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ALASKA NATURAL GAS SYMPOSIUM Regulatory Update

ALASKA NATURAL GAS SYMPOSIUM Regulatory Update. J. Mark Robinson, Director Office of Energy Projects Federal Energy Regulatory Commission December 2, 2004 Houston, Texas. FERC. Alaska Natural Gas Transportation System and Other Pipelines. Office of Energy Projects. 2.

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ALASKA NATURAL GAS SYMPOSIUM Regulatory Update

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  1. ALASKA NATURAL GAS SYMPOSIUMRegulatory Update J. Mark Robinson, Director Office of Energy Projects Federal Energy Regulatory Commission December 2, 2004 Houston, Texas

  2. FERC Alaska Natural Gas Transportation System and Other Pipelines Office of Energy Projects 2

  3. FERC and AlaskaAncient History 1976 Congress passes the Alaska Natural Gas Transportation Act (ANGTA) 1977 FERC issues conditional certificates 1979 Office of the Federal Inspector (OFI) established. 1981 Western Leg of the Alaska Natural Gas Transportation System (ANGTS) – Pacific Gas Transmission – goes into service 1982 Eastern Leg of ANGTS – Northern Border Pipeline – goes into service The Alaskan portion of ANGTS was not constructed. 1992OFI eliminated

  4. FERC and AlaskaRecent Events 2001 In May, National Energy Policy recommends expedited construction of an Alaskan pipeline to deliver natural gas to the lower 48 states. 2001 Alaska Natural Gas Interagency Task Force formed - Members include: Energy, State, Interior (BLM, MMS), DOT (OPS), FERC (Energy Projects), Joint Pipeline Office 2001 In August, H.R. 4 approved by House 2004 H.R.4837 with section titled “Alaska Natural Gas Pipeline Act” approved and signed by President on October 13th.

  5. Alaska Natural GasPipeline Act Presumptions The Act presumes that: • Public need for Alaskan project exists • Adequate downstream capacity exists to move the gas to markets in the Lower 48

  6. Alaska Natural GasPipeline Act Provisions • Clarifies legal issue which allows Commission to consider any application for Alaskan natural gas transportation projects • Clarifies ability to continue to process any modified application under the Alaskan Natural Gas Transportation Act of 1976

  7. Alaska Natural GasPipeline Act Provisions • FERC must issue regulations for Alaskan pipeline capacity open season in 4 months • FERC may order expansion • FERC may allow accommodation for State of Alaska royalty gas • Only D.C. Circuit has judicial review of FERC orders

  8. Alaska Natural GasPipeline Act Provisions • Federal Coordinator is created for either type of project (i.e., ANGTA or NGA) • Makes loan guarantee of up to $18 billion available to either type of project. • If no application is filed in 18 months, then DOE must study alternatives.

  9. Alaska Natural GasPipeline Act Provisions • A separate tax bill provides for: • Seven-year amortization of the cost instead of 15 years • An enhanced oil recovery tax credit for the cost of a gas conditioning plant on the North Slope

  10. Alaska Natural GasPipeline Act Open Season • Must issue regulations governing the conduct of open seasons for Alaska natural gas transportation projects by February 10, 2005. • Regulations must include procedures for the allocation of capacity. • Final rule would be subject to rehearing after February 10.

  11. Alaska Natural GasPipeline Act Open Season The regulations must: • Include the criteria for and timing of any open seasons; • Promote competition in the exploration, development, and production of Alaska natural gas; and • Provide the opportunity for the transportation of natural gas other than from the Prudhoe Bay and Point Thomson units when capacity exceeds the initial capacity during open seasons.

  12. Alaska Natural GasPipeline Act Open Season The open season regulations apply to: • Any initial or (voluntary) expansion capacity on any Alaska natural gas transportation project. • Does not apply to involuntary expansion if one is ordered under the Act.

  13. Alaska Natural GasPipeline Act Open Season Rulemaking Schedule 11/18/04 – Commission issues NOPR 12/03/04 – Public technical conference in Anchorage, Alaska. 12/17/04 – Written comments due on NOPR 02/09/05 – Commission issues final rule.

  14. Alaska Natural GasPipeline Act Cooperation in Processing • FERC is designated as the lead agency for NEPA processing. • FERC is responsible for preparation of the EIS. • Other federal agencies conducting reviews covered by the EIS shall comply with the deadlines established by FERC. • The EIS prepared by FERC shall be adopted by the other federal agencies.

  15. Alaska Natural GasPipeline Act Processing Timeline • NEPA Pre-filing process is expected to take 18 months • When the formal application is filed: • Draft EIS issued in 12 months • Final EIS issued in 6 more months • Final order in 2 more months ( total elapsed time 20 months )

  16. Post-CertificationTimeline • Two to three years of preparation prior to construction • Financing • Fabrication of Equipment and Supplies • Two to three years for construction • Majority of construction to be performed in winter • One year of preparation (camps, roads) • Gas treatment plant

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