Federal regulators assert role in gas line
Published Tuesday, June 17, 2008
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Stumble It!ANCHORAGE — Federal regulators on Monday answered dozens of questions from state lawmakers about natural gas pipelines and the extent to which the state’s own pipeline legislation would affect their decisions.
The federal officials defended their permitting process as efficient and fair, and they urged lawmakers to do what they could to get a project started through the process.
“We stand ready,” said Mark Robinson, director of the Federal Energy Regulatory Commission’s Office of Energy Projects. “We just need somebody to play with.”
Testimony from FERC lasted most of the day and cleared up some questions while leaving others open for interpretation.
After that, some lawmakers said the testimony weakened the case for supporting Canadian pipeline builder TransCanada under the Alaska Gasline Inducement Act, while others said they still believed AGIA and TransCanada offered valuable protections to the state.
The day was marked by news that North Slope producers BP and ConocoPhillips, who are pursuing their own pipeline project outside AGIA, had requested to begin the “pre-filing” process with federal regulators.
Lawmakers are in Anchorage this week continuing their evaluation of TransCanada’s proposal. They have until the beginning of August to vote it up or down.
One of the big questions addressed Monday was whether AGIA protections were necessary in light of federal legislation and FERC rules already in place.
When asked about provisions in AGIA meant to ensure gas producers can get space in the pipeline, Robinson and Jeff Wright, the deputy director of the Office of Energy Projects, said they were confident existing rules would ensure pipeline access.
Before the pipeline is built, all gas producers would have an equal chance to reserve space in it, they said, adding that if there was more demand than space, companies would be given space on a prorated basis.
Once the line is built, they said, companies would be able to request a pipeline expansion. If the pipeline owner was unwilling to expand the pipe, the companies could ask FERC to require an expansion.
“The law says this is going to be an open-access pipeline,” Wright said.
Sen. Bert Stedman, a Republican from Sitka, said afterward that the testimony weakened the case for issuing a license under AGIA, which would involve giving TransCanada a subsidy worth up to $500 million in exchange for certain commitments.
“I would even ask the question of the value of AGIA,” he said.
But other lawmakers and the commissioner of the state’s Department of Revenue, Pat Galvin, said AGIA still offered important protections.
As an example, they pointed to a provisions dealing with pipeline expansions. AGIA would require TransCanada to expand the pipe every two years if there was demand for it, and to spread out the cost of the expansion among all shippers rather than just the new shippers.
Without AGIA, a pipeline owner might not expand the pipe on its own, and an expansion mandated by FERC likely wouldn’t result in so-called “rolled-in rates,” which are considered beneficial for smaller gas producers.
“The state still has something to gain through an AGIA partner,” said Sen. Gene Therriault, a Republican from North Pole.
Another big question was whether FERC would consider the state’s AGIA license in determining whether to grant a federal certificate for TransCanada’s project.
The FERC officials said the state license wouldn’t change anything in their permitting process, which involves a thorough study of the benefits and impacts of the project, but would be considered by the five FERC commissioners who ultimately decide whether a project is in the public interest.
They added the commissioners could eventually certify TransCanada’s project as well as the project pursued by BP and ConocoPhillips.
In cases where FERC grants multiple certificates for the same project, Robinson said, “The market will pick the ones that are deemed the most efficient for delivering the lowest cost gas to the consumer.”
Whichever builder is able to get commitments from gas producers to use its pipeline would ultimately get the financing needed to complete the project, they added.
Rep. Mike Hawker, an Anchorage Republican, asked at one point, “How much influence do we really have on this process?”
“The state has a significant role,” Robinson answered, “but it’s one of many roles in the FERC process.”
The FERC officials refused to comment specifically on AGIA, and said during breaks that they had not studied the state law.
But in their testimony, they cautioned against asking for too much in a pipeline.
Gas projects are popping up around the world, and it’s critical that Alaska start moving forward now, they said.
They added that the federal legislation governing an Alaska gas pipeline was meant to ensure open access without killing the project through excessive restrictions.
Robinson said it wasn’t a foregone conclusion that a pipe would get built, and he warned that the project would be “easy to derail.”
When Hawker asked if the state was too focused on future expansions and not enough on turning dirt, Wright responded, “You can’t expand if you don’t have a pipeline.”
For more news from the capital, visit www.newsminer.com and look for the Capital Focus blog.
