Alaskan Municipality Disputes Site Choice for Alaska LNG Terminal
A regulatory dispute is brewing between two competing Alaskan municipalities over the site chosen by Alaska Gasline Development Corp (AGDC) for the 20mn metric tons/year liquefaction terminal of its $40bn Alaska LNG project.
In January this year, the Matanuska-Susitna Borough (MSB) filed a motion with the US Federal Energy Regulatory Commission (Ferc) for permission to intervene late in Ferc’s process to establish a draft environmental impact statement for the Alaska LNG project. In that motion, it outlined concerns it had been expressing since at least 2013 to AGDC and ExxonMobil that an environmentally-superior site for the liquefaction terminal – which AGDC proposes in its application to build at Nikiski, near the mouth of Cook Inlet and within the boundaries of the Kenai Peninsula Borough (KPB) – exists at Port MacKenzie, nearer the head of Cook Inlet and just north of Anchorage.
“For several years, the borough has been in dialogue with AGDC and other project proponents regarding the ability to site the liquefaction facility at Port MacKenzie, within the borough’s jurisdiction,” MSB said in its Ferc motion. “AGDC assured the borough on numerous occasions that Port MacKenzie would be considered as an alternative site for the liquefaction facility in its application for the project.”
But when AGDC filed its project application, MSB officials were dismayed to learn that its Port MacKenzie alternative had been left off the list of eight potential alternate sites.
“Moreover, after more careful review, the borough discovered that AGDC did not actually consider Port MacKenzie at all in its alternatives analysis,” MSB said. “Instead, AGDC considered Point MacKenzie, a completely separate location with different attributes than Port MacKenzie. This is in spite of the fact that AGDC, on numerous occasions over several years and [after] multiple site visits, insisted that Port MacKenzie would be studied as an alternative for the liquefaction facility.”
Among the attributes which make the Port MacKenzie location an environmentally-superior option to the Nikiski location, the MSB said, is its location at the head of Cook Inlet, which means that AGDC’s feed gas line from Alaska’s North Slope need not make a 28-mile underwater crossing of Cook Inlet, which is a critical habitat for beluga whale. And at 50 miles shorter than the line to Nikiski, it would be cheaper to build.
As well, the Nikiski location would require extensive dredging to deepen the water to accept LNG tankers, endangering critical salmon spawning grounds in the area. Port MacKenzie, MSB said, requires no dredging and virtually no marine construction requirements, since it can take advantage of existing jetty and waterfront infrastructure installed by the municipality in a $250mn program undertaken with the express intent of attracting major LNG investments.
“Two LNG companies, REI and WesPac, conducted pre-Feed analysis and determined Port MacKenzie would be a suitable LNG liquefaction site,” MSB said. “Port MacKenzie would be the least environmentally disruptive site and cost between $3.3bn and $3.8bn less to develop than Nikiski.”
In August, when KPB learned of MSB’s efforts to promote the Port MacKenzie location as an environmentally-preferable site for the liquefaction terminal, it too filed a motion with Ferc seeking late intervenor status. It had not filed for status at the beginning of the Ferc process, it said, because it had assumed that AGDC, which preferred the Nikiski location, would represent its interests adequately.
“[N]o other party can adequately represent the interests of the Kenai Peninsula Borough and its citizens and businesses in this proceeding, particularly on the issue of the location of the proposed Alaska LNG project,” the borough said in its August 9 application to Ferc. “Siting the Alaska LNG project within [MSB] would be to the detriment and prejudice to the citizens and businesses of the Kenai Peninsula Borough.”
On September 5, the MSB replied to the KPB application, noting that it appeared the AGDC was “making every effort” to support Nikiski as the liquefaction plant location, “even to the point of making several assumptions about the site at Port MacKenzie” without consulting its officials.
But it also said it has no quarrel with the KPB over the Nikiski site, only with AGDC’s refusual to consider Port MacKenzie as an alternative.
“Ultimately, the KPB motion highlights the importance of the commission ensuring that all interests, including the general public’s, are thoroughly considered in evaluating AGDC’s application,” MSB said. “This standard cannot be met until AGDC provides a thorough and accurate analysis of Port MacKenzie as an alternative location for the Alaska LNG project.”