Update on the Alaska Natural Gas Transportation Projects

UPDATE ON FEDERAL ACTIVITIES TOWARD COORDINATING THE
ALASKA NATURAL GAS TRANSPORTATION PROJECTS

Presented to the DOT Pipeline Hazardous Materials & Safety Administration Advisory Council Meeting
Alexandria, VA
December 10, 2010

by Drue Pearce
Federal Coordinator,
Alaska Natural Gas Transportation Projects

SLIDE 1 – COVER SLIDE
LET ME BEGIN TODAY BY SAYING THE COMMERCIALIZATION OF NORTH SLOPE NATURAL GAS IS CRITICAL, AND NOT JUST FOR ALASKA. AT A RECENT DEVELOPMENT CONFERENCE IN ALASKA, DAVID HOLT, PRESIDENT OF THE CONSUMER ENERGY ALLIANCE, SAID ALL ROADS THAT LEAD TO ENERGY SECURITY FOR AMERICA RUN THROUGH ALASKA, AND I TRULY BELIEVE THAT’S THE CASE, NOT ONLY BECAUSE IT’S THE MISSION OF THE OFC – 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 — BUT BECAUSE CONGRESS AND A SUCCESSION OF PRESIDENTS HAVE RECOGNIZED THIS SAME PERSPECTIVE.
THEY’VE ALSO 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.
FOR THAT REASON, THE OFC WAS CREATED IN 2004 AND GIVEN THE AUTHORITIES OF THE CARTER/REAGAN ERA FEDERAL INSPECTOR. I WAS SWORN IN 36 MONTHS AGO, AND IN THAT TIME THE OFFICE HAS BEEN DEDICATED TO A SINGLE MISSION – TO GET THIS PIPELINE BUILT. THE OFC COORDINATES AND EXPEDITES THE WORK OF 24 PLUS FEDERAL AGENCIES WITH ROLES IN THE PERMITTING, LICENSING, CERTIFICATING THE NATURAL GAS PIPELINE -- I THINK OF THE OFC AS BEING TASKED WITH DOING THE JOB THAT COMBINES THE TALENTS OF TRAFFIC COP, DIPLOMAT, PSYCHIC, OMBUDSMAN, ANALIST AND ENGINEER.
IN ADDITION TO THE US FEDERAL COORDINATION, WE WORK WITH THE CANADIAN GOVERNMENT, THE STATE OF ALASKA AND ALL STAKEHOLDERS… FROM ALASKA NATIVE TRIBES TO THE CONSERVATION COMMUNITY TO THE UNIONS.
FOR PURPOSES OF THIS PRESENTATION, I WANT TO TOUCH ON THE MOST RELAVANT OF OUR MAJOR EFFORTS. FIRST ALLOW ME TO GIVE YOU SOME BACKGROUND SOME GENERAL INFORMATION ABOUT BOTH PROJECT APPLICANTS AND THE OPEN SEASON PROCESS. CLICK
SLIDE 2 – APPLICANT LOGO SLIDE
THERE ARE TWO APPLICANTS, DENALI (A CONSORTIUM OF BP AND CONOCOPHILLIPS) AND THE ALASKA PIPELINE PROJECT KNOWN AS APP (A PARTNERSHIP OF TRANSCANADA AND EXXONMOBIL). BOTH HAVE ENTERED FERC’S PRE-FILE PROCESS AND ARE WORKING ON THEIR FERC OPEN SEASON PACKAGES. THE APP WILL SUBMIT ITS OPEN SEASON PACKAGE TO FERC IN JANUARY 2010. DENALI ANTICIPATES SUBMITTING ITS PLAN IN THE FOURTH QUARTER OF NEXT NEAR.