Contact staff writer Stefan Milkowski at 388-6141.
Community Discussion
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Stefan: Good reporting on the issues. The FERC licensing is going to be a critical step in moving an Alaska natural gas pipe line forward whether it be TransCanada, Denali and/or other export projects.
ConocoPhillips/BP request for early consideration from FERC application process is not necessarily bad for AGIA and TransCanada as long as the playing field is level. And the common goal that a gas line MUST be built in the Public interest.
I would encourage everyone to stay engaged in the process so that ALASKAN natural gas energy needs are protected for now and the future.
If the State issues an exclusive license to Trans Canada to build a gasline wouldn't permitting a competing gasline project be a breach of contract?
It's clear to me, that the oil companies could have built the gas line long ago. They're only proposing to make their own now, to derail the AGIA process. It would be my hope, that the state sue them on this matter to ban any such projects that conflicts with the states AGIA process.
I would also love to see their leases modified on the grounds that they have had ample time and resources go develop and market our natural gas, but have chosen not to do so. Revoke their rights to natural gas resources and re-sell the leases to other companies who will commit to the AGIA process.
AND you can bet that if ANWR is ever opened up, I would never give the big oil companies a lease option in there.
Hard Times on the farm for BigOil...
Sometimes ya gotta forget about slaughtering your prize hog and selling the smoked bacon at next years county-fair for top dollar..
..if yer gonna save the farm you should consider getting some good support from your neighbors by selling them some chicken eggs for cheap just to keep the wolf away from the door.
www.fairbanksgas.com
Luckily for america, there's some really nice smart people who work at FERC, mostly scientist types who understand the psychology of hydrocarbons. They're optimists, despite having to work in a chicken coop.
.....flash/rumble
Noticed that the news minor took out the ability to post comments to the article on Jewelz Nutter Fairbanks chamber of Commerce CEO resigning (due to the Chamber choosing to support the Denali pipeline over AGIA). There are some great comments regarding the options for Alaskans and how many of the players are tied together. Could the comments about the News Minor being tied to the oil companies (in advertising etc) hit too close to home? You make your decision where the News minor stands on this issue.
4alaska, this article (by Stefan Milkowski) doesn't seemed biased against AGIA to me. If the News-Miner is forcing their reporters to slant things against AGIA they're doing a bad job of it.
According to Julie Stricker the ability to comment on the Jewelz Nutter story was taken away because of false clames from people posting. After speaking with her she agreed the claims were not false, but off topic, after speaking with her some more she said they were removed because someone complained. When I told her this is an impotant issue for Fairbanks she told me she doesn't care she is tired of dealing with this story. So I recomend that you do what I am doing and post in the ADN.
Small Bob-
No, it would not be a breach of contract. The State has no authority to issue a permit to construct a pipeline. That is solely the authority of FERC in the US and the NEB in Canada. AGIA is a license for the inducement ($500 million subsidy). FERC could issue a license to both projects (although doubtful that it would). A FERC license is but one requirement to move a project forward. The other critical component is the ability to finance the project which is dependent upon acquiring F/Ts (Firm Transporation Commitments).
No FERC Permit = No Project
No Financing = No Project
Stefan is an excellent reporter.
Please--read his blogs: "Capital Focus."
It's the only place one gets in on an "inside scoop" around here.
It is disgusting that FDNM stopped comments on the FCC thread. Now Rod'll probably remove this.
But go anyway and read the links. Naturally, the FCoC thinks only of monetizing our resources, so that the legislators, with whom they keep in close contact, can spend it.
They prefer that the gov, with whom CoC's tend to wield great influence, spend ALL of our money rather than the people, who's money it is, spend even some as the people see fit for themselves.
Getting some of one's own money back is not a hand-out or a gov program. It is only being cast in that light to create conflict and to try to keep as much of our money in the gov's hands to spend rather than the owners of the money.
And the circle goes 'round and 'round.
Seems to me FERC is more sensible than most of the players in the state. Kind-of like it took the feds to do at least something about the corruption. Amazing. Just wish they'd clean it up some more.
I am encouraging our legislators to grant the lic. to TC. I would not have so eagerly supported them, but it is appearant that BIG OIL, whom have had us over the barrel (so to speak) for years are now starting to sweat a little because their precious hold on our resources could be slipping away!! Gov. Palin, to you and your administration, a HUGE THANK YOU!! To our legislators, DO THE RIGHT THING for Alaskans! If you choose to side with big oil, you will find yourself in the same boat they are in....a sinking one!!
