Borough's pipeline plan: 'plain wrong' or good idea?

Posted: Sunday, October 12, 2003

Routing a gas pipeline from the North Slope along the Alaska Railbelt-Parks Highway corridor to a Cook Inlet gas terminal, as the Kenai Peninsula Borough has proposed, is an idea that's already been considered and rejected for a host of reasons in a 1988 U.S. Department of the Interior environmental impact statement, a board member of the Alaska Natural Gas Development Authority said last week.

"The stark, number one problem is you'd have to get the U.S. House and the U.S. Senate to OK a permit to go through Denali National Park. Good luck!" said Scott Heyworth, who led the fight last year for Proposition 3, which created the authority.

The ANGDA board is mandated to build a natural gas pipeline from Prudhoe Bay to tidewater at Prince William Sound with a spur line from Glennallen to the Southcentral Alaska gas grid a pathway favored by the 1988 EIS.

But that environmental impact review is 15 years out of date and parameters that drove its preparation may no longer apply, said Bill Popp, the Kenai Peninsula Borough's liaison to the oil and gas industry, in an interview Thursday.

It should not be used to reject out of hand a gas line directly south to Cook Inlet, he said.

"Regulations change. Govern-ments change. That 1988 EIS was developed for a specific project with specific parameters, not necessarily parameters in play for a project to be developed now," Popp said.

The borough believes a Railbelt route directly to Cook Inlet is an alternative with many advantages over a route to Valdez and should be seriously evaluated.

Southcentral Alaska is the state's most populous zone one with a ready domestic demand, a working natural gas infrastructure, and good locations for an export facility. Popp presented that position on the borough's behalf to a meeting of the gas authority board last month.

"Popp is just plain wrong," Heyworth said.

A Railbelt route likely would have to pass through Denali National Park as well as environmentally sensitive state refuges and would face almost impossible odds getting the necessary federal permits, Heyworth said. Pursuing those could delay the project for years and perhaps even kill it, he said.

Regarding Popp's opinion of the 1988 EIS, Heyworth was equally emphatic.

"That dog won't hunt. An EIS is law," he said. To change one, the KPB would have to start from scratch and pursue a new EIS.

"It's ridiculous. An EIS holds forever. There is no timeline on it."

The 1988 EIS document, prepared by the Bureau of Land Management and the U.S. Army Corps of Engineers, said the Railbelt route then being considered faced numerous environmental difficulties, especially where it coursed through national parks and state reserves, as well as severe engineering challenges all of which led to its conclusion that a route along the trans-Alaska oil pipeline right-of-way made more sense.

Sections of the Railbelt route considered at the time would have traversed portions of Denali National Park and Preserve, the Minto Flats area and the Susitna River Flats State Game Refuge, as well as environmentally sensitive areas on the east and west sides of Cook Inlet depending upon which route was chosen for the final leg of the journey.

That is essentially the same route being proposed today by supporters of a Cook Inlet terminus, Popp confirmed.

The 1988 EIS also considered routes that would have avoided Denali National Park.

One followed the Parks High-way right of way between Healy and McKinley Village, a route considered at least buildable without long-term operation and maintenance difficulties. Another looked at avoiding the park by building along the east side of the Nenana River, while a third considered routing the line along the Anchorage-Fairbanks electrical intertie corridor.

Ultimately, all three were rejected "because of engineering constraints due to very rough terrain and potentially severe environmental impacts," the EIS said.

Terminal locations in the Cook Inlet region at Boulder Point and Cape Starichkof on the east side and Harriet Point on the west side faced their own sets of environmental difficulties. Those included tides and ice that could affect the ability of tankers to maneuver, proximity to active volcanoes, the likelihood that extensive dredging would be necessary and possible impact on fishing streams and the Kenai National Wildlife Refuge.

Compared to locations considered in Prince William Sound, the EIS said the Cook Inlet terminal locations were less able to meet specific criteria considered desirable. Among those were minimizing the length of the pipeline itself, maximizing the use of existing infrastructure, avoiding areas of potential geohazards, reducing conflicts with sensitive environments, avoiding permitting delays, as well as addressing construction and safety considerations surrounding a liquefied natural gas plant and minimizing problems surrounding shipping at the terminal.

Anderson Bay in Prince William Sound had "favorable" to "moderately favorable" ratings in all criteria, while sites in Cook Inlet earned very few "favorable" ratings, garnering mostly "moderately favorable" and "unfavorable" marks.

Of particular note in the 1988 EIS was that all three Cook Inlet sites Harriet Point, Boulder Point and Cape Starichkof earned "highly unfavorable" ratings when it came to their ability to "avoid permitting delays."

"All three Cook Inlet alternatives are considered to be highly unfavorable due to the project time delays that would be involved in any attempt to secure congressional approval when the proposed route to Anderson Bay would avoid the Denali National Park and Preserve entirely," the EIS said.

The Denali segment was deemed "the most problematic" insofar as permit acquisition was concerned, but the EIS also noted probable permit difficulties in Minto Flats and Susitna Flats State Wildlife Refuge.

Because the route to Anderson Bay generally follows the trans-Alaska pipeline, that route is thought less likely to meet permitting delays.

Indeed, Heyworth pointed out that Yukon Pacific Corp. owns all the major permits necessary for the Prudhoe-to-Prince William Sound route and has done the engineering studies on the pipeline and liquefaction plant.

"We (the authority) will negotiate with them for the permits," Heyworth said.

The authority is "not at that stage yet," he said. It is busy trying to line up potential gas customers.

In recent weeks the ANGDA board has begun seeing increased interest in Alaska natural gas.

