Report 

Submitted to the 

United States Congress 

by the Federal Energy Regulatory Commission 

 

Sixth Report to Congress on Progress Made in Licensing 

and Constructing the Alaska Natural Gas Pipeline 

 

August 29, 2008 
Sixth 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 submit to Congress 

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

natural gas pipeline and any impediments thereto. There has been substantial progress 

towards development of an Alaska natural gas pipeline over this reporting period, more 

than any previous period covered by these status reports. 

 

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

February 19, 2008. During the period covered by this report, the following major events 

have occurred: 1) Denali – The Alaska Gas Pipeline LLC (Denali), a partnership of BP 

and ConocoPhillips, was announced and began the pre-filing process for its project with 

the Commission and has begun field work; and, 2) the State of Alaska has moved forward 

and completed the process of selecting TransCanada Alaska Company, LLC and 

Foothills Pipe Lines, Ltd. (TC Alaska), affiliates of TransCanada Corporation, as the 

preferred applicant under its Alaska Gasline Inducement Act (AGIA) program. 

 

II. Status Report 

 A. The Commission’s Activities 

1. Chairman and Commissioner Moeller’s Visit to Alaska

 Chairman Kelliher and Commissioner Moeller, accompanied by senior FERC 

staff, traveled to Alaska in July 2008 to tour energy projects within the state. The focus 

of this trip was the progress being made in developing and building an Alaska natural gas 

pipeline. 2

 The group met with state officials, toured the gas production area in Prudhoe 

Bay, and met with sponsors of the two competing pipeline projects. 

 The Chairman’s group met with the Governor and leaders of the Alaskan Senate 

and House of Representatives which at the time were considering TC Alaska’s AGIA 

license application. They met with Senate President Lyda Green, Senator Charlie 

 

1

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

2

 The group also toured the Terror Lake Hydroelectric Project on Kodiak Island and the 

Kenai LNG Export Terminal.

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Huggins, Senate Minority Leader Gene Therriault, and House Minority Leader Beth 

Kerrtula (conference phone call). The FERC role and procedures for reviewing and 

deciding upon a certificate for an Alaska natural gas pipeline were discussed at these 

meetings. 

 The Chairman’s group then traveled to Prudhoe Bay to view the existing natural 

gas production area and gas treatment facilities on the North Slope and the potential route 

for an Alaska natural gas pipeline. Of particular interest were the gas treatment facilities 

because a new plant would have to be built to produce pipeline quality natural gas for 

eventual pipeline transportation. The Chairman’s group observed the challenging terrain, 

wildlife habitat, and environment where the gas treatment plant and pipeline are planned 

to be located, the specific sites for which would have to be approved by the Commission. 

 After returning from the North Slope, the Chairman’s group met with senior 

executives of ExxonMobil, which has control over the majority of the proven natural gas 

reserves at Prudhoe Bay. They also met separately with senior executives of Denali and 

TC Alaska to discuss each company’s plan and FERC's role and procedures for reviewing 

and deciding upon a certificate for any proposed Alaska natural gas pipeline. 

 2. Denali Begins FERC Pre-Filing Process

On April 8, 2008, BP and ConocoPhillips announced they have combined 

resources to form Denali, a pipeline project proposal to construct and operate an Alaska 

natural gas transportation system as defined by section 103 of the Alaska Natural Gas 

Pipeline Act of 2004 (ANGPA). 

On June 16, 2008, Denali filed a request in Docket No. PF08-26-000 for the FERC 

staff to start the pre-filing process for Denali’s project. On June 25, 2008, FERC’s 

Director of the Office of Energy Projects (OEP) granted Denali’s request and instructed 

the staff to begin pre-filing activities with Denali. This approval has enabled Denali and 

the Commission staff to immediately begin exchanging information and coordinating 

activities to ensure a timely and efficient application development and review process. 

All items related to Denali’s proposal are now being placed in FERC’s eLibrary under 

Denali’s PF docket. 