IN THE ENABLING LEGISLATION, CONGRESS INSTRUCTED FERC TO ESTABLISH A NATURAL GAS PIPELINE OPEN SEASON PROCESS SPECIFIC TO THE ALASKA PIPELINE THAT INCLUDES OPPORTUNITIES FOR PUBLIC REVIEW AND COMMENT. ANGPA INSTRUCTED FERC TO ISSUE REGULATIONS TO INCLUDE PROCEDURES FOR THE ALLOCATION OF CAPACITY; CRITERIA FOR AND TIMING OF ANY OPEN SEASON THAT WOULD PROMOTE COMPETITION IN THE EXPLORATION, DEVELOPMENT, AND PRODUCTIONS OF ALASKA NATURAL GAS; AND TO PROVIDE FOR EXPANSION OPEN SEASONS WHICH MUST PROVIDE THE OPPORUTNITY FOR THE TRANSPORTATION OF NATURAL GAS OTHER THAN FROM THE PRUDHOE BAY AND POINT THOMPSON FIELDS. THE FERC ISSUED THEIR FINAL RULE WITH REVISION IN JUNE 2005 AND ESTABLISHED THE FOLLOWING OPEN SEASON PACKAGE PROCESS: CLICK
SLIDE 3 – FERC PROCESS
• THE APPLICANT FILES AN OPEN SEASON PACKAGE WITH THE FERC FOR REVIEW AND APPROVAL;
• THE FILING IMMEDIATELY IS PUBLISHED FOR A 30 DAY THIRD PARTY REVIEW, WHICH ALLOWS FOR PUBLIC COMMENT;
• THE APPLICANT HAS A 15 DAY PERIOD TO RESPOND TO THIRD PARTY COMMENTS; WHICH IS
• FOLLOWED BY A 15-DAY FERC REVIEW AND ACTION BY THE COMMISSION;
• THE APPLICANT FINALIZES THE OPEN SEASON PLAN AND PROVIDES THE OPEN SEASON PACKAGE TO THE PUBLIC; AND
• THEN 30 DAYS LATER, THE APPLICANT COMMENCES THE OPEN SEASON FOR AT LEAST 90 ADDITIONAL DAYS. CLICK
SLIDE 4 – APP PROCESS
THE APP ENTERED THE FERC PRE-FILE PROCESS IN MAY 2009. THEY ARE HOLDING DISCUSSIONS WITH POTENTIAL SHIPPERS IN ALASKA AND CANADA, FOR ROUTES TO THE ALBERTA HUB OR AN LNG OPTION TO VALDEZ, ALASKA. THE APP IS ALSO COMPLETING AN IN-STATE GAS STUDY, REQUIRED BY STATUTE, TO FILE AS PART OF THE OPEN SEASON PACKAGE. THEY ARE THE STATE OF ALASKA’S LICENSEE UNDER THE ALASKA GASLINE INDUCEMENT ACT (AGIA). CLICK
SLIDE 5 – DENALI PROCESS
DENALI, THE SECOND APPLICANT, ENTERED THE FERC PRE-FILE PROCESS IN JUNE 2008. IN MAY 2009, FERC NOTIFIED DENALI THAT THEY HAD SELECTED ARGONNE NATIONAL LABORATORY AS THE THIRD-PARTY CONTRACTOR TO ASSIST FERC STAFF IN THE PREPARATION OF DENALI’S ENVIRONMENTAL IMPACT STATEMENT (EIS). DENALI INDICATES THAT IT WILL BEGIN ITS OPEN SEASON IN LATE 2010. THEY TOO HAVE BEGUN DISCUSSIONS WITH POTENTIAL SHIPPERS. CLICK
SLIDE 6 - CANADA APPLICATION PROCESSES
OUR DIRECTOR OF PERMITS, SCHEDULING AND COMPLIANCE RECENTLY RETURNED FROM OTTAWA WHERE HE PARTICIPATED IN THE STATE DEPARTMENT’S ANNUAL ENERGY CONSULTATIVE MECHANISM (ECM) MEETING WHICH CONSISTS OF A BILATERAL ENERGY TRADE DELEGATION. THE OFC HAS PARTICIPATED, AT THE REQUEST OF THE STATE DEPARTMENT, FOR THE PAST THREE YEARS AT THIS FORUM, WHICH PROVIDES A FORMAT FOR ENERGY AND TRADE EXPERTS FROM THE U.S. AND CANADA TO EXPLORE MUTUAL ISSUES INCLUDING WORLD ENERGY PRICES AND REGULATORY PERMITTING ISSUES. THE TWO DELEGATIONS DISCUSSED THE PROGRESS BEING MADE ON THE DEVELOPMENT OF THE ALASKA GAS PIPELINE PROJECT.
