FERC approves Alaska LNG project, though viability in doubt

The Federal Energy Regulatory Commission (FERC) approved May 21 the proposed Alaska LNG project that could allow development of Alaska North Slope natural gas primarily for export as LNG despite the costly plan’s uncertain future.

The project, led by state-owned Alaska Gasline Development Corp., would involve construction of a 42-in. pipeline more than 800 miles from the North Slope, where it would draw gas especially from Point Thomson and Prudhoe Bay fields. The pipeline would run to Nikiski, on the Cook Inlet coast of southern Alaska.

At Nikiski a new liquefaction plant would be built, planned for three trains with a total capacity of 20 million tonnes/year, receiving gas at about 3.5 bcfd. The overall project cost is estimated at $43 billion.

FERC voted 3-1 in favor of a certificate of public convenience and necessity for the project, though Commissioner Richard Glick voiced his doubt that the Alaska LNG project is economically viable.

Glick voted against the order to express his wish for more environmental analyses, including greenhouse gas estimates, but used the occasion to suggest the commission has been approving unrealistic plans.

FERC Chairman Neil Chatterjee said the Alaska LNG project was the thirteenth approved since he joined the commission. He did not comment on its economics. Chatterjee must at times testify before the Senate Energy and Natural Resources Committee, whose chairman, Sen. Lisa Murkowski (R-Ala.), supports the LNG project.

Costs restudied amid skepticism

Skepticism has been expressed about the project by many observers and by oil and gas companies over the years, given the relatively lower costs of many other LNG export plans proposed for the US, the west coast of Canada, and elsewhere.

North Slope producers ConocoPhillips Co., ExxonMobil Corp., and BP PLC reduced their roles in the Alaska LNG project several years ago, though ExxonMobil and BP have provided some financial assistance recently.

Fluor Corp., which built the Trans-Alaska Pipeline in the 1970s, is said to be near completion of an updated cost study for the project.

It has been assumed for some time that Alaska Gasline Development will shift to a private company or consortium of companies at some point, if any are willing to take on that role. As things now stand, no companies apparently want to do so, which is why the state-owned company has led the plan since 2016.

No rehearing on Jordan Cove

At its May 21 meeting, FERC also refused a rehearing request on its approval of the Jordan Cove LNG export project, another plan that Glick suggested may never be built.

FERC in March approved the Jordan Cove LNG project, including the Pacific Connector Gas Pipeline and a liquefaction plant to be constructed in Oregon. Rehearing was denied on a procedural detail, the fact that the rehearing application was filed a few hours late.

Glick suggested the commission show more flexibility and greater consideration of the interests of landowners concerned about the use of eminent domain to build a pipeline across their land. Commissioner Bernard McNamee responded that the landowner concerns had, for the most part, already been raised and considered.

The Jordan Cove project would involve construction of a 229-mile, 36-in. pipeline from connections with existing lines in Klamath County, Ore., to Coos Bay on the Oregon coast. The pipeline would be able to carry up to 1.2 bcfd. A liquefaction plant to be built in Coos Bay would use five trains to process up to 1.04 bcfd for export.