Report 

Submitted to the 

United States Congress 

by the Federal Energy Regulatory Commission 

Fifth Report to Congress on Progress Made in Licensing 

and Constructing the Alaska Natural Gas Pipeline 

 February 19, 2008 
Fifth Report to Congress on the Alaska Pipeline 

I. Executive Summary 

This report by the Federal Energy Regulatory Commission (Commission or 

FERC) is submitted pursuant to section 1810 of the Energy Policy Act of 2005 (EPAct 

2005).1

 Section 1810 of EPAct 2005 requires that the Commission shall submit to 

Congress semi-annual reports describing the progress made in licensing and constructing 

the Alaska natural gas pipeline and any impediments thereto. 

 

This report provides an update from the Commission’s Fourth Report, submitted 

on August 15, 2007. During the period covered by this report, the following events have 

occurred: 1) the State of Alaska has moved forward with the process of selecting a 

preferred applicant under its Alaska Gasline Inducement Act (AGIA) program; 2) the 

Federal Coordinator has continued discussions with project stakeholders; and 3) FERC 

staff held a technical conference to discuss its third-party contracting requirements and 

expectations with respect to preparing an environmental impact statement (EIS) on an 

Alaskan natural gas transportation project. 

II. Status Report 

A. The Alaska Gasline Inducement Act 

In January 2007, Alaska’s Governor Sarah Palin introduced the AGIA bill in the 

state legislature; it was enacted in May 2007 and is now the state’s official vehicle for 

inducing a project sponsor to proceed with a federal application for the construction of an 

Alaska natural gas pipeline. Under AGIA, a qualified project sponsor will receive an 

exclusive and enforceable license from the State of Alaska that entitles the licensee to 

receive state matching contributions of up to $500 million for its expenditures for the 

planning and preparation of a federal application and related permits for the construction 

of an Alaskan natural gas pipeline project and other state administrative benefits. The 

AGIA process is a vehicle for the state to select a preferred applicant. However, the 

process is a not a prerequisite to obtaining federal authorization. Thus, a project 

proponent could file a certificate application with the Commission regardless of whether 

it participated in, or was the project selected as a result of, the AGIA process. 

On July 2, 2007, Alaska released its detailed Request for Applications which 

included the purpose, instructions, requirements, evaluative criteria, and other 

information about submitting an application for the competitive AGIA license selection 

process. All applications for an AGIA license were due by November 30, 2007, and five 

 

1

 P.L. 109-58, 119 Stat. 594 (2005), 42 U.S.C § 15801 et seq. 

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applications were filed. In addition, one application was filed with the state outside of 

the AGIA process. These proposals are summarized below. 

 B. Applications Filed in Response to AGIA 

 1. TransCanada Pipelines Ltd. (TransCanada) submitted an AGIA application for 

a pipeline to run from the Alaska North Slope to connect with its Alberta hub.2

 

TransCanada owns and operates a major North American network of more than 36,500 

miles of pipeline which taps into virtually all major gas supply basins in North America. 

TransCanada currently holds the Alaska Natural Gas Transportation Act (ANGTA) 

certificate issued by the Commission in 1977 and the state and federal rights-of-way in 

Alaska, but stated that it formed its new subsidiary to proceed with its AGIA proposal 

without reliance on the ANGTA certificate. As part of its proposal, TransCanada is 

contemplating additional financing options which would likely require further legislative 

actions by Congress and favorable regulatory rulings by federal agencies. TransCanada’s 

schedule provides for an initiation of field work in 2008 and the commencement of 

commercial operations near the end of 2017. 

2. The Little Susitna Construction Company (Little Susitna), a local Alaskan firm, 

submitted an AGIA application with a subsidiary of the Chinese energy conglomerate, 

China Petroleum and Chemical Corporation (Sinopec), as its prime sub-contractor. Its 

AGIA application proposed a project which includes a pipeline to Valdez, where the gas 

would be liquefied for shipment to Pacific Rim buyers using a dedicated fleet of tankers 

associated with the project. Sinopec has a very large global energy development 

footprint, including oil-services company subsidiaries with worldwide operations. 

3. The Alaska Natural Gasline Development Authority, a public corporation 

created by the citizens of Alaska, proposed to build a lateral “spur line” link off a major 

pipeline project, which it assumes will be built by another entity. The spur line would 

run into South Central Alaska and serve local needs. 

 4. The Alaska Gasline Port Authority (Port Authority) a municipal entity, created 

by the City of Valdez, Fairbanks North Star Borough, and the North Slope Borough, 

proposed a natural gas pipeline project from Prudhoe Bay to Valdez, where gas would be 

liquefied and exported. 