In his approval letter, the Director of OEP determined that use of the pre-filing 

process on such a complex project is necessary to ensure completion of the 

environmental impact statement (EIS) within the legislated timeframe. The early 

initiation of the pre-filing process enables the Commission staff, cooperating agencies, 

and other stakeholders to be involved in the development of an application as soon as 

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possible. To this end, the Director of OEP waived a number of the filing requirements 

and timelines stipulated in the Commission’s regulations at section 157.21(d) and (f). 3

 

3. Denali’s Proposal

 Denali plans to construct and operate a 48- to 52-inch-diameter pipeline to move 

4 billion cubic feet of natural gas per day (Bcf/d) from the Alaska North Slope to the 

Alberta Hub for North American consumers. Denali’s Alaska segment would be about 

750 miles in length and would generally follow the Trans Alaska Pipeline System from 

Prudhoe Bay to Fairbanks and then follow the Alaska Highway to the Alaska/Yukon 

Border. Denali also plans to provide at least five Alaska off-take points for in-state gas 

distribution. At the Canadian border, the pipeline would connect to a new pipeline, to be 

constructed by Denali affiliates in Canada that would be about 1,000 miles long from the 

international border to Alberta. 

Denali’s proposal also includes (1) transmission pipelines to transport gas from 

production areas to connections with other portions of its system, and (2) a gas treatment 

plant on the Alaska North Slope where gas would be processed to remove impurities, as 

appropriate, and the residue gas would be chilled. Denali has stated that if additional 

capacity is needed to transport these volumes to the lower 48 states, its Canadian 

affiliates may construct an extension of the pipeline from Alberta to the United States 

border. In such a case, Denali would also construct a pipeline in the Lower 48 across 

parts of North Dakota, Minnesota, Iowa, and Illinois to the Chicago area. 

Denali has opened a main office in Anchorage and a field office in Tok near the 

Alaska – Yukon, Canada border. Denali has begun conducting initial pipeline routing 

surveys and environmental resource studies this summer. Denali has reported in press 

releases that it intends to spend $600 million over the 36 months preceding its submission 

of a complete application to the FERC. Denali currently proposes to hold its open season 

before year-end 2010. Assuming a successful open season, Denali expects to submit its 

complete application to the FERC in August 2011. Denali’s schedule indicates that it 

would bring gas to market by mid-2018. 

4. Staff’s Environmental Review of Denali’s Proposal 

Since its Fifth Report, the Commission has continued to progress towards 

fulfilling its National Environmental Policy Act (NEPA) and Natural Gas Act certificate 

 

3

 Under section 375.308(z) of the Commission’s regulations, the Director of OEP can 

make modifications to and grant waivers of the pre-filing procedures on a case-specific 

basis. 

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application responsibilities. In addition to issuing an approval for Denali to enter the prefiling process, the Commission staff has engaged in several other significant activities. 

 First, on June 18, the staff presented to the federal interagency team 4

 an overview 

briefing of the pre-filing process and the contents of the Commission’s application and 

environmental resource reports. The briefing was conducted at the Commission’s offices 

with local agency representatives and simultaneously by teleconference with agency 

representatives in Alaska. The staff discussed the goals and regulatory basis for prefiling, the activities to be undertaken during the pre-filing review period, and emphasized 

the benefits to both an applicant and the other stakeholders (especially the federal 

interagency team) of early issue identification. The staff described the broad range of 

data and information that is required to develop complete environmental resource reports 

and the value of the resource reports to cooperating agencies that have specialized 

information needs. 

 

 On July 25, the staff issued a data request to Denali. In this request, staff sought 

information on the content, timing, and results of Denali’s ongoing resource data-gap 

analysis. The purpose of the analysis is to assess the relevant existing information in 

order to identify environmental resource data gaps and determine which studies, tasks, 

and other work are needed to enable Denali to submit complete environmental resource 

reports to the Commission in support of its certificate application. Specifically, the 

request directed Denali to identify the start and completion timeframes for each study, 

and highlight those elements/studies that are expected to require multiple field seasons to 

complete. 

 Denali’s data-gap analysis began on August 1 and is expected to conclude by 

December 1, 2008, with the development of a summary report. The staff will review 

Denali’s summary report to provide direction and guidance so that data collection 

activities accurately target the requirements of the environmental resource reports needed 

for Denali’s FERC application. 

 During the last week of July, the staff visited Alaska to conduct pipeline route 

reconnaissance and meet with agencies and Denali. Discussions with the Department of 

the Interior’s Bureau of Land Management (BLM) and the Federal/State Joint Pipeline 

Office in Anchorage included (1) details of the planned NEPA process and scope of the 

alternatives analysis; (2) data specifications of the environmental resource reports; (3) 

strategies for engaging Native Alaskans during and after pre-filing; and (4) the pipeline 

 

4

 In June 2006, 15 federal agencies signed a Memorandum of Understanding Related to 

an Alaska Natural Gas Transportation Project. This MOU established a project 

management framework for cooperation among participating federal agencies with 

responsibilities related to the approval of an Alaska natural gas transportation project. 

