including any term or condition that the Federal Coordinator determines would prevent or impair in any significant respect the expeditious construction and operation, or expansion, of the Alaska gas pipeline project.
The law gives my office the responsibility for developing a Surveillance and Monitoring Agreement with the State of Alaska. We are currently working on an Agreement that will layout the process for working together from the permitting phase of the project through construction.
Lastly, my staff and I meet regularly with Canadian officials working on this project to identity and resolve any cross-border issues as early as possible. We also are in close contact with the Governor and State of Alaska officials. And, we work hard on being transparent through all of our communications efforts. We want you to know what we know, and we’re committed to providing all stakeholder groups and the public with the most comprehensive and accurate project information possible. CLICK

SLIDE 16: CHALLENGES
So, other than trying to manage some 20 plus federal agencies, work with the State of Alaska and the government of Canada, along with keeping the interests of the indigenous people at the forefront of our consideration, what are the major challenges?
I love a good challenge, and we have identified a couple of categories that definitely fit the description.
The most straightforward but hardly simplest of the issues are the technical ones. They are solvable but will require collaboration between hydrologists, biologists, archaeologists, geologists, metallurgists, ecologists, climatologists, seismologists and engineers of all classes to name a few.
There are also economic issues: A few minutes ago, I mentioned the jobs that will be created in the steel industry. That’s because the project will utilize approximately 2.5 million tons of steel and a 2004 estimate had the project creating 54 million hours of work. At the same time the cost of the project will need to be financeable by the middle of the next decade and the tariffs have to be low enough to attract customers. CLICK

SLIDE 17: Technical Issues
Let’s start with the technical challenges: CLICK

SLIDE 18: Permafrost Construction
Much of the land along the pipeline route in Alaska contains permafrost. Permafrost is defined as ground that does not thaw for two or more years and can reach thickness of more than 1,000 feet. Permafrost extends through as much as 50 percent of Canada and 80 percent of Alaska (Clark, 1988). It is continuous in the North, discontinuous in the mid-sections and leads to areas near the 60th parallel that are subjected to only seasonal freezing. But even that freezing and thawing can cause the land to shift dramatically placing major stress on a buried, chilled pipeline. CLICK

SLIDE 19 TO 34: Permafrost Map Slide Show
Permafrost trends must be incorporated into the design by project engineers for this 30-plus-year pipeline. The University of Alaska, State of Alaska Department of Geological and Geophysical Surveys, and U.S. Geological Survey have been working together to map and understand the change that is occurring. On the screen is a model that demonstrates the range of permafrost in Alaska from 1950 to today and how it is forecast to shift by 2100. The areas in red are permafrost free and as you look further north the colors shift to light blue and dark blue areas – the darker the blue, the colder the ground temperature. Watch what is forecast to happen. CLICK
(PAUSE while slide show runs)

SLIDES 35 TO 45: Permafrost Map Slide Show One More Time – 2000-2050
I am going to play the map one more time showing you the map from 2000 to 2050. This time, we look at the forecast change every 5 years. CLICK
(PAUSE while slide show runs)
CLICK

SLIDE 46: ARCTIC CONSTRUCTION AND ENGINEERING
Frost heave and buckling of pipelines are known major causes of natural gas pipeline failures in the Arctic.
The geologic instability of routes through permafrost put challenging demands on those who design and construct pipelines in cold regions. CLICK

SLIDE 47: BURIED PIPE
Arctic construction and engineering is another significant challenge. Construction in Alaska will take place primarily in winter seasons, where temperatures can reach 60 below zero. Lack of sun and the darkness increase the potential for accidents, unsafe conditions, and worker fatigue. Machinery tends to not function in the same capacity in extreme wind and cold. People are working in the Arctic every day, so these are very manageable issues.
This will be the largest high-pressure gas pipeline ever built in the Arctic. The U.S. Pipeline and Hazardous Materials Safety Administration and the Canadian National Energy Board will harmonize requirements on both sides of the border to withstand the extreme Arctic conditions. They have already begun this work. CLICK

SLIDE 48: SEISMIC
On average, Alaska records 50 to 100 earthquakes per day; one magnitude-7 event every year; and a magnitude-8 or larger event every 13 years. As a result of its seismicity, regions of Alaska do in fact pose significant challenges to the construction of a natural gas pipeline. Most Alaskans felt the Denali Fault Line magnitude-7.9 earthquake that occurred on November 3, 2002. That fault slipped approximately 18 feet laterally and more than 3 feet vertically beneath the Trans Alaska Pipeline System. Not one drop of oil spilled from the pipeline. Why? Because the seismic activity in south central Alaska was understood by the engineers and geologists who played a role in the design, placement, and location of Trans Alaska Pipeline System line some thirty years earlier. CLICK

SLIDE 49: DELTA JUNCTION
Innovative geological and geophysical engineering will be needed where the gas pipeline crosses active faults to design a pipeline that will be “fail safe.” For example, where the gas line follows the Alaska Highway from Delta Junction into Canada it will cross some northeast-trending faults. This part of the pipeline route was considered to be a region of low seismic activity. But the latest work by the State of Alaska Department of Geological and Geophysical Surveys indicates substantial recent activity in the region. New design standards will be required in this area. CLICK

SLIDE 50: CONGRESSIONAL ACTION
As Congress debates climate change and energy policy in this legislative session, I continue to remind lawmakers about the benefits of this project vis-a-vis their desire to see a climate change bill passed this session.
Natural gas can serve as an efficient and cost effective bridge fuel as the nation moves toward establishing new sources of energy – wind, solar and geothermal to name a few -- and natural gas can deliver immediate reductions in greenhouse gases. CLICK

SLIDE 51: ARCTIC WARMING
Congressional action aside, it is very important that policy makers understand permafrost changes and other effects climate change may have on the pipeline after its construction. In October 2008, Canada and the U.S. held the first Northern Oil and Gas Research Forum. The forum provided an opportunity for the two countries to bring together scientists, resource managers and industry to discuss what research is being conducted and to identify gaps. While not limited to climate change, the goal of the forum was to initiate a cooperative effort in which the research that is being done is the research that policy makers need to make the decisions of the day. CLICK