 5. AEnergia LLC (AEnergia), a start-up company formed by individuals with 

personal experience and knowledge about large geo-technical and engineering projects, 

proposed to be the project manager for a natural gas pipeline project which would go 

 

2

 Application officially filed by TransCanada Alaska Company, LLC and Foothills Pipe 

Lines Ltd, as joint applicants. 

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from the North Slope to Alberta and would be jointly owned 74 percent by the natural gas 

producers, 25 percent by the State of Alaska, and 1 percent by AEnergia. 

In addition to the above five AGIA proposals received by Alaska, on November 

30, 2007, ConocoPhillips Company (Conoco), one of the world’s largest energy 

companies, submitted a proposal for a North Slope gas treatment plant and a pipeline to 

run from Alaska North Slope to Alberta, and possibly on to Chicago, Illinois. Conoco 

stated that its proposal did not meet the requirements of AGIA in some respects, but that 

it hoped the state would nonetheless consider it. Conoco suggested that it would begin 

field work in 2008 and bring initial gas to market in mid-2018. 

 

 C. State Review of the Applications 

During December 2007, state officials sought further information from the five 

applicants, and on January 4, 2008, the state announced that it had finished the 

application completeness review of the five applications and determined that only 

TransCanada’s proposal meets the requirements of the AGIA program and would be 

considered as a conforming bid for an AGIA License. The state also rejected Conoco’s 

proposal as not conforming to AGIA. Concurrent with the state’s announcement that its 

initial review was complete, all of the AGIA documents, applications and correspondence 

regarding all five applications were made public on the State of Alaska’s AGIA 

webpage(s).3

There have been further developments with respect to two of the proposals that 

were not selected. In an exchange of letters between Governor Palin and Conoco, the 

state took the position that the objectives of AGIA process had to be firmly adhered to, 

and Conoco indicated its disappointment that the state would not consider its proposal. 

The Port Authority, the sponsors of a pipeline solely within the State of Alaska to supply 

a liquefied natural gas (LNG) export terminal and southern Alaskan markets, has asked 

Alaskan officials for reconsideration of their determination that its proposal was 

incomplete, but this request was not granted. However, in announcing their decision, 

state officials said that they would make a thorough evaluation of LNG project options as 

part of their determination of whether a natural gas pipeline that goes through Canada 

(TransCanada’s proposal) will sufficiently maximize the benefits to the people of Alaska 

and merits issuance of an AGIA license. 

A 60-day public comment period required under AGIA began on January 4, 2008, 

and is to conclude on March 6, 2008. During this comment period, the state is 

conducting a series of town hall meetings about AGIA and TransCanada’s proposal 

throughout the state. The public was invited to review all five applications received and 

 

3

 All ongoing AGIA documents and official correspondence are available on 

http://www.gov.state.ak.us/agia/. 

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provide comments to assist the state officials in making their determination of whether 

TransCanada’s application proposes a project that will sufficiently maximize the benefits 

to Alaskans and merits issuance of the exclusive AGIA license. If TransCanada’s 

proposal is found to satisfy this goal, then the Governor of Alaska will submit 

TransCanada’s proposal to the state legislature for confirmation that an AGIA License 

should be granted to TransCanada. 

In addition, the Alaska legislature is conducting hearings independent of the AGIA 

process to examine all of the proposals submitted under AGIA. The legislature has also 

invited public testimony from companies that did not submit AGIA applications. 

 E. AGIA Process – as anticipated in Alaska’s Request for Applications 

Action by State of Alaska Status as of this Report Actual Dates

AGIA Bid Applications Filed Completed November 30 

Completeness Review Completed January 4 

of Conforming Bids 

Estimated 

Action by State of Alaska Status as of this Report Target Dates

60-day public comment period Begins upon public notice thru March 6 

after Completeness Review 

Commissioners’ Notice of Intent On completion of the evaluation April 2008

To Issue License – public notice of public comments and the written 

and submission to Alaska State findings of the Commissioners 

Legislature for review 

Legislative action to approve Within 60 days after receipt of June 2008

the AGIA License Notice of Intent to Issue License 

AGIA License issuance As soon as practicable after June 2008

effective date of a legislative act 

approving the AGIA License 

 While it is not necessary that the ultimate sponsors of an Alaskan project 

participate in the AGIA process as a prerequisite to filing an application with the 

Commission, to the extent that AGIA requires the holding of an open season within 36 

months of the issuance of an AGIA license, and that the licensee commits to using the 

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Commission’s pre-filing process and to filing an application with the Commission by a 

time certain, AGIA could provide incentives for the timely development of an Alaska 

project. 

 The Commission’s pre-filing process is not an additional step in the project; it is 

designed to facilitate the development of a FERC application that is complete and that 

identifies all stakeholders and issues. In this connection, the pre-filing process could 

begin as soon as possible after an AGIA license is issued. Beginning the pre-filing 

process need not await the open season process or its completion as two summer seasons 

likely will be necessary to obtain natural resource data. 

