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State officials urge FERC to open consultations on Alaska LNG impact on historic sites

Highlights

State officials want process complete before permit decisions

Project has faced uncertainty over costs, commercial interest

Houston — Already facing multiple obstacles including a lack of customers and a massive price tag, Alaska LNG is under renewed scrutiny over the impact the proposed export project could have on historic properties and cultural resources.

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State officials urged the Federal Energy Regulatory Commission in a letter made available Tuesday to begin consultations to draft an agreement to protect vulnerable sites.

If built, the terminal would be capable of exporting up to 20 million mt/year, with feedgas shipped through an 800-mile, 42-inch-diameter pipeline that is also proposed to run from the North Slope to the facility on the Kenai Peninsula in southern Alaska. FERC still must complete a final environmental review, currently scheduled to be issued in March, and issue a permit certificate that would allow construction.

The certificate decision is expected by June.

The agency's preliminary environmental review raised concerns about the impact of construction on wetlands, air quality, noise levels, and federally listed species, including polar bears, whales, and seals.

In its letter to FERC, the Alaska State Historic Preservation Office said formal consideration of the potential impact on tribal properties and other cultural resources should occur sooner rather than later, given the need for any determinations to be taken into account by state and federal agencies that are being asked to issue permits.

"The National Historic Preservation Act requires that the Section 106 process be completed prior to the issuance of any license or decisions that will limit the consideration of alternatives to avoid, minimize or mitigate the undertaking's adverse effects on historic properties," Alaska officials said. "Our office believes that it is appropriate and necessary for the FERC to execute a programmatic agreement ... to account for the need to phase the Section 106 process and meet other associated regulatory timelines."

A FERC spokeswoman declined to comment on the concerns raised in the letter.

Uncertainty has surrounded the fate of the project for several years. At an estimated $43 billion, the project is expected to cost two to four times as much as similar size LNG export terminals being developed on the US Gulf Coast and take as long as eight years to complete, twice as long as other projects.

Three North Slope producers — ConocoPhillips, BP, and ExxonMobil — were in a consortium with the state's Alaska Gasline Development Corporation until 2016, when the companies withdrew due to falling energy prices and a mixed outlook for LNG demand. AGDC subsequently took over sole ownership of the project.

AGDC officials did not immediately respond to requests for comment Tuesday.

Trade war

Also problematic: ongoing trade tensions between the US and China stalled a potential investment and LNG sales deal with three Chinese companies that would have involved three-quarters of Alaska LNG's production.

When the potential China deal was announced, AGDC had hopes of getting sales contracts and financing secured in early 2020, with a start of construction in 2021 and completion and first LNG shipments in 2024 or 2025. Last year, AGDC said the project schedule was being extended.

The biggest advantage of adding a major liquefaction facility in Alaska is the shorter shipping route to Asia than from the Gulf Coast, where four of the six major US LNG export facilities currently in operation are located.

One of those facilities, Freeport LNG in Texas, asked FERC Monday for approval to place its second liquefaction train into commercial service. Freeport LNG feedgas deliveries have averaged 870 MMcf/d in January, peaking at 934 MMcf/d January 10, S&P Global Platts Analytics data show. But flows have yet to reach near the full two-train facility capacity, which is roughly 1.4 Bcf/d.