SLIDE 52: RIGHT-OF-WAY
One such decision they need to make that will be of particular interest to you pertains to the pipeline rights-of-way.
In Alaska, this pipeline will traverse 750 miles along federal, state, private and Native allotment lands.
On the Canadian side, the route is nearly 1,000 miles long. TransCanada, through its Canadian subsidiary Foothills Pipeline Company, claims that it already has most of the access rights and certificates that it needs to build the pipeline in Canada by virtue of its approvals under the 1978 Northern Pipeline Act.
The other applicant, Denali, also plans to apply for a right-of-way along the Alaska Highway corridor through Canada.
Canada’s Major Projects Management Office will oversee Denali’s application process. CLICK

SLIDE 53: ECONOMIC CHALLENGES
With all of the invigorating challenges presented by the technical and legal issues, I’d like to turn my comments to the economic issues, which are equally as grand. Depending on how you look at it, there are five major economic challenges or benefits for this project. CLICK

SLIDE 54: ECONOMIC CHALLENGES
First, this is a $26 billion dollar enterprise, according to the latest estimate. Who will finance the largest and most innovative natural gas transportation system ever constructed? The private sector will finance this project. It is true that Congress also authorized a loan guarantee of up to 18 billion dollars in 2004 dollars that will be adjusted for inflation and is considering increasing it to $30 billion. The loan guarantee is likely to be an essential piece of the financial puzzle; however the private sector will take on the responsibility for financing the projects debt.
Second, in order to construct a pipeline, it is imperative to have the necessary infrastructure in place to stage all the manpower and materials for construction.
In both the U.S. and Canada, the companies are talking to the appropriate entities about what new bridges, highways, airports, material sites and maintenance camps will be needed to support tens of thousands of workers, the heavy equipment and the 2.5 million tons of steel to construct the pipeline. The companies will be responsible for these infrastructure needs.
It will take 4-6 years to complete the major infrastructure projects. They must be done before pipeline construction can begin. Every day, week, month, year that we wait to build the infrastructure adds major costs to the project. CLICK

SLIDE 55: STEEL NEEDS
Third, the project calls for all that steel. In ANGPA, Congress expressed the preference that such steel should come from North America. North American steel producers and plants need to be prepared to deliver 2.5 million tons of high strength steel pipe in the next decade. CLICK

SLIDE 56: QUALIFIED LABOR
The fourth economic challenge is finding, training and retaining the labor pool needed on both sides of the border. Labor for Trans Alaska Pipeline System peaked during construction at 28,000 workers ranging from welders to truck drivers to cooks.
This pipeline will require tens of thousands of skilled workers at the peak. A huge skilled labor force must be trained, be ready to be hired, and then retained throughout the preconstruction and construction.
The U.S. Dept. of Labor gave to the State of Alaska a grant it is using to conduct a study as well as to begin finding and training that labor pool. CLICK

SLIDE 57: PIPELINE APPLICANTS
Finally, I want to note that Denali and TransCanada Alaska are engaged in the regulatory process for the gas line construction. Both interests are following the same highway corridor, but they have a different means to getting the project done. Both are earnest in their desire to be the company that builds the pipeline.
Of course Trans Canada holds the state of Alaska’s license and, as I mentioned, three months ago, TransCanada Alaska announced ExxonMobil as its new partner. Both Denali and TransCanada Alaska have been in the field for the past two seasons conducting environmental and other studies, and both are moving toward “open season” next year wherein North Slope producers will have an opportunity to commit natural gas to the pipeline for transport to lower 48 markets.
It is a fully engaged process with many components, and I am sure you would agree that expediting this confluence of interests and the permitting and technical issues may seem daunting. CLICK

SLIDE 58: WINSTON CHURCHILL
But when the process seems slow, I’m reminded of Winston Churchill who advised to never, never, never give up.
You might know that it was Churchill who, as a member of the War Council of Great Britain, acquired a majority interest in the Anglo-Persian Oil Company in 1914, bringing the company under British government control to secure its access to Persian oil. That company later became British Petroleum.
When I look at the complexity of this project and all of the competing and complementary interests, I’m reminded of Churchill’s foresight in bringing energy security to Great Britain and of his words, which I leave you with today… CLICK

SLIDE 59: CHURCHILL SAID
He said: “Success is not final, failure is not fatal; it is the courage to continue that counts.”
As President Obama works toward presenting Congress with a national energy plan that includes an emphasis on clean natural gas and renewable energy sources, this project makes economic sense, and we need the courage to complete this project and bring arctic natural gas to North American markets within the next 10 years.
Our nation will benefit plenty if we do. CLICK

SLIDE 60: OFC CONTACT INFO
Thank you and I look forward to taking your questions.
 

UPDATE ON FEDERAL ACTIVITIES TOWARD COORDINATING THE
ALASKA NATURAL GAS PIPELINE

Presented Nov. 19, 2009
To the Resource Development Council’s Annual Meeting
Anchorage, Alaska

by Drue Pearce
Federal Coordinator,
Alaska Natural Gas Transportation Projects
Washington, DC