Boy if this is true..."she is tired of dealing with this story" then she is in the wrong line of work? Sad.
Pretty good article.
But I haven't seen or read one word about the bottom line....that is....what is the gas going to cost the average Joe in Alaska? (when and if it ever gets here). Shouldn't we all keep reminding our "Representatives" to keep their eye on the ball (that is, our interests)
Another point of view. Since it's technically OUR gas, the only costs (to us consumers in Alaska) should be the refining costs (not counting the distribution costs, which will be added also), this SHOULD lower the cost to the average Joe to where it will be the lowest in the nation, wouldn't it?...I know this supposedly isn't the place or time to think about the average Joe, because its the "bigger picture", but I think it is...it should be the pivot point upon which all other points, agreements, deals, and negotiations’ are based on. I think this would help insure we the OWNERS of the gas will truly benefit (and it would be a very small amount of the total gas moved).
Uh... Edlw, Alaska residents don't get free gold, oil, copper, or anything else mined in Alaska. For that matter, we don't get free salmon, blueberries or water unless we go out and harvest them legally.
The state government controls which companies and individuals have access to our natural resources, but it doesn't necessarily interfere with the market prices. Should the state force canneries to sell salmon cheaper to Alaskans instead of selling it out of state for a higher profit?
I'd like a gas line to Fairbanks ASAP, and I'd like it if we didn't have to pay so much for fuel. I'm just saying that there are good reasons why the state governs our resources capitalistically rather than communistically. There are lots of creative ways for the government to encourage businesses to do the right thing for the community without socializing energy.
Why was the comments section closed in regards to the Jewelz nutter case. I have to say shame on you DNM. From what i read this is clearly something that Fairbankians want to weigh in on. All other comments sections are opened but from the repeated censorship that you have done to the comments there its clear that our opinions are only valid and matter when they fit into what you feel the people should read. I believe thats called censoring the press and im pretty sure that right is still in action. I demand that the comments section be reopened in regards to the Jewelz quitting her job article so the people can continue to weigh in on the issue. All others who agree with me i ask that you keep making requests in the same light on variouse article in this paper unitl the paper allows us their readers to have our voice back. I intend to post a comment at least one half hour randomly around this paper in regards to the jewelz case until we are allowed to continue to voice our opinions. And DNM in case your considering trying to stop me, registering with your paper is free as well as getting a hotmail account so if you delete me posts ill repost and if you shut down my account ill just go get another one. Good luck censoring me.
Edlw and "n8v"-
In Stefan's blogs--particularly one I think on May 30, and then a "cheap gas" or something update from a few days ago--he explains the take on just what you're asking Edlw.
Corinne-
The "people" do spend the money through the legislative process. The Legislature, solely, has the power of appropriation. This "our" gas and "our" money concept seems to escape many people. Those are "our" resources collectively. No individual has personal claim on any portion, but the State government acting on our accord. Simply because elected officials don't do what YOU would want them to do does not mean they are not doing what they are supposed to.
FERC didn't choose to get involved. . .all gas pipelines in the United States are regulated by FERC. Period. Any Alaska gas line does not happen without their approval.
We have no personal state taxes (income or sales), we get free money from the State every year, because of the oil and gas industry in this state we have been largely spared the effects of a recession that is crippling other areas of the country and yet many Alaskans not only want more but for some reason believe they're ENTITLED to more. Seems like a welfare state to me.
"If the News-Miner is forcing their reporters to slant things against AGIA they're doing a bad job of it."
I wouldn't exactly say the DNM "forces" their reporters to take the liberal side on issues, ... rather liberal-minded people tend to be drawn to media as writers and reporters. NBC is so far left that they may as well change their name to National Barack Company.
Don't get me wrong, places like Fox News claim to be "fair and balanced", but often resort to being nothing more than a reactionary network in response to liberal media. Not all the time, but often enough to cause me to be weary.
Regarding DNM, I don't think it is a political issue for them, ... rather a financial matter. It doesn't pay to criticize those that are your best customers. DNM definitely knows where their bread is buttered.