III. Related Federal and Canadian Activities 

 A. Operations of the Federal Coordinator 

In accordance with section 106 of the Alaska Natural Gas Pipeline Act of 2004 

(ANGPA), the Office of the Federal Coordinator for Alaska Natural Gas Transportation 

Projects (OFC) is responsible for: (1) coordinating the expeditious actions of all federal 

agencies regarding an Alaska natural gas transportation project; and (2) ensuring the 

compliance of federal agencies with the provisions and deadlines of ANGPA. 

 

The OFC is currently staffed by three permanent employees, the Federal 

Coordinator, a Director of Administration and a Director of Communications and Policy 

Support. Additional staff includes a detailee from the Minerals Management Service and 

a student intern. Two new positions, for a General Counsel and a Director of Permits, 

Scheduling and Compliance, will be advertised in the coming weeks. Additional staff 

will be hired as federal activity increases. 

The OFC was awarded its first direct appropriation in FY 2008. In addition to 

providing funding for additional staff, the appropriation will fund planned activities to 

include coordinating federal agency comments to Alaska regarding its AGIA process, 

designing a data management system and completing an analysis of potential legal and 

regulatory gaps. Contracts have been awarded to Michael Baker Jr, Inc (Baker) and 

Argonne National Laboratory (Argonne) to aid the OFC in completing the latter two 

projects. The OFC’s FY 2009 budget is now before Congress. 

In December 2007 Congress passed the Energy Independence and Security Act of 

2007 (P.L. 110-140) which included technical amendments to the ANGPA. The 

amendments allow the OFC flexibility in its hiring practices by granting a Title V 

exemption for competitive service employees and provide the OFC cost reimbursement 

authority. This authority is identical to that provided by the Federal Land Policy and 

Management Act (section 304) which allows the Bureau of Land Management (BLM) to 

charge for reviews of permits and plans under oil and gas leases. 

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The Federal Coordinator meets monthly with a federal interagency team 

representing all the agencies that have a role in the permitting of a natural gas project. 

The Federal Coordinator also meets regularly with the State of Alaska pipeline team and 

Canadian federal and provincial officials. In July 2007, the OFC established a Senior 

Intergovernmental Management Team to address intergovernmental and stakeholder 

coordination issues. The team comprises the Federal Coordinator, the Alaska Deputy 

Commissioner for Natural Resources, and the official designee of the Canadian Minister 

of Industry who is handling the “North of 60” gasline files. They meet when issues 

dictate. 

During the next six months, the OFC expects at least one potential applicant to 

engage federal agencies as part of the pre-filing stakeholder process. Baker will make a 

recommendation for design of the data management system in May 2008; and the OFC 

expects to initiate the process to let a contract for the development of the data 

management system in September 2008. By June 2008, Argonne will provide its initial 

analysis regarding gaps, specifically looking at potential legal and regulatory gaps and/or 

bottlenecks for key action items. The Federal Coordinator plans to establish an 

Anchorage office when warranted by the level of federal project activity. 

B. U.S. Department of Energy 

The U.S. Department of Energy's (DOE) program office for the federal loan 

guarantee process for the Alaskan natural gas transportation project is monitoring the 

progress of Alaska's AGIA process, and when a commercial project emerges from the 

AGIA process or otherwise, DOE will proceed with structuring the loan guarantee 

program. 

 On January 29, 2008, the DOE's Office of Fossil Energy issued a very 

comprehensive new report entitled, “Alaska North Slope Oil and Gas: A Promising 

Future or an Area in Decline? ” 4

 This report examines the potential for Arctic Alaska to 

remain a major contributor to the Nation's domestic energy supply under different 

development scenarios. The report evaluates potential oil and natural gas resources on 

the all of Arctic Alaska, including the North Slope, regardless of whether certain areas 

are currently available for exploration and development. Science Application 

International Corporation performed the study under contract to DOE's National Energy 

Technology Laboratory. The study was jointly funded by DOE and the Department of 

the Interior’s - Minerals Management Service and BLM. The Report concludes that the 

future for Alaska North Slope oil and gas ranges from very promising to limited 

depending on whether exploration and development was allowed in all areas of Arctic 

Alaska and other favorable assumptions, such as high energy prices, were realized. The 

 

4

 This report is available at: http://fossil.energy.gov/news/ techlines/2008/08002-

DOE_Releases_Alaska_Report.html 

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Report states that an additional 36 billion barrels of oil and 137 trillion cubic feet of 

natural gas over current reserve estimates could be found and produced in Arctic Alaska. 

