Companies file export application for gas project

JUNEAU — The companies pursuing a major liquefied natural gas project in Alaska have applied for an export license with the U.S. Department of Energy.


Securing the authorization is seen as critical for the viability of the mega-project, which the companies say would be the largest of its kind ever designed and built.

The filing was made Friday, but it was announced by the companies on Monday. Participants in the project include BP, ConocoPhillips, Exxon Mobil Corp., TransCanada Corp. and the Alaska Gasline Development Corp.

The application requests authorization to export up to 20 million metric tons of liquefied natural gas a year for 30 years. It seeks to export to countries with which the U.S. has free trade agreements and those with which it does not. Japan, for example, often mentioned as a potential market for Alaska’s liquefied natural gas, falls into the latter category.

Supporters of the project hailed the application as a milestone and another sign of progress toward building the long hoped-for line. Some Alaskans have been dreaming of a pipeline for decades as a way to provide reliable energy to residents, create jobs and help shore up revenues as oil production declines.

But the project is far from a done deal. It is currently in a phase of preliminary engineering and design as well as an effort to determine its exact cost. The cost is estimated now at between $45 billion and more than $65 billion, but the goal is to bring it down as much as possible to help make it more economically competitive.

The project also would have to be approved by the Federal Energy Regulatory Commission. And, of course, there would have to be proven market interest.

Larry Persily, federal coordinator for Alaska gas-pipeline projects, said approval of an export license would be a good sign for the market. Given that more investment would be needed as the project progresses, it would be good for the companies to have the export authorization in hand before moving to the next phase, he said.

A federal law also requires a presidential finding that exports of a certain level, to countries other than Canada or Mexico, would not diminish the quantity or quality or the price of energy in the U.S. The project’s supporters point to a finding by President Ronald Reagan to this effect in 1988, and they say it was not limited in scope to a particular project or time period.

In a news release issued Monday, the companies said they expect the current phase of work to be completed in 2016. During the legislative session, lawmakers were told agreements could be brought back to them for approval as early as late next year as part of that phase.

An agreement the state signed with TransCanada lists Dec. 31, 2015, as a date by which the state could exercise an option to buy-back part of its stake in the pipeline and gas treatment plant from TransCanada. Mike Pawlowski, a deputy commissioner with the state Department of Revenue, said that depending on the progress of the project and how the two sides feel about it, the parties could agree to extend the timeline for such a decision.


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