IT’S ALWAYS GREAT TO BE HOME. TODAY IS ESPECIALLY POIGNANT AS IT IS LIKELY MY FINAL APPEARANCE BEFORE THE RDC IN MY ROLE AS YOUR FEDERAL COORDINATOR.
I WANT TO THANK YOU, JASON, CARL AND MEMBERS FOR ALL YOU DO FOR ALASKA.
AS YOU KNOW, AT THE REQUEST OF THE PRESIDENT, I TENDERED MY RESIGNATION AND JANUARY 3RD WILL BE MY FINAL DAY AS YOUR FEDERAL COORDINATOR. I WANT TO TAKE THIS OPPORTUNITY TO TELL YOU AND ALL ALASKANS THAT IT’S BEEN AN EXCEPTIONAL HONOR TO BE THE FIRST FEDERAL COORDINATOR. MY MISSION ALL DAY, EVERY DAY, HAS BEEN TO EXPEDITE THE MOST IMPORTANT ENERGY DEVELOPMENT PROJECT IN NORTH AMERICA.
THE COMMERCIALIZATION OF NORTH SLOPE GAS PROJECT IS CRITICAL NOT JUST TO ALASKA BUT TO THE NATION, AND AS THE OFC MISSION STATEMENT SAYS IT IS OUR JOB TO: “Advance our Nation’s energy and economic security by expediting the delivery of clean, natural gas from the North Slope of Alaska to North American markets.
I AM VERY PROUD OF WHAT I’VE ACCOMPLISHED OVER THE PAST THREE YEARS. I’VE STOOD UP A NEW INDEPENDENT FEDERAL AGENCY WITH A SECURE BUDGET, A GREAT STAFF, AN UNQUALIFIED ANNUAL AUDIT -- FOR ALL YOU CPA’S IN THE ROOM, YOU KNOW WHAT AN ACCOMPLISHMENT THAT IS -- AND A SOLID STRATEGIC PLAN. I AM EVEN MORE PROUD OF WHAT MY STAFF AND I HAVE DONE AS A TEAM TO PREPARE THE FEDERAL GOVERNMENT TO EXPEDITE THE PROJECT.
I REGRET HAVING TO LEAVE BEFORE THE JOB IS DONE. SO THIS MORNING, PLEASE ALLOW ME TO GIVE YOU MY VERSION OF THE “STATE-OF-THE-STATE” SPEECH – A STATE OF THE AGENCY SPEECH.
CONGRESS AND A SUCCESSION OF PRESIDENTS RECOGNIZED A VERY DISTINCT NEED FOR AN OFFICE TO COORDINATE THE FEDERAL PROCESS OF LICENSING, PERMITTING AND OVERSIGHT OF DESIGN AND CONSTRUCTION OF THE GAS PIPELINE PROJECT. AT PRESIDENT JIMMY CARTER’S DIRECTION, THE OFFICE OF THE FEDERAL INSPECTOR PRESIDED OVER THE PRE-BUILD IN THE 80’S AND 90’S.
AFTER A NUMBER OF DRAFT ITERATIONS, THE OFC WAS CREATED IN 2004. IT TOOK 26 MONTHS TO GET FROM PASSAGE OF THE LEGISLATION TO MY SWEARING IN. I LIKE TO DESCRIBE THE OFFICE AS BEING TASKED WITH DOING THE JOB THAT COMBINES THE TALENTS OF TRAFFIC COP, DIPLOMAT, PSYCHIC, OMBUDSMAN, ANALIST AND ENGINEER.
IT HAS BEEN 36 MONTHS SINCE I WAS SWORN IN. WHEN I STARTED, IT WAS JUST ME WITH NO OFFICE OR BUDGET OR STAFF. I’VE PUT TOGETHER A TALENTED AND DEDICATED GROUP OF 10 PEOPLE WHO WORK BOTH HERE IN ALASKA AND IN WASHINGTON, DC ON YOUR BEHALF. THEY ARE EXTREMELY TALENTED, FULLY ENGAGED AND DEDICATED TO A SINGLE MISSION…. TO COORDINATE AND EXPEDITE THE WORK OF 24 PLUS FEDERAL AGENCIES WITH ROLES IN THE PERMITTING, LICENSING, CERTIFICATING THE PIPELINE.
ALL THE WHILE WE COORDINATED WITH THE CANADIAN GOVERNMENT, THE STATE OF ALASKA AND ALL STAKEHOLDERS… FROM TRIBES TO THE ENVIRONMENTAL COMMUNITY.
AND SO I’D BE REMISS IF I DIDN’T APPLAUD THE STAFF I LEAVE BEHIND. THEY ARE EXCEPTIONAL.
CONGRESS HAS AUTHORIZED A $9.6 MILLION BUDGET TO ACCOMPLISH OUR LAUNDRY LIST OF TASKS. I HAVE TIME TODAY TO TOUCH ON ONLY A FEW OF OUR MAJOR EFFORTS:
• WHAT’S GOING ON AT THE FEDERAL U.S. LEVEL AS WE PREPARE FOR THE OPEN SEASONS AND COMPLETE APPLICATIONS FROM TRANSCANADA/EXXON MOBIL AND DENALI;
• HOW MY OFFICE COLLABORATES WITH CANADA’S REGULATORY AGENCIES AND ORGANIZATIONS TO EXPEDITE THE PROCESS; AND,
• OUR WORK WITH THE STATE OF ALASKA TO MOVE THIS PROJECT ALONG.
WE COMPLETED A GAP ANALYSIS THAT IDENTIFIES GAPS – OVERLAPS THAT COULD JEOPARDIZE THE EFFORT TO EXPEDITE CONSTRUCTION.
