“People should be excited, or at least hopeful, that they’re spending 200 million dollars this year,” says Persily. “That part of the deal, the building permit, if you will, is proceeding on schedule -- and it’s a serious effort.”
But supporters of a liquefied natural gas line from the North Slope to Valdez say they’re troubled by what they found in the August 6th edition of the Federal Register. In FERC’s announcement, there’s a small footnote that says the environmental review won’t include the LNG route, because it does not have enough information to proceed.
“My take on it, is, that TransCanada has no interest in a line to Valdez,” says Bill Walker, a former candidate for governor. Currently, Walker is general counsel for the Alaska Gasline Port Authority.
“It’s no surprise from what I’ve seen from FERC at all. It’s further acknowledgement that we are left in the dust, when it comes to the energy race.”
Walker and other proponents of the LNG line to Valdez say TransCanada and Exxon have their own agendas. Walker says it’s in TransCanada’s interest to bring the gas to its system in Canada, while Exxon is busy developing projects all over the world and the Alaska gas is not a priority.
“Why would they look at a line into Valdez, when in fact they don’t have to. We’ll continue to pay them under AGIA,” said Walker.
Under the Alaska Gasline Inducement Act, TransCanada and Exxon can get reimbursed by the state for up to a half a billion dollars in expenses.
Persily says the producers will probably recover about 160 million from the state for their expenditures this year. Even so, he says the outstanding balance says a lot about their commitment to the project.
“If you have no expectations of this project happening, you would never spend 40 or 50 million dollars for show,” says Persily. “You’d go spend it elsewhere.”
Persily also says TransCanada has likely not had any bidders in the LNG line.
"The customers determine where it gets built, and obviously there weren't enough customers out there willing to commit their balance sheet, their assets, their checkbooks for an LNG line."
Persily’s considers FERC’s announcement on Friday a milestone of sorts.
“We’ve never gotten this close before,” says Persily. “The Federal Energy Regulatory Commission, for the first time, it’s saying, ‘Here’s the notice. Here’s the calendar.'”
To meet FERC’s timetable, TransCanada and its partner, Exxon Mobile, will have to submit eleven detailed studies by December, reporting on resources that might be affected by the pipeline -- from the soil and water to the socio-economic consequences.
In January of 2012, the FERC is scheduled to begin hearings in Alaska and Washington, D.C., to explore the potential environmental hurdles to permitting the pipeline.
Feburary 27, 2012 is the deadline for public comment.
In October of next year, the two producers must submit their application to the FERC for a certificate required for pipeline construction.
But Persily says, none of this guarantees a pipeline.
TransCanada has yet to announce whether it’s succeeded in recruiting customers for the new line, a key step to getting loans for the project, estimated to cost up to 40 billion dollars.
Then there are the state’s tax terms, which producers have said are too high. And there's sure to be a protracted wrestling match anticipated, should the legislature and the governor tackle revamping oil and gas taxes.
“Am I optimistic that this is going to get built?” said Persily. “Has something transcendentally been changed in the last two weeks. No.”
But at least it’s a new process, that’s about to come into play.