 C. Commission’s Activities - Environmental Review 

The Commission has continued its preparation to fulfill its National 

Environmental Policy Act of 1969 (NEPA) and Natural Gas Act certificate application 

responsibilities. Since the Commission’s fourth report, FERC staff visited the pipeline 

project area in Alaska and continued discussion with the Department of the Interior’s 

BLM concerning the eventual EIS and project permitting. Commission staff has actively 

participated with the OFC and the other federal agencies in planning and preparing for a 

pre-filing request to be followed by a project application. 

On January 29, 2008, FERC staff held a technical conference to discuss its thirdparty contracting requirements and resource expectations with respect to preparing an 

EIS on an Alaska natural gas transportation project. The staff invited contracting 

companies with the relevant expertise and interest in providing third-party contractor 

services to assist FERC environmental staff with the review of the application(s) for an 

Alaskan natural gas pipeline and the design and preparation of an EIS for the anticipated 

project. 

FERC’s Office of Energy Projects has a long-standing, third-party contracting 

program which enables applicants seeking certificates for natural gas facilities to fund a 

contractor to assist the staff in meeting its responsibilities under NEPA. The third-party 

contracting program involves the use of independent contractors to assist FERC staff in 

its environmental review and preparation of environmental documents. A third-party 

contractor is selected by, and works under the direct supervision and control of FERC 

staff, but is paid by the applicant. The use of a third-party contracting program for an 

Alaskan natural gas pipeline proposal is imperative. 

The January 29, 2008, Technical Conference was well attended by environmental 

and engineering analysis firms, prospective project sponsors, other project stakeholders 

and the OFC.5

 FERC staff presented an overview of its third-party contracting program. 

They also described how an Alaskan natural gas pipeline EIS might be different than 

other pipeline EISs because of the unique nature of project, the unusual public and 

governmental participation and interest, and the expectation and requirements for 

conducting the Commission’s environmental review within a particular timeframe. 

 

5

 The public notice and attendance list for the Technical Conference is available in the 

Commission’s E-Library under Docket No. AD08-3-000, Conference on Alaska Natural 

Gas Transportation Project. http://elibrary.ferc.gov/idmws/search/fercgensearch.asp 

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 Participants at the Technical Conference made some general suggestions 

concerning how environmental consultants could participate in the environmental review 

of the project. FERC staff responded to several questions about what the Commission’s 

environmental review might include and described its intention to closely coordinate with 

other participating agencies. Finally, FERC staff received from several consulting firms 

Statements of Interest and Capability Statements, along with Organizational Conflict of 

Interest Statements, which will be useful in the eventual selection of a third-party 

contractor. 

 D. Developments in Canada 

The Mackenzie Gas Project continues to be under consideration by the 

government of Canada. This project includes development of natural gas fields, 

gathering lines, and processing facilities in the Mackenzie River Delta of Canada's 

Northwest Territories, and a transportation pipeline along the Mackenzie River Valley to 

deliver the natural gas to market. This major pipeline project consists of over 750 miles 

of 30-inch diameter natural gas transmission pipeline that would transport 1.2 billion 

cubic feet (Bcf) per day of new Arctic gas to market. The estimated capital cost of this 

project has risen to $16.2 billion, and it is now planned to be in operation by 2015. 

IV. Conclusion 

 The certainty of Alaska supply makes it an attractive long-term source of natural 

gas to meet growing U.S. demand while enhancing economic development in the state. 

The State of Alaska has made progress completing the initial phase and entering the 

application evaluation phase of AGIA, and Conoco has shown an interest in developing a 

project outside of AGIA. 

The long lead time required for an Alaskan natural gas transportation project 

makes it critical that an AGIA licensee or any other project sponsor begin our prefiling/application development process as soon as possible. Meanwhile, the Commission, 

OFC, and other federal agencies are continuing to prepare for the efficient and timely 

processing of the eventual pre-filing request and application for an Alaskan natural gas 

transportation project. FERC staff and the OFC are in contact with the various potential 

project sponsors, participants and stakeholders, and urging them to work together and 

move as swiftly as possible to advance the project. 

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Based upon the statutory finding of public need in ANGPA6

, any project sponsor 

could conceivably proceed with a pre-filing request at the Commission, conduct an open 

season to obtain prospective customers, and file a certificate application for an Alaskan 

natural gas transportation project without actual commitments for the transportation of 

natural gas from the North Slope. However, this would be a less than desirable situation, 

given the considerable expenditures of financial and human resources required to 

complete the permitting process. Clearly, a proposed project which is backed by firm 

shipper commitments to transport natural gas supplies will have a greater chance of 

ultimate success. 

 

6

 Section 103(b)(2) of ANGPA states that : 

“In considering an application under this section, the Commission shall presume that-- 

(A) a public need exists to construct and operate the proposed Alaska natural gas 

transportation project; and 

(B) sufficient downstream capacity will exist to transport the Alaska natural gas 

moving through the project to markets in the contiguous United States.” 

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