AS YOU KNOW, DENALI AND TRANSCANADA / EXXON MOBIL HAVE ENTERED FERC’S PRE-FILING PROCESS. BOTH ARE WORKING ON THEIR OPEN SEASONS WITH TRANSCANADA SLATED TO GO FIRST AND CONCLUDE IN THE SUMMER OF 2010. DENALI ANTICIPATES CONDUCTING ITS OPEN SEASON IN THE LATTER PART OF NEXT NEAR.
WE HAVE WRITTEN AN IMPLEMENTATION PLAN FOR EACH APPLICANT TO DEVELOP AN AGREED UPON ROADMAP FOR EACH TO FOLLOW AS THEY PROGRESS TO FILING THEIR FERC APPLICATIONS. THESE PLANS ALLOW FOR EARLY COORDINATION … EARLY COORDINATION MEANS WE HAVE ADOPTED A PROJECT MANAGEMENT APPROACH BASED ON A COMMON UNDERSTANDING AND COMMITMENT TO THE PERMITTING PROCESS. THE IMPLEMENTATION PLANS ALSO ALLOW THE OFC TO MAKE SURE THAT ALL FEDERAL AGENCIES FULLY COMPLY WITH THE FEDERAL LAWS THAT GOVERN THIS UNIQUE PROJECT.
WE ALSO ARE COMPLETING A PERMITTING MATRIX – AN OVERALL PICTURE OF THE PERMITTING PROCESS – FOR EACH APPLICANT SO THAT ALL AGENCIES, BOTH COMPANIES, AND THE PUBLIC HAVE AN ORGANIZED AND AGREED UPON FRAMEWORK TO USE AS THEY PREPARE, REVIEW AND ISSUE PERMITS, LICENSES AND CERTIFICATIONS.
THE FERC’S SCHEDULE TO COMPLETE THE ENVIRONMENTAL IMPACT STATEMENT IS MORE THAN AMBITIOUS – IT’S WARP SPEED. WE’RE WORKING CLOSELY WITH FERC ON THIS PHASE OF THE PROJECT AS WELL AS TO ENSURE IT PROVIDES LOTS OF INFORMATION TO THE PUBLIC BEFORE OPEN SEASON PACKAGES ARE DELIVERED SO THAT YOU, THE PUBLIC, WILL UNDERSTAND WHAT FERC IS REVIEWING AND WHAT YOU WILL BE ASKED TO COMMENT ON BEFORE THE COMMISSION VOTES TO ALLOW THE OFFERING TO PROCEED.
WE’VE ESTABLISHED A TECHNICAL REVIEW TEAM COMPRISED OF TECHNICIANS, FEDERAL AND STATE AGENCY EXPERTS AND CANADIAN EXPERTS TO:
• SHARE ENGINEERING INFORMATION AND EXPERTISE RELEVANT TO AGENCY
PERMITTING OF DESIGN AND CONSTRUCTION OF THE ARCTIC NATURAL GAS PROJECT
• IDENTIFY PROJECT TECHNICAL ISSUES TO INCLUDE BUT NOT LIMITED TO:
PIPELINE, PROXIMITY, SECURITY, LEAK PREVENTION, BEST AVAILABLE CONTROL
TECHNOLOGY, PERMAFROST, GAS TREATMENT PLANT, AND EMISSIONS.
• IDENTIFY ISSUES THAT REQUIRE EXPEDITED COORDINATION AND RESOLVE THESE ISSUES BEFORE IMPACTING THE TIMELINE OR PROJECT.
ONE OF THE MOST AMBITOUS EFFORTS ON OUR ‘TO DO’ LIST IS THE DEVELOPMENT OF A PROTOTYPE GEOGRAPHIC INFORMATION SYSTEM.
AS YOU KNOW, THE ARCTIC IS NOT WELL MAPPED. IN FACT, THERE’S NO ACCESSIBLE STANDARD SET OF MAPS AND DATA FOR THE PIPELINE ROUTE. BUT BY THE END OF THE YEAR, WE’LL HAVE INFORMATION ON A 20-MILE STRETCH OF THE ROUTE AT ATIGUN PASS.
AGENCIES USE DIFFERENT SETS OF INCOMPATIBLE DATA. THERE IS A LACK OF AN AUTHORITATIVE BASEMAP TO REFERENCE INFORMATION RELEVANT TO PERMITTING. THERE IS
SOME GOOD DATA, BUT ALSO SOME THAT IS EITHER INCOMPLETE OR ACTUALLY INCORRECT. INTEGRATION CAN BE CHALLENGING.
OUR GOAL IS TO DEMONSTRATE THAT THE GIS PROTOTYPE IS AN AUTHORITATIVE, CONSISTENT, AND INTEGRATED SOURCE OF INFORMATION TO CONSTRUCT, OPERATE, AND MAINTAIN A GAS PIPELINE.
AS SHOWN HERE, EXISTING ELEVATION DATA FOR THE AREA IS COARSE. LIDAR DATA REVEALS THE TERRAIN IN FAR MORE DETAIL. WE HOPE TO BUILD A SYSTEM THAT USES THE INCREDIBLY DETAILED LIDAR AS THE BASE MAP.
HERE IS A DETAIL VIEW OF ATIGUN PASS, AND THE LIDAR DATA THAT WE COLLECTED THIS FALL HAS BEEN ANALYZED IN GIS TO SHOW SLOPE. HERE IS SHOWN SLOPE IN DEGREES, BLUE COLOR BEING FROM 0—7 DEGREE SLOPES; AND RED COLOR 7—90 DEGREE SLOPES. THE INTENSITY OF COLOR REFLECTS SLOPE STEEPNESS. ALSO SHOWN HERE ARE THE ORIGINAL NW BOREHOLES. MORE THAN 1,000 BOREHOLES WERE DIGITIZED AS PART OF THIS PROTOTYPE PROJECT, WHICH IS ONLY 20 MILES LONG.
