March 13, 2013 | Vol. 25 Edition 11

Denied: DOE nixes Port Valdez export license

Feds tell Port Authority to apply again, application needs more contracts

The Dept. of Energy (DOE) has denied – with prejudice – an LNG export license application submitted by the Alaska Gasline Port Authority that would have been a major step forward in the group’s years’ long efforts to market and export Alaska’s North Slope natural gas reserves through Port of Valdez.

In a dismissal letter dated March 7, the DOE said the Port Authority’s July 2012 application for a license to export “an amount up to the equivalent of approximately 2.5 billion cubic feet …per day… of natural gas from a proposed LNG Terminal in Valdez,” for 25 years, was incomplete.

The DOE cited three federal license requirements “…which require applicants to identify the "source and security of the natural gas supply to be imported or exported" and "the facilities to be utilized or

constructed." It also required the siting of the liquefaction plant.

Bill Walker, legal council for the Port Authority said the group was undaunted by the denial.

“They invited us to reapply,” he said Monday night in a brief telephonic interview.

The DOE denial letter backs up Walker’s assertion.

DOE said the group’s application failed to meet the same requirements that were met by Yukon Pacific Corporation (YPC) which had licenses and permits to build a natural gas export facility in Anderson Bay. The YPC permits and licenses, which are now owned by the Port Authority, were dependent on a long-defunct natural gas pipeline planned to parallel the Trans-Alaska Pipeline System.

DOE also said the Port Authority’s license application did not meet the requirement that a natural gas transportation mode be in place and said the open season held by AGIA, where the Port Authority and a Japanese consortium had bid enough gas to fill a natural gas export gas pipeline, was not mature enough under DOE requirements to qualify.

“We thought they’d accept how far along AGIA is,” Walker said.

Port Valdez has long been considered by TransCanada to be the export terminal of choice for the AGIA backed project once it was forced to abandon its original export plan to build a gasline from Alaska’s North Slope to Alberta, Canada.

AGIA, the Palin-era legislation that granted TransCanada an exclusive state license to build a natural gas export gas pipeline, has raked in several hundred million state dollars to study the feasibility of a natural gas line, but its state contract lacks a requirement to build an actual gas pipeline. It has since partnered with ExxonMobile in its study, which is now approaching its seventh year.

In a prepared response to the DOE denial, Dave Cobb, chairman of the Port Authority, expressed disappointment at DOEs denial and expressed disappointment that TransCanada and ExxonMobil had yet to respond to the Port Authority’s bid to buy natural gas.

Walker, also in a prepared statement, pointed out that ExxonMobil was not only competing with itself – ExxonMobil and a Qatar-based partner has an LNG application for a Texas based LNG export facility - but indirectly accused state lawmakers of allowing the company to hold Alaska’s natural gas hostage by demanding oil-tax concessions.

“We are disappointed that export of Alaska’s gas continues to be held off the market by the North Slope producers’ demands for oil tax concessions,” he said in a prepared statement. “This nearly twenty-year stand-off persists while the producers pursue competing LNG projects targeting the Asian Market. Alaska natural gas goes from a bargaining chip to a contracted project when the State takes control of its asset. ”

The Alaska Gasline Port Authority consists of the Fairbanks North Star Borough and the City of Valdez. It was formed in 1999 by voters in Valdez, and the Fairbank North Star and Arctic North Slope Boroughs for the purpose of “building or cause to be built” a large volume gasline from the North Slope south to Port Valdez.

Its LNG development plan is also known as the “MVP” or Maximum Volume Pipeline, which is currently the subject of a large-scale media campaign backed by the City of Valdez in a direct bid to defeat current legislation, specifically HB4, and its lesser volume, liquids-free gasline.

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