THE ALASKA PIPELINE PROJECT’S APPLICATION RENEWAL IN CANADA WILL BE PROCESSED BY THE NORTHERN PIPELINE AGENCY (NPA). THE NPA WAS CREATED WITH THE PROCLAMATION OF THE NORTHERN PIPELINE ACT IN APRIL 1978 TO OVERSEE PLANNING AND CONSTRUCTION OF THE CANADIAN PORTION OF THE ALASKA HIGHWAY GAS PIPELINE PROJECT BY THE FOOTHILLS GROUP OF COMPANIES. FOOTHILLS IS NOW A SUBSIDEARY OF TRANSCANADA.
THE NPA ACTS AS A SINGLE WINDOW BETWEEN FEDERAL AUTHORITIES AND THE FOOTHILLS GROUP OF COMPANIES, BETWEEN PROVINCIAL AND TERRITORIAL GOVERNMENTS AND THE GOVERNMENT OF THE UNITED STATES. IN KEEPING WITH THE ACT, MANY REGULATORY POWERS OF OTHER FEDERAL CANADAIAN DEPARTMENTS AND AGENCIES RELATED TO THE PIPELINE PROJECT ARE DELEGATED TO THE NPA. THE NATIONAL ENGERY BOARD ALSO HAS A ROLE IN ISSUING A NOTICE TO PROCEED.
THE DENALI APPLICATION IN CANADA WILL BE COORDINATED BY THE MAJOR PROJECTS MANAGEMENT OFFICE (MPMO). THE MPMO WAS ESTABLISHED IN 2007 TO SUPPORT THE GOVERNMENT OF CANADA’S NEW APPROACH TO THE REGULATORY REVIEW OF MAJOR RESOURCE PROJECTS – AN APPROACH THAT ENSURES A MORE EFFECTIVE, ACCOUNTABLE, TRANSPARENT AND TIMELY REVIEW PROCESS.
THE MPMO'S MANDATE IS TO PROVIDE OVERARCHING PROJECT COORDINATION, MANAGEMENT AND ACCOUNTABILITY FOR MAJOR RESOURCE PROJECTS WITHIN THE CONTEXT OF THE EXISTING FEDERAL REGULATORY REVIEW PROCESS AND UNDERTAKE RESEARCH AND IDENTIFY OPTIONS THAT DRIVE FURTHER PERFORMANCE IMPROVEMENTS TO THE FEDERAL REGULATORY SYSTEM FOR MAJOR RESOURCE PROJECTS. DENALI IS REQUIRED TO SUBMIT TO THE MPMO A PROJECT DESCRIPTION AND THEN THE MPMO WILL COORDINATE A PROJECT AGREEMENT BETWEEN THE APPROPRIATE CANADIAN AGENCIES THAT HAVE PERMITTING AND AUTHORIZATION RESPONSIBILITIES. CLICK
SLIDE 7 -- OFC WORK TO DATE
SO WHAT HAS THE OFC BEEN UP TO FOR THE PAST 36 MONTHS? TO SET THE STAGE FOR THE WORK AHEAD, WE FIRST HAD A GAP ANALYSIS PREPARED IN 2007 THAT IDENTIFIED GAPS AND OVERLAPS THAT COULD JEOPARDIZE THE EFFORT TO EXPEDITE CONSTRUCTION. THE GAP ANALYSIS WAS COMMISSIONED TO “PROVIDE UNBIASED STUDIES AND EVALUATIONS OF ENVIRONMENTAL, ENGINEERING, AND REGULATORY ISSUES.” CLICK
SLIDE 8 – OFC
I CHOSE THIS METHODOLOGY IN ORDER TO IDENTIFY THE GAPS IN THE PROCESS AND THEN TO DRAFT AN IMPLEMENTATION PLAN FOR EACH APPLICANT. THESE PLANS WILL PROVIDE AN AGREED UPON ROADMAP FOR EACH TO FOLLOW AS THEY PROGRESS TO FILING THEIR FERC APPLICATIONS. THESE PLANS ALLOW FOR EARLY COORDINATION AND 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.