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design review process. The staff and a BLM representative met with Denali 

representatives to discuss Denali’s field study plans and survey details (approaches, 

presentation of findings). 

Staff visited segments of the route and observed field studies underway near Tok, 

Alaska. Discussions with Denali field staff focused on ensuring that the scope and timing 

of the surveys will facilitate an expedited development of the FERC application. Other 

topics of discussion included the scope of infrastructure (e.g., roads and bridges) needs to 

support project construction, the status of Denali’s application to the BLM, and staff’s 

July data request. 

 This site visit also allowed the staff to conduct an investigation of Denali’s 

planned route between Delta Junction and the Canadian border. Staff viewed areas where 

Denali’s planned route departed from the existing Haines-Fairbanks Pipeline right-ofway and looked at some possible alternative routes. 

 On August 19, the staff sent letters to almost 500 Native Alaskan tribes, villages, 

corporations, and other organizations in Alaska to establish contact and open a dialogue 

regarding the pre-filing process for the Denali Pipeline Project. This letter will serve a 

number of functions, including (1) alerting Native Alaskans that Denali has proposed 

construction of a large-diameter natural gas pipeline and related facilities between the 

North Slope and the Alaska-Yukon border; (2) explaining that the pre-filing process is 

designed to encourage the early involvement of interested stakeholders, facilitate 

interagency cooperation, and identify and resolve issues before an application is filed 

with the Commission; (3) introducing the Commission as the lead federal agency for 

compliance with NEPA and the National Historic Preservation Act (NHPA); and (4) 

noting that the Commission will be conducting a tribal consultation process that will 

address Native Alaskan concerns and meet all of the federal agency consultation needs. 

The letter also informs the parties that the Commission is authorizing Denali and its 

consultants to act on the Commission’s behalf in contacting tribes and other affected 

parties as part of its compliance with section 106 of the NHPA. 

In addition, the Commission staff and the federal interagency team have continued 

working together in a streamlined and coordinated fashion. For example, the staff 

recently drafted the scope of project alternatives to be considered in the EIS, as well as 

the project’s statement of purpose and need. Both of these items, contemplated in the 

June 2006 Memorandum of Understanding Related to an Alaska Natural Gas 

Transportation Project, are currently under review by the federal interagency team. 

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B. TC Alaska’s Proposal under AGIA 

1. The Alaska Gasline Inducement Act 

AGIA is the state’s official vehicle for encouraging a project sponsor to proceed 

with a federal application for the construction of an Alaska natural gas pipeline. Under 

AGIA, a qualified project sponsor receives an exclusive and enforceable license from the 

State of Alaska that entitles the licensee to receive matching contributions from the state 

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 Alaska natural gas pipeline 

project and other state permitting administrative benefits. An AGIA license also 

represents an agreement or a “settlement” of various project issues between the State of 

Alaska and the licensee. 

On May 22, 2008, the Governor of Alaska announced that the proposal by TC 

Alaska was found to satisfy the state’s goals of protecting Alaska’s interests through 

reasonable commercial terms and meeting the needs of Alaskans. The Governor also 

announced that she would submit TC Alaska’s proposal to the state legislature seeking 

confirmation that an AGIA License should be granted to TC Alaska. In the ensuing two 

months, the Alaska legislature held numerous hearings on AGIA and TC Alaska’s 

proposal and other alternatives. The Alaska House of Representatives voted on July 22, 

2008 to approve the issuance of an AGIA License to TC Alaska; on August 1, 2008, the 

Alaska Senate also voted to approve the issuance of an AGIA License to TC Alaska. 5

 

On August 27, 2008, the Governor signed the approved legislation to issue the AGIA 

license to TC Alaska. 

FERC staff participated in several sessions of the Alaska Legislature’s hearings, 

and responded to questions for several hours (both in person and by the phone) regarding, 

among other things: 1) the Commission’s role in reviewing any applications for pipeline 

or LNG proposals; 2) future regulation of an Alaska pipeline; and 3) the effect, if any, of 

AGIA upon the Commission’s decision-making process. 

