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Alaska LNG clears PHMSA review; FERC decision slated for June

Highlights

Project found to meet PHMSA siting requirements

FERC's final EIS expected in March

Washington — The US Pipeline and Hazardous Materials Safety Administration completed its portion of the review of the Alaska LNG project, finding the proposed LNG export facility along the eastern shore of Cook Inlet, Alaska, complies with siting requirements overseen by the agency.

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PHMSA's letter of determination released February 4 marks an advance for the project on its path toward gaining federal authorization. The letter completes PHMSA's commitment as a cooperating agency through a memorandum of agreement with the Federal Energy Regulatory Commission.

The project entails a 20 million mt/year LNG terminal on the southern Alaska coast, along with an 807-mile, 42-inch-diameter pipeline reaching to North Slope production areas.

FERC is slated to release a final environmental impact statement in March and to decide on the project June 4, according to notice of revised February 2019 schedule from FERC.

Safety review

PHMSA found the project complied with requirements for thermal radiation and flammable vapor-gas dispersion protection exclusion zones, which are areas surrounding the facility. It also reviewed safeguards in the event of accidental releases and the project's ability to withstand wind forces and other natural hazards such as storm surges and seismic activities.

The biggest commercial 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.

Uncertainty has surrounded the fate of the project for several years, in large part because of its massive price tag and differences among state and local officials. 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.

State officials involved in the project recently said their goal is to get the project through licensing and permitting, and secure an updated cost estimate, so that the project will be ready to advance when markets turn around.

State-owned Alaska Gasline Development Corp., along with BP and ExxonMobil, has contracted with Fluor to update a 2015 estimate that the project would cost $43 billion to complete. The state, ExxonMobil and BP have sought ways to cut the costs with the hopes of attracting investment.