NEXT, WE BEGAN WORK ON A PERMIT 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 THE AGENCIES PREPARE, REVIEW AND ISSUE PERMITS, LICENSES AND CERTIFICATIONS.
WE’VE ALSO ESTABLISHED A TECHNICAL REVIEW TEAM, CHAIRED BY THE OFC AND COMPRISED OF TECHNICIANS, FEDERAL AND STATE AGENCY EXPERTS AND CANADIAN EXPERTS TO MEET REGULARLY TO ENSURE TECHNICAL ISSUES DO NOT DELAY THIS PROJECT. THE TEAM WILL SHARE ENGINEERING INFORMATION AND EXPERTISE AS THEY IDENTIFY PROJECT TECHNICAL ISSUES SUCH AS PIPELINE, DESIGN, SECURITY, LEAK PREVENTION, BEST AVAILABLE CONTROL TECHNOLOGY, PERMAFROST, SEISMIC STANDARDS, AND EMISSIONS. THEY WILL ALSO IDENTIFY ISSUES THAT REQUIRE EARLY RESOLUTION AND FIND SOLUTIONS BEFORE IMPACTING THE PROJECT TIMELINE. THE TEAM HAS BEGUN MEETING. CLICK
SLIDE 9 -- GIS SYSTEM
THE OFC IS ALSO WORKING ON A PROTOTYPE GEOGRAPHIC INFORMATION SYSTEM OR GIS. FOR YEARS, ALASKANS HAVE DISCUSSED THE NEED FOR BETTER MAPPING AND MANY OF OUR PROJECT AGENCIES IDENTIFIED A NEED FOR A SINGLE REFERENCE SYSTEM FOR DATA AND INFORMATION COLLECTION. THERE IS NOT A CONSISTENT, STANDARD SET OF MAPS DETAILING THE PIPELINE ROUTE IN ALASKA. EACH STATE AND FEDERAL AGENCY HAS DATA PERTINENT TO THEIR MISSION; HOWEVER, SHARING THAT DATA AND INCORPORATING IT INTO ONE AUTHORITATIVE BASEMAP IS INSTRUMENTAL TO EXPEDITE PERMITTING. BY THE END OF THE YEAR, WE’LL HAVE INTEGRATED INFORMATION ON A 20-MILE STRETCH OF THE ROUTE AT ATIGUN PASS.
OUR GOAL IS TO DEMONSTRATE THAT THE GIS PROTOTYPE IS AN AUTHORITATIVE, CONSISTENT, AND INTEGRATED SOURCE OF INFORMATION THAT SHOULD BE USED BY ALL PARTIES TO PERMIT, DESIGN, CONSTRUCT, OPERATE, AND MAINTAIN A GAS PIPELINE. CLICK
SLIDE 10 – IMPROVEMENT IN DATA QUALITY
EXISTING ELEVATION DATA FOR THE AREA IS COARSE. LIDAR DATA REVEALS THE TERRAIN IN FAR MORE DETAIL. OUR SYSTEM USES THE INCREDIBLY DETAILED LIDAR AS THE BASE MAP. CLICK
SLIDE 11 – SLOPE
HERE IS A DETAIL VIEW OF ATIGUN PASS. THE LIDAR DATA THAT WE COLLECTED THIS FALL HAS BEEN ANALYZED IN GIS TO SHOW SLOPE. SHOWN HERE IS 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 NORTHWEST BOREHOLES. MORE THAN 1,000 BOREHOLES WERE DIGITIZED AS PART OF THIS PROTOTYPE PROJECT, WHICH IS ONLY 20 MILES LONG. CLICK
SLIDE 12 – WEB ACCESS TO DATA
THE WEB BROWSER APPLICATION WILL PROVIDE PUBLIC 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 CONTENT FRAMES ON THE LEFT SHOW 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. CLICK
SLIDE 13 – INCORPORATING GEOTECHNICAL DATA
NORTHWEST BOREHOLE LOGS ARE GEOREFERANCED INTO THE GIS PROTOTYPE AND PROVIDE A STRATIFICATION OF SOIL TYPES AND PERMAFROST DATA. THERE ARE MORE THAN 10,000 BOREHOLES IN ALASKA ALONE BUT THE DATA HAS NEVER BEEN INTEGRATED.