If Trans Canada said they would build regardless of AGIA, why is the State giving them half a billion. Gas is up to 4.34 a gallon, diesel even more. What do you think $5 by end of next week. We have an oil line in our back yard and how much do we pay. Who ever said a gas line would bring cheap gas to Fairbanks. Give me their names, so I can get it in writing.
Non_Lemming, you're right. I think issues like the gas line are way more interesting than most of national politics because there's no kneejerk division between "liberal" and "conservative".
There are definitely powerful economic interests involved though, especially on the Big Oil side. That agenda is more likely to influence coverage.
That said, I just searched the News-Miner archives for the term "ConocoPhillips" and was actually impressed at how balanced the coverage has been.
Whatever Heath-
I am familiar with your attitude from when you worked for a legislator, and your attitude here for we peons who aren't as intelligent as the likes of you.
I think most of us are aware of FERC's task.
As far as the rest, you and I have gone 'round about this before.
That's right, we own the resources collectively. The reality is, many of us would like some of our share of our monetized resources in cash
to do with as we see fit.
Especially, but not solely, since there is such a huge windfall available. It is too bad we haven't insisted on more of share before the current energy situation.
I am sorry, Heath, that you are one of those who believe that government can spend your share of the (esp. windfall) money better for you than you can for yourself.
No one is getting free money from the state. We get a small sum from our share of our investments which are indirectly related to the current crop of excess cash in the state coffers. Our share of that crop is disproportionately small--and only through gov spending choices.
What so many of us are saying is:
We want more of our share, as shareholders, directly.
Semantics count. But you don't fool me. If you want to call it welfare, and you disapprove of that, then I hope you don't accept your share in the form of PFD, or any other means by which some of our money might be returned to us, for us to spend for ourselves as WE see fit.
Is your former legislative employer aware of your apparent philosophy that gov is better able to spend your money for your benefit than yourself?
That is the elitist attitude.
Actually Corinne -
You have once again proven adept at misunderstanding, misrepresenting, and misstating my point. I didn't say I necessarily I agreed with the way government spends the money, but I recongnize and abide by our constitutional form of government. There were 55 men and women who gathered in Fairbanks about 50 years ago who came up with one of the best state constitutions in the United States. I'm pretty comfortable with how government works. When I don't agree I do what I can to change it. If you don't like it, then I suggest you run for office and become one of the 60 men and women who get to make those decisions. As for the "many of you" who would like things to be handled differently. . .you merely need to convince 50%+1 of your fellow voting Alaskans. If not, well. . .that's called democracy in action.
What investment are you talking about? You haven't invested anything! Living here? Is that your claim to fame? What have YOU PERSONALLY done to create any wealth in the state of Alaska? I challenge you to name anything that you've actually done to create the vast wealth we have here.
Do you really think you're clever that you refer to my former boss? Which one? Jeannette James or Mike Kelly or Lesil McGuire or Carl Gatto?
My "elitist" attitude as you refer to it, is simply the fact that I've taken the time to read our State Constitution and know what it says; that I've studied our system of government; and that I point out inaccuracies by bloviating populists like yourself.
Not that it's any of your business--or even relevant--to the discussion; and without going onto the specifics of my personal life; and besides the fact that you have no idea what or whether I have any personal investments in anything here or elsewhere or otherwise under the comprehensive definition of "investment;
ONE of my PERSONAL contributions to creating wealth in Alaska has been in...
resource extraction!
Truly, new wealth!
And bringing in "investment" (in the less comprehensive meaning of the word!) from Outside to do so! At times.
You have pointed out no inaccuracies.
Just continued to reveal yourself as one of those who prefers to have government spend all the peoples' money rather than allowing the people to make some of those decisions for themselves.
I don't prefer government to spend the "people's" money, I simply recognize and work within the confines of constitution government as adopted by fellow Alaskans 50 years ago.
There's a reason that our founding fathers granted Congress the power of taxation and directed that all appropriations originate in the House of Representatives.
How are we not getting free money from the State? We pay no taxes to State government and yet we receive a dividend based solely on the fact that we consume space. How is suggesting that the dividend isn't free money accurate?
Congratulations, you have a job. Atta boy. Maybe you've started a small business. . .good for you. However, the revenue generated from oil and gas development in our state accounts for 85% of unrestricted operating budget. Oh, and we have $40 billion in the bank. Even mining which has increased exponentially in the last decade is still is still overshadowed by the petroleum industry ten times over.
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