Sempra Energy International Inc., owner of gas utilities in southern California, has proposed that 1 billion cubic feet of Alaska's gas be allocated to the California market. Meanwhile, Mitsubishi Corp., a Japanese trading company with interests in LNG, has submitted a draft memorandum of understanding to the ANGDA board offering help in marketing gas in Asia and California and expertise in establishing a viable LNG project. The authority board and the state Department of Law are reviewing that proposal.

Recent articles on that memorandum of understanding have said Mitsubishi was looking to buy 1 billion cubic feet of gas per day. However, in a phone conversation Friday afternoon, Harold Heinze, chief executive officer of the authority, said that is not the case and he did not know the basis of those reports.

He said the Mitsubishi's proposal has to do with a possible working relationship with ANGDA.

"There is no offer in there for any specific volume," Heinze said.

Perhaps of more interest to the backers of a Cook Inlet pipeline route is Mitsubishi's proposal announced Thursday in a governor's office press release that the memorandum of understanding should be expanded to include consideration of other gas routes including a spur line from Fairbanks to Anchorage down the railroad right of way and through the Matanuska-Susitna Valley.

Gov. Frank Murkowski was in Tokyo on Thursday meeting with Mitsubishi Corp. President Mikio Sasaki to discuss energy-related issues. Both agreed the memorandum of understanding should be expanded, according to a press release from the governor's office.

Friday, Heyworth suggested signing an expanded memorandum of understanding might be illegal given the specific route ANGDA is charged with pursuing.

"That is how several of us board members see it as of last night (Thursday)," he said. "The law in the initiative language was very precise. We are to build a project to Prince William Sound not study a spur from Fairbanks to Kenai."

Heyworth said the latter might delay a project for years, only to come up against the same impediments noted in the 1988 EIS.

John Manly, Murkowski's press secretary, said the Legislature indeed might have to act before ANGDA could put time and effort into a Railbelt route.

Some precedent already exists for proposing a legislative expansion of the authority's purview however, albeit regarding a different alternative route. Senate Bill 193, introduced at Murkowski's request in April, would give the authority the power to investigate an Alaska Highway route into Canada as well as the route to Valdez. The bill currently is in the Senate Resources Committee. It does not include reference to a Railbelt alternative.

Manly also said the Murkowski administration would support any economically viable project that would benefit the people of Alaska.

Bob Favretto, an ANGDA board member from the Kenai Peninsula, who said recently that he favored a legislative move to expand the gas authority's mandate so it could look at a Railbelt alternative, said Friday that he was not prepared to offer an opinion regarding the legality of studying alternative routes without a change in the law.

While the board is charged with looking at what Proposition 3 mandated, he does not think the people of Alaska will simply accept that a 15-year-old EIS automatically applied today. They would want all options looked at, he said.

"There's a new governor, a new administration and a lot of changes," he said. "Whether it flies or not, I don't know the answer. I'm not a lawyer, but I think we have to look at it."

Popp insists that a Railbelt-Parks Highway route is not impossible.

Rights of way already in use by the Alaska Railroad, the electrical intertie and the Parks Highway could be used by a pipeline to Cook Inlet, he said. Other projects within those corridors have required environmental studies more recent than the 1988 EIS, which suggests there is more up-to-date data on which to base a decision, he said.

"They've gone through regulatory changes over the years, which brings into question the statement that there is no way to do it," Popp said. "We think the down-the-pipeline route (to Valdez) has its own challenges, including Thompson Pass, which has incredible topography they would have to deal with, too. It's an incredibly narrow right of way. It was a challenge for the TAPS line."

Friday, Heyworth disagreed, saying it would be physically impossible to use parts of the railroad right of way, virtually assuring the need for a congressional vote on a measure allowing a pathway through Denali National Park.

As for the proposed location of an LNG plant and marine terminal at Anderson Bay near Valdez, Popp said several million tons of rock would need to be removed.

"Where does it go and what does that add to the project costs?" he said. "Then there is the idea recently floated of putting the whole facility on a floating barge. What kind of permitting challenges will that face? Are there navigation problems? Will Valdez residents like it floating in the bay?"

A very big question yet to be answered, Popp added, is what a spur line from Glennallen will cost.

"There's no number attached to that," he said. "But add that to the total project cost and what does it do to the overall economics? Their project is going to do nothing but get more expensive. There will come a point when the Railbelt route will justify bringing the project this way (where) an in-state market already exists and facilities to export gas exist without having to build a substantially expensive plant to liquefy the natural gas."

Popp said there was no one besides the natural gas authority currently doing a cost analysis of the spur expense.

Heinze, the authority's chief executive officer, said last month that assessing the feasibility of the spur was one of the board's prime duties. "That is an essential part of what we are doing," he said, adding, however, "the devil is in the details."

The Kenai Peninsula Borough's position may be about to get some support from parts north.

Matanuska-Susitna Borough Manager John Duffy said Thursday that he is preparing to present his borough's assembly with a resolution in support of a Glennallen-to-Anchorage spur line. He added that he would expand its scope to include support for the Kenai Peninsula Borough's position regarding a direct Cook Inlet pipeline route.

"We would like to have some natural gas off the North Slope," he said. "Certainly, if we could get the entire pipeline down through the Railbelt, we would love that. If we can't get that, we want a spur. We are supportive of the Kenai Peninsula's efforts."

Regardless of who may be lining up in favor of at least another new look at a Railbelt alternative, Heyworth remains adamant that it would be a futile exercise, and that the lowest-cost option for putting North Slope gas into Southcentral Alaska is a large-diameter pipeline to Valdez with a 140-mile spur line from Glennallen. It is a matter of economy of scale, he said.

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