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. CLICK
SLIDE 14 – INTEGRATING DATA
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. CLICK
SLIDE 15 – KEY FINDINGS
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; AND
• LIDAR COUPLED WITH GOOD IMAGERY PROVIDES A VALUE-ADDED DATABASE.
LET ME TOUCH BRIEFLY ON SOME MORE OF THE TECHNICAL CHALLENGES THE PIPELINE PROJECT FACES. CLICK
SLIDE 16 - TECHNICAL ISSUES
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.
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. CLICK
SLIDES 17 – 47 – PERMAFROST MAP
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 CLOSELY WHAT IS FORECAST TO HAPPEN – THE TREND IS STARTTLING! CLICK
(PAUSE WHILE SLIDE SHOW RUNS SLIDES 17-47)
CLICK
SLIDE 48 - 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.
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.
THIS WILL BE THE LARGEST HIGH-PRESSURE GAS PIPELINE EVER BUILT IN THE ARCTIC. PHMSA 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 49 – SEISMIC ACTIVITY ROAD DAMAGE
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? CLICK
SLIDE 50 – SEISMIC ACTIVITY FAULT MAPS
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 SOME THIRTY YEARS EARLIER.
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 51 – RIGHTS OF WAY
IN ALASKA, THIS PIPELINE WILL TRAVERSE 750 MILES ALONG FEDERAL, STATE, PRIVATE AND NATIVE ALLOTMENT LANDS, REQUIRING RIGHTS-OF-WAY FOR THE ENTIRE ROUTE.
ON THE CANADIAN SIDE, THE ROUTE IS NEARLY 1,000 MILES LONG. BOTH COMPANIES ARE PROGRESSING THEIR CANADIAN PERMIT PROCESSING. CLICK
SLIDE 52 - ECONOMIC ISSUES
THERE ARE FIVE MAJOR ECONOMIC ISSUES FOR THIS PROJECT.
 FIRST, FINANCING FOR THE LARGEST AND MOST INNOVATIVE NATURAL GAS TRANSPORTATION SYSTEM EVER CONSTRUCTED. THE PRIVATE SECTOR WILL FINANCE THIS PROJECT. CONGRESS ALSO AUTHORIZED A LOAN GUARANTEE OF UP TO 18 BILLION DOLLARS IN 2004 DOLLARS THAT WILL BE ADJUSTED FOR INFLATION. IN ADDITION CONGRESS IS NOW CONSIDERING INCREASING IT TO $30 BILLION.
 SECOND, THE GROWING SECTOR OF UNCONVENTIONAL NATURAL GAS – NAMELY SHALE – WHICH BRINGS NEW VARIBLES INTO THE EQUATION;
• THIRD, 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.