THE WEB BROWSER APPLICATION PROVIDES OPEN ACCESS TO THE GIS DATABASE. DATA CAN BE SELECTED TO BE DISPLAYED DEPENDING ON LEVELS OF CONFIDENTIALITY. IN THIS CASE WE ARE LOOKING AT THE OVERVIEW OF THE ATIGUN PASS PROTOTYPE AREA ON TOP OF THE REGIONAL ELEVATION BASE OVERLAID WITH SATELLITE IMAGERY. THE TABLE OF CONTENTS FRAMES ON THE LEFT SHOWS THE ATIGUN PASS PROTOTYPE LAYERS. THESE ARE BY DEFAULT TURNED OFF AT THE BEGINNING AND CAN BE TURNED ON ONE BY ONE. NOTE, THAT EACH LAYER WILL HAVE its OWN SECURITY/CONFIDENTIALITY LEVEL. IT IS OUR GOAL TO MAKE AS MUCH INFORMATION AVAILABLE TO THE PUBLIC AS POSSIBLE.
NW BOREHOLE LOGS ARE GEOREFERANCED INTO THE GIS PROTOTYPE AND PROVIDES A STRATIFICATION OF SOIL TYPES AND PERMAFROST DATA.
WITH GIS, YOU CAN CLICK ON ANY POINT ALONG THAT STRETCH OF THE PIPELINE TO EXTRACT AND VIEW RELEVANT MAPPING AND REPORT DATA. THE POWER OF GIS IS PROVIDING A PLATFORM FOR SHOWING MANY TYPES OF INFORMATION.
IN THIS CASE WE ARE CLICKING ON A STREAM CROSSING POINT (IN GREEN SQUARES) TO PULL UP A PHOTO. WE THEN CAN CLICK ON A STREAM TO GET INFORMATION ABOUT THAT STREAM, ITS NAME AND ESSENTIAL FISH HABITAT. THE PIPELINE IS SHOWN IN RED, THE PROPOSED GASLINE MILEPOSTS IN YELLOW.
I’D LIKE TO GIVE YOU A SNEAK PREVIEW OF WHAT THE GIS WILL LOOK LIKE. IT’S A 1 MINUTE VIDEO WITH A GOOGLE EARTH FEEL. THE MOVIE FILE CONTAINS THE LIDAR, THE BOREHOLE SAMPLES ILLUSTRATED BY THE GREEN PLUS SIGNS AND THE SOIL TYPE INFORMATION, WHICH IS OVERLAIN IN PASTEL.
TO SUMMARIZE, THE GIS PROTOTYPE WILL PROVIDE AN
 AUTHORITATIVE BASEMAP, WHICH ALLOWS DATA TO BE INTEGRATED
FOR MULTIPLE AGENCIES, THE PUBLIC AND STAKEHOLDERS
• THE WEB INTERFACE PROVIDES TRANSPARENT ACCESS TO DATA AT
DIFFERENT LEVELS
LIDAR COUPLED WITH GOOD IMAGERY PROVIDES A VALUE-ADDED DATABASE. OUR NEXT STEP IS TO ACQUIRE INPUTS FROM FEDERAL AND STATE AGENCIES.
SO, THESE ARE SOME OF THE TASKS ON OUR PLATE FOR THE NEXT SIX MONTHS, AND AS THE APPLICANTS HEAD TOWARD OPEN SEASON, WE ARE WORKING DILIGENTLY WITH THE STATE OF ALASKA, CANADIAN GOVERNMENT AND ALL THE STAKEHOLDERS FROM NATIVE GROUPS TO OUR FRIENDS IN THE CONSERVATION COMMUNITY.
LET ME TAKE A MINUTE TO BRIEF YOU ON MY WORK WITH OUR CANADIAN PARTNERS. IT’S IN OUR BEST INTEREST TO ENSURE THE PROCESS MOVES AS EXPEDITIOUSLY AS POSSIBLE ON THEIR SIDE OF THE BORDER.
I’VE MADE MANY TRIPS TO CANADA IN AN EFFORT TO ENGAGE THEIR ENTHUSIASTIC RESPONSE TO THE PROJECT. THAT’S NOT AS SIMPLE AS IT MIGHT SOUND SINCE THERE ARE MANY CANADIAN WHO CONSIDER OUR PROJECT A COMPETITOR TO THEIR DREAM OF A MAKENZIE PIPELINE.
AT THIS POINT, EVERYONE IS ENGAGED. MINISTER JIM PRENTICE – WHO HAS THE ALASKA PIPELINE FILES ON HIS DESK – NATURAL RESOURCES MINISTER LISA RAITT, DEPUTY MINISTER CASSIE DOYLE, THE NATIONAL ENERGY BOARD, THE NORTHERN PIPELINE OFFICE, THE MPMO, THE ENVIRONMENTAL ASSESSMENT AGENCY, PROVINCIAL PREMIERS, THE FEDERAL SENATE, THE PETROCHEMICAL INDUSTRY, ORGANIZED LABOR, FIRST NATIONS, ET AL ARE ENGAGED AND ENTHUSIASTIC ABOUT THE ECONOMIC BENEFITS THAT THE PIPELINE WILL BRING TO CANADA.
WE’VE INVITED CANADIANS TO BE A PART OF THE TECHNICAL REVIEW TEAM – THEY HAVE EXPERTS AND EXPERIENCE THAT WILL BE OF CRITICAL IMPORTANCE TO THE U.S. PERMITTING AGENCIES. WE NEED TO HARMONIZE OUR STANDARDS – AND THAT WORK HAS ALREADY BEGUN.
ALL THOSE CANADIAN OFFICIALS I MENTIONED HAVE SHAKEN MY HAND AND PLEDGED TO MEET THE U.S. SCHEDULE SO THAT THEIR LICENSE IS IN PLACE WHEN OURS IS, IN 2014.
CANADA DOESN’T HAVE A POSITION LIKE MINE, BUT MINISTERS PRENTICE AND RAITT HAVE BEEFED UP THE MPMO TO BE THE PROJECT MANAGER FOR DENALI AND REPOPULATED THE NORTHERN PIPELINE OFFICE TO OVERSEE THE FOOTHILLS PROJECT, NOW OWNED BY TRANSCANADA, PARTNERED WITH EXXON.
WE HAVE DRAFT SURVEILLANCE AND MONITORING AGREEMENT WITH THE STATE OF ALASKA, WHICH IS REQUIRED BY OUR STATUTE, AND THE ATTORNEYS ARE WORKING TO COMPLETE IT AS SOON AS POSSIBLE. WHEN FINALIZED, THE MOU WILL LAYOUT THE PROCESS IN DETAIL FOR WORKING TOGETHER FROM THE PERMITTING PHASE OF THE PROJECT THROUGH CONSTRUCTION.
THERE ARE MAJOR INFRASTRUCTURE NEEDS THAT I’VE SPOKEN ABOUT PREVIOUSLY.
THERE IS NATIONAL SUPPORT FOR THE PIPELINE PROJECT INCLUDING AN ENDORSEMENT FROM THE NATIONAL AFL-CIO BECAUSE OF THE JOBS IT WILL CREATE, AND FOR THAT WE ALL OWE OUR GRATITUDE TO VINCE BELTRAMI. THERE’S SUPPORT FROM CONGRESS AND THE FEDERAL EMPLOYEES AT THE AGENCIES ARE EXCITED TO BE WORKING ON SUCH AN IMPORTANT PROJECT.
DECISIONS MADE ON ENERGY OVER THE NEXT TWO YEARS WILL HAVE PROFOUND IMPACTS FOR DECADES TO COME. IT IS IMPERATIVE THAT ALASKANS UNITE TO PORTECT OUR STATE DURING THE ENERGY AND CLIMATE CHANGE DEBATES TO COME.
I THINK YOU’LL AGREE WITH ME THAT THERE IS AND ALWAYS WILL BE CONSUMER DEMAND FOR ENERGY. THAT’S NATURAL GAS – CLEAN BURNING AND ENVIRONMENTALLY FRIENDLY – OUR TIME IS NOW.
CAMBRIDGE ENERGY RESEARCH ASSOCIATES HAS A GOOD STATEMENT THAT I WANT TO SHARE WITH YOU: “HUMANS HAVE THE CAPACITY TO INVENT GADGETS THAT HAVE TO BE CHARGED FASTER THAN WE INVENT NEW WAYS TO CREATE THE POWER.”
NO MATTER WHICH HORSE YOU BET ON, IT’S TIME TO BUILD THE PIPELINE SO THAT WE CAN CREATE THE POWER SOURCE TO CHARGE ALL THOSE GADGETS THAT WE USE EVERY DAY AND CAN’T SEEM TO LIVE WITHOUT.
2018 FIRST GAS SEEMS LIKE A LONG WAY AWAY, BUT 2014 FOR FINANCING AND SANCTIONING IS RIGHT AROUND THE CORNER.
I WANT TO PERSONALLY THANK THE HIGHLY PROFESSIONAL STAFF AT DENALI FOR THEIR TIRELESS EFFORTS. LISA PEKICH AND GUS GUSTAFSON WERE THERE FIRST: WE’VE SHARED SOME GROWING PAINS.
TRANSCANADA IS THE MOST SUCCESSFUL PIPELINE COMPANY IN NORTH AMERICA WITH ENGINEERS WHO, FOR 30 YEARS, HAVE BEEN DREAMING ABOUT THIS PROJECT.
I ALSO WANT TO THANK EXXON MOBIL FOR COMING TO THE TABLE. ITS RE-ENTRY IS COMMENDABLE AND ITS TECHNICAL EXPERTISE UNSURPASSED.
THERE’S NEVER BEEN A BETTER GROUP WORKING TO MAKE THIS PROJECT FINALLY HAPPEN!
I ALSO WANT TO THANK AND PRAISE THE MEN AND WOMEN WHO ARE FEDERAL EMPLOYEES, ESPECIALLY THE CAREER FEDERAL EMPLOYEES, FOR THEIR ENTHUSIASM AND HARD WORK. AND I WANT TO PUBLICLY THANK THE STATE OF ALASKA AND THE GOVERNMENT OF CANADA FOR THEIR EFFORTS.
AND, OF COURSE, I FEEL THE NEED TO ONCE AGAIN PRAISE THE MEN AND WOMEN OF THE OFC WHO HAVE GELLED INTO THE BEST TEAM ON THE PLANET – BAR NONE.
LASTLY, I THANK YOU, ALASKA AND HER PEOPLE, FOR ALLOWING ME TO WORK FOR YOU EVERY DAY FOR THE PAST 25 YEARS. EVERY DAY HAS BEEN AN ADVENTURE.
KNOW THAT I WON’T STOP NOW – MY PASSION FOR MY STATE, MY COUNTRY AND THIS PROJECT HASN’T DIMINISHED. MY RESIGNATION IS SIMPLY A FORK IN THE ROAD – FULL OF OPPORTUNITY AND I LOOK FORWARD TO THE NEXT CHAPTER.
DAVE HOLT HAD THE BEST LINE OF THE CONFERENCE WHEN HE SAID: “THE ROAD TO ENERGY SECURITY IS THROUGH ALASKA!”
LET ME EXPAND ON THAT... THE ROAD TO ENERGY SECURITY, ECONOMIC SECURITY AND DOMESTIC HOMELAND SECURITY FOR AMERICA ALL RUN THROUGH ALASKA.
SO LET’S WORK TOGETHER TO MAKE SURE THAT OUR PLACE AS THAT ROAD IS PROTECTED.
AS THE GOVERNOR SAID LAST WEEK, OUR BEST RESOURCES ARE OUR CHILDREN. ALL OF OUR EFFORTS ARE FOR THEM.
FOR THOSE OF YOU WHO HAVEN’T SEEN HER FOR AWHILE, HERE’S MINE. THIS IS TATE HANNA AT 15.
I WILL CONTINUE THE ALASKA ADVENTURE FOR HER AND FOR YOUR FUTURE.
THANK YOU.