 FOURTH, THE PROJECT CALLS FOR MASSIVE AMOUNTS OF STEEL. IN ANGPA, CONGRESS EXPRESSED THE PREFERENCE THAT SUCH STEEL SHOULD COME FROM NORTH AMERICA. NORTH AMERICAN STEEL PRODUCERS AND PLANTS WILL NEED TO BE PREPARED TO DELIVER 2.5 MILLION TONS OF HIGH STRENGTH STEEL FOR THE ENTIRE PROJECT. CLICK
SLIDE 53 – WORK FORCE
THE LAST ECONOMIC ISSUE IS FINDING, TRAINING AND RETAINING THE LABOR POOL NEEDED ON BOTH SIDES OF THE BORDER. LABOR FOR CONSTRUCTION OF THE TRANS-ALASKA PIPELINE SYSTEM PEAKED AT 28,000. CLICK
SLIDE 54 - JOBS
THIS GAS PIPELINE WILL REQUIRE TENS OF THOUSANDS OF SKILLED WORKERS AT THE PEAK AS WELL. A HUGE SKILLED LABOR FORCE MUST BE TRAINED, BE READY TO BE HIRED, AND THEN RETAINED THROUGHOUT THE PRECONSTRUCTION AND CONSTRUCTION. CANADA’S LABOR CHALLENGES WILL COMPLEMENT OURS.
IT IS A FULLY ENGAGED PROCESS WITH MANY COMPONENTS. CLICK
SLIDE 55 – OUR PARTNERSHIP WITH CANADA
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.
AT THIS POINT, EVERYONE IS ENGAGED. MINISTER JIM PRENTICE – WHO HAS THE ALASKA PIPELINE FILES ON HIS DESK – NATURAL RESOURCES MINISTER LISA RAITT, DEPUTY NATURAL RESOURCES 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 ARE OF CRITICAL IMPORTANCE TO THE U.S. PERMITTING AGENCIES.
ALL THOSE CANADIAN OFFICIALS I MENTIONED HAVE SHAKEN MY HAND AND PLEDGED TO MEET THE U.S. SCHEDULE SO THAT THE CANADIAN LICENSES ARE IN PLACE WHEN FERC ISSUES THE U.S. LICENSES.
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 AGENCY TO OVERSEE THE ALASKA PIPELINE PROJECT.
SLIDE 56 – STATE OF ALASKA
I WOULD BE REMISS IF I DIDN’T MENTON THE OFC WORK WITH THE STATE OF ALASKA. THE OFC AND STATE OF ALASKA ATTORNEYS ARE WORKING ON A DRAFT SURVEILLANCE AND MONITORING AGREEMENT, WHICH IS REQUIRED BY OUR STATUTE. WHEN FINALIZED, THE MOU WILL LAYOUT THE PROCESS IN DETAIL FOR WORKING TOGETHER FROM THE PERMITTING PHASE OF THE PROJECT THROUGH CONSTRUCTION.
THIS PROJECT, AS I SAID AT THE BEGINNING OF MY PRESENTATION, IS CRITICAL TO NORTH AMERICAN ENERGY SECURITY. THERE IS AN ABUNDANCE OF NATURAL GAS ON ALASKA’S NORTH SLOPE; THERE IS NATIONAL SUPPORT FOR THE PIPELINE PROJECT INCLUDING AN ENDORSEMENT FROM THE NATIONAL AFL-CIO BECAUSE OF THE TENS OF THOUSANDS OF GOOD PAYING, GREEN JOBS IT WILL CREATE. THERE’S SUPPORT FROM CONGRESS AND THE WHITE HOUSE AS WELL.
FIRST GAS IS PLANNED FOR 2018, FOLLOWING FERC LICENSING IN 2014. THAT MAY SEEM LIKE A LONG TIME, BUT 2014 FINANCING AND SANCTIONING IS RIGHT AROUND THE CORNER. CLICK
SLIDE 57 – OFC CONTACT INFO SLIDE
IT’S BEEN AN HONOR TO STAND UP THE OFC AND DEVOTE EVERY DAY TO THE COMMERCIALIZATION OF ALASKA’S NORTH SLOPE GAS. THANK YOU FOR THIS TIME TO UPDATE YOU. IT HAS BEEN A TRUE PLEASURE WORKING WITH YOU AND SERVING ON THIS ADVISORY COMMITTEE.

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