THE ALASKA NATURAL GAS PROJECT
Presented Sept. 15, 2009
To The Oil & Gas Congress
Anchorage, AK

Drue Pearce
Federal Coordinator
Office of the Federal Coordinator
Alaska Natural Gas Transportation Projects

Good afternoon, and thanks for the kind invitation to be with you again to discuss getting Alaska’s natural gas to market, and specifically what we’ve been doing in the Office of the Federal Coordinator to help make that happen.
Over the course of its lifetime, this project is estimated to create tens of thousands of good paying jobs, and in today’s economy that represents a very bright spot.
Of course, the clean natural gas it will deliver will help the nation tremendously as we transition to renewable sources of energy.
For these reasons, and many more, we’re fortunate to have broad support for the project from the Obama Administration, the Congress, from the State of Alaska and, of course, from the industry, which will build and fill this pipeline.
This week my Director of Permits, Scheduling and Compliance is at the annual AFL-CIO meeting in Pittsburgh to work with labor on the importance of the pipeline in creating jobs for Americans. And, as may be no surprise, the Alaska Natural Gas Pipeline is one of the topics of the day.
This morning, Vince Beltrami, the President of the Alaska AFL-CIO spoke before the national convention to all of labor about the importance of this gas pipeline project and the amount of renewable energy projects that exist and are being created in Alaska. Vince told thousands of convention goers that this project will create tens of thousands of jobs across our nation, from the manufacturing of steel pipe and other integral parts, to transportation, loading, shipping, and delivery of those parts. He explained that under Alaska law, AGIA, the construction of the Alaska natural gas pipeline will be subject to a Project Labor Agreement. And finally, Vince expressed that natural gas is a clean, reliable and domestically produced energy source.
Vince's speech received a huge reception because on a national level the AFL-CIO working families get it.
To prove that point, the Second District Vice President of the International Brotherhood of Electrical Workers, which represents all of New England, today came out in support of the project. He said even though the project would be constructed thousands of miles away from the East Coast, “the jobs set the stage for the next generation of workers."
As all of Alaska’s leaders – both at the Congressional level and the state level – and now national labor unions know, Alaska’s natural gas is the “it fuel” of today’s global economy; perhaps not as “it” as Paris Hilton, but in the context of clean, secure, available, low cost and green, we are a happening source for today’s and tomorrow’s energy supply.
This has been an active year for the pipeline project. TransCanada Alaska and ExxonMobil formed a new project partnership. Both Denali (the BP/ConocoPhillips partnership) and TransCanada Alaska have entered the FERC Pre-file Process and FERC designated Argonne National Laboratory as the third party contractor for the Denali project. At the OFC, we’re doing our part to move the project forward.
As many of you know, we signed a Memorandum of Understanding three years ago to strengthen coordination with all the federal agencies that have permitting functions related to this project and create a consolidated project and implementation plan.
We need to make sure that these agencies are working together, that they are moving forward with their respective assignments and that they have the necessary knowledge and the most reliable information about the project as possible.
We work daily to ensure accurate and in-depth communication between all parties, and we coordinate with the Canadian federal, territorial and provincial governments as well as all stakeholders, including tribal interests, the Congress, and the State.
One of our first accomplishments this year was the completion of the First Phase Consolidated Implementation Plan for the Denali project in June. We’ll do one for each applicant that enters the FERC Pre-file Process. So, we’ve finished the first phase of the Denali plan and will have the first phase of the TransCanada Alaska/ExxonMobil plan done by the end of the year.
In August, my office hosted eight White House and agency officials on a trip to the state to learn more about the pipeline and the route that it will follow.
Our guests were all critical members of the federal team involved in getting the pipeline built – Acting Deputy Administrator for the Pipeline and Hazardous Materials Safety Administration, a member of the TSA Pipeline Security Division, a member of the Advisory Council on Historic Preservation and the State Historic Preservation Officer, members from DOD and Army Corp of Engineers staff including the new Alaska head, Colonel Koenig, staff for the Department of the Interior’s Office of the Secretary, and finally, two members of the White House’s team, the NEPA lead at the Council on Environmental Quality and the Energy Director for the National Security Council.
It was a great opportunity for me and my staff to educate our travelers about the project, including our federal agency partners and their activities, so we can move it forward together.
In addition to our trip, this summer Alaska hosted a number of federal dignitaries and staff. Four cabinet secretaries who, along with Gov. Parnell and Senator Begich, visited rural Alaska to learn more about climate change and rural issues.
The Federal Energy Regulatory Commission and Environmental Protection Agency each sponsored a trip to meet with agencies that are part of the federal interagency team and the Alaska Department of Natural Resources.
Also this summer members of my staff traveled the Dalton Highway accompanied by FERC and EPA staff. They observed the entire route north from Fairbanks and spent significant time examining road conditions, bridges, river crossings and other infrastructure.
The surveyed pinch points such as the Yukon River and Atigun Pass. In Prudhoe Bay, they visited the West Dock, sand and gravel locations and toured the proposed location of the gas treatment plant.
There was also an arctic tour by the head of NOAA, the Deputy Secretary of the Department of the Interior, the U.S. Coast Guard Commandant and the Chair of the White House Council on Environmental Quality to study coastal erosion and the oceans as the first step in establishing a new comprehensive ocean policy.
So, in effect, we’re creating our own information pipeline from the arctic to Washington, D.C. in preparation for the final push to get permitting in place and get the natural gas pipeline construction going.
President Obama has told us that getting a natural gas pipeline built is one of his priorities and having the President’s support is important for moving it along.
I don’t need to remind this audience that the project concept has spanned six presidents, seven Alaska governors, eight Canadian Prime Ministers including Pierre Trudeau twice! There have been countless proposals to produce North Slope gas since the late 1970’s.
Ironically, not far from where our lawmakers meet in the Capitol, there are these busses that ferry people around D.C., and I got a kick out of seeing a bus sign that says “this bus runs on clean natural gas.”
Our message is being delivered by everyday citizens right under the nose of lawmakers who are considering a climate change bill that needs to be friendly to natural gas development.
To keep America running on abundant natural gas, which is now being touted as the bridge fuel of the 21st century, we have to pay attention to every piece of legislation and Federal agency proposed rule making that might impact the project.
As I meet with members of Congress and their staff, they continue to ask the question “what can we do to help?” And my response is that their most important action is to make sure any legislation they pass will do no harm. As they work on energy and climate legislation, they need to be careful to not negatively impact the nation’s ability to gain the benefits of Alaska’s natural gas through this pipeline.
One goal of Congress is to reduce CO2 and other harmful emissions. Using natural gas, a clean burning and cost effective source of energy is a great way to do just that. This project will deliver approximately 4.5bcf of natural gas each day to the lower 48 states. That is a lot of clean natural gas that can fill existing and upcoming energy demand.
Congress also must be mindful to maintain a level playing field by ensuring that natural gas can compete fairly in our energy markets. And, as the Senate creates its climate and energy legislation, it should listens to Alaskan colleagues, Senators Murkowski and Begich. The Senators are working together to bolster the use of natural gas, the cleaner burning fossil fuel, as well as understand the moderate and potentially negative financial impacts to all natural gas pipelines, including this project, of the cost of CO2 allowances on combustion emissions and compliance with performance standards for fugitive emissions.
Congressional actions to date have been very helpful. The Senate Energy and Natural Resources Committee recently passed a bill that included loan guarantee language that will increase the project federal guarantee to $30 billion, and make sure that whichever company applies can receive 80 percent of the project cost. Both these changes are helpful to ensuring the economics of this privately financed project.
As for other OFC actions, we recently opened an Alaska office here in Anchorage headed by my Deputy, Admiral Tom Barrett, who prior to this job was the Deputy Secretary at the Department of Transportation and prior to that was the Administrator of the U.S. Pipeline and Hazardous Materials Safety Administration; the office also includes Christa Gunn, our environmental engineer.
In Washington, our staff includes a permitting chief, a communications staff and administrative support along with our general counsel.
As I mentioned earlier, we work closely with the state agencies in Alaska, with Canadian authorities as well as with every stakeholder.
We’ve begun negotiations with the State of Alaska on a joint Monitoring and Surveillance Agreement to oversee construction of the project.
We’re also in the process of developing a prototype Geospatial Information System, GIS, along a 20-mile stretch of the proposed pipeline route at Atigun Pass. We recently conducted a Light Detection and Ranging, LiDAR, shoot along the pass and hope to have the prototype done by the end of the year. If successful, we’ll propose the system for the entire 750-mile pipeline route from Prudhoe Bay to the Canadian border.
This system will provide the most consistent source of information and mapping for the pipeline project. Using LiDAR technology to create a base map, the GIS will offer 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 not only by federal and state agencies involved in permitting the gas pipeline but also the public.
This is critical because right now, agencies use different sets of data and systems when studying the pipeline route, and those data sets are not compatible. The new resource system will erase 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 river crossing in order to lay a foundation for consistent, effective and streamlined permitting activities and land and resource management.
On the diplomatic front, since spring we’ve met with government leaders in Canada multiple times on key issues ranging from workforce development on both sides of the border to mapping out how to coordinate critical permitting timelines.
Tom Barrett and I met in early June with Michael Wilson, Canadian Ambassador to the United States and later that month we met with the heads of agencies including Natural Resources Canada, the Major Projects Management Office, the Canadian Environmental Assessment Agency and the Northern Pipeline Agency on myriad issues.
As you may know, the U.S. and Canada are both going through a transition in the appointment and confirmation of new Ambassadors. My office will continue to work with the new appointees just as we have with their predecessors.
Positive working relations between the U.S. and Canada are essential to resolving key cross-border issues. For example, we are working with both the U.S. Pipeline and Hazardous Materials Safety Administration and the Canadian National Energy Board to standardize requirements on both sides of the border to withstand the extreme Arctic conditions. These relations also provide us with opportunities to discuss how the Alaska pipeline can coexist with and potentially benefit from smaller pipeline projects in Canada, such as the Mackenzie Gasline Project in the Northwest Territories. Permitting and timeline issues and the development of infrastructure and employment on both sides of the border are important issues we discuss regularly.
While we’re dealing with these issues at the national level, there also are major challenges at the state level.
The most critical for the immediate future are the challenges that face the State of Alaska in developing both its workforce and its infrastructure that must be taken into consideration to make this project possible.
As I have discussed in years past and FERC noted in its latest report to Congress, in order to construct a pipeline, it is imperative to have the necessary infrastructure in place to stage all the manpower and materials for construction.
There are a number of projects to be done. The State and companies are working together to identify and prioritize State projects that the State can improve such as bridges, highways, airports, material sites and maintenance camps that might be used to support tens of thousands of workers, the heavy equipment and the 2.5 million tons of steel needed to construct the pipeline.
The latest estimate of projects the state identified for completion before construction begins outlines $2 billion dollars in projects.
But it will take 4-6 years to complete all the projects, and they must be committed to by the state legislature.
Every day, week, month, year that we wait to build the infrastructure adds major costs to the project. We can’t afford unnecessary delays.
And then there is the challenge of finding, training and retaining the labor pool needed on both sides of the border. Labor for the Trans Alaska Pipeline System peaked during its construction at 28,000 workers with over 70,000 jobs created between 1975 and 1978, and that was just for construction.
As I mentioned earlier, at its peak this pipeline will require tens of thousands of skilled workers. This skilled labor force must be trained, be ready to be hired, and then retained throughout the preconstruction and construction. A major focus on the training must be giving the workers job skills that can be used beyond the construction of a pipeline.
The U.S. Dept. of Labor gave the State of Alaska a grant it’s using to conduct a study as well as to begin finding and training that labor pool.
Alaska Department of Labor Commissioner Click Bishop and Vince Beltrami both spoke to our August visitors explaining their efforts to date to ensure we have a prepared workforce.
The State of Alaska and the Government of Canada also have approval processes that must proceed alongside the U.S. federal licensing and permitting process.
In some respects, the Canadian coordination is the most important part of the process because the pipeline will traverse more than a thousand miles through remote Canada.
In the U.S., ANGPA designates the FERC as the lead agency for completing the environmental review, or EIS, and allows 18 months to do it. In my conversations with Minister Prentice in Canada and Governor Parnell, both have agreed to time their processes to coincide with the aggressive schedule set by the U.S. Congress.
The schedule is very demanding, especially if two applicants proceed with a separate EIS.
Nevertheless, all federal agencies have been working diligently during the Pre-File Process preparing for the EIS. That work, the Implementation Plans the OFC is preparing, and the interagency meetings my office hosts should ensure the federal agencies can meet the aggressive schedule.

I have to tell you that expediting this confluence of interests and the permitting and technical issues may seem daunting. I like to think of it as multitasking at its finest.
But I do love a good challenge and want to ensure a transparent process that brings a more predictable, accountable and timely regulatory review process and construction for this project.
When the process seems slow, I’m reminded of Winston Churchill who advised to never, never, never give up.
You might know that it was Churchill who, as Lord of the Admiralty and a member of the War Council of Great Britain, negotiated to acquire a majority interest in the Anglo-Persian Oil Company in 1914. That deal brought the company under British government control and secured its access to Persian oil. That company later became British Petroleum.
When I look at the complexity of our gas pipeline project, and all of the competing and complementary interests, I’m reminded of Churchill’s foresight in bringing energy security to Great Britain and of his words, which I leave you with today:
He said: “Success is not final, failure is not fatal; it is the courage to continue that counts.”
This project is great for the economy, for the environment, for Alaska and it’s great for America.
With the kind of broad support we’re seeing from the President, the Congress and from labor as recently as today, we’re more than hopeful that we will be delivering abundant arctic natural gas to North American markets within nine years, but we must continue to work diligently to deliver that dream.
Thank You