One topic examined at these hearings was how future pipeline expansions might 

be treated by TC Alaska and Denali, and how future pipeline expansion proposals would 

be reviewed by FERC. Under AGIA, TC Alaska has put forth a specific process for 

voluntary expansions which it would initiate every two years. However, under section 

105 of the ANGPA, FERC policy would govern voluntary expansions and, if necessary, 

 

5

 All ongoing AGIA documents and official correspondence for the state government 

are available at http://www.gov.state.ak.us/agia/; the Alaska legislature’s documents 

regarding AGIA are available at http://www.legis.state.ak.us/specdocs.asp and 

http://lba.legis.state.ak.us/proposals-doc_log.htm. 

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FERC would administer the process for involuntary expansions prescribed in section 105 

of ANGPA, as discussed in the FERC’s Open Season Rule, Order No. 2005. 

The perceived differences in the details of rolled-in pricing for expansions 

between AGIA and FERC were also discussed. AGIA provides that the cost of an 

expansion would be rolled-in to a pipeline’s rates if the expansion costs do not raise 

existing rates by more than 15 percent. If FERC orders an expansion pursuant to section 

105 of ANGPA, Order No. 2005 noted that there is a rebuttable presumption in favor of 

rolled-in pricing but also that FERC has a present policy against existing shippers 

subsidizing pipeline expansions. The Commission will not be bound to accept the AGIA 

rate methodology regarding expansions, but rather will independently consider any such 

proposals on their merits. 

A significant point confirmed by the staff was that a project proponent could enter 

into the pre-filing process and 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. Staff noted that while the provisions of AGIA may be taken into 

consideration, such provisions are not binding upon the Commission. Further, while 

AGIA may bind the State of Alaska and TC Alaska in certain aspects of a future 

application to the Commission, it does not limit Commission discretion in its disposition 

of an application. 

2. TC Alaska’s Proposal 

TC Alaska proposes to construct and operate a 48-inch-diameter pipeline with 5 

Bcf/d throughput to transport natural gas from the North Slope of Alaska to all major 

markets in North America via the existing Alberta Hub. The total pipe length would be 

about 1,750 miles from a gas treatment plant near Prudhoe Bay on Alaska’s North Slope 

to Alberta, Canada. Similar to Denali’s plan, TC Alaska’s Alaska segment would be 

approximately 750 miles in length. It would generally follow the Trans Alaska Pipeline 

System from Prudhoe Bay to Fairbanks and then the Alaska Highway to the Alaska/ 

Yukon Border. The Canadian segment would be approximately 1,000 miles from the 

international border to Alberta. For the Alaska segment of its project, TC Alaska stated 

in its AGIA application that it is utilizing section 103 of the ANGPA, (which authorizes 

the Commission to consider and approve an Alaska natural gas pipeline system other than 

the project authorized under the Alaska Natural Gas Transportation Act of 1976). TC 

Alaska also stated that it does not intend to develop, own, and operate a gas treatment 

plant on the Alaska North Slope, but it is prepared to do so if necessary. 

TC Alaska has not yet begun the pre-filing process at FERC, but has briefed the 

FERC staff on its AGIA proposal. Before beginning any substantial field work, FERC 

staff believes that TC Alaska should request that the Commission accept its project in the 

pre-filing process to ensure that the field work is performed in a manner to meet the 

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Commission’s environmental requirements. 6

 TC Alaska initially planned to conduct its 

open season in 2009 (for completion by September 2009), request FERC to begin the prefiling process in June 2010, and file an application at FERC by December 2011. TC 

Alaska says it could be in-service by November 2017. However, these dates were based 

on an AGIA License being issued by April 2008 and may slip forward to account for the 

later issuance of the AGIA license. 

Under AGIA, TC Alaska would hold an additional open season every two years 

and has designed its project to be expandable to 5.9 Bcf/d with compression only. Its 

project’s expansions would have rolled-in rates in Alaska for up to 115 percent of initial 

rates and fully rolled-in tolls (rates) in Canada. The project would have debt-equity ratios 

with a minimum ratio of 70/30 during construction and 75/25 during operation. TC 

Alaska would have in-state deliveries at a minimum of five points and in-state delivery 

rates which are distance-sensitive. The FERC would have to consider and approve these 

proposals before they would be effective. 

C. Other Projects

The Alaska Gasline Port Authority (AGPA) is the sponsor of an Alaskan LNG 

project which contemplates delivering Prudhoe Bay gas to Valdez by pipeline, where it 

could be liquefied and shipped on tankers to the Asian market, the West Coast of the U.S. 

and Mexico, and Hawaii. On June 20, 2008, AGPA announced that Japan’s largest 

general trading company, Mitsubishi Corporation, became a co-sponsor. Then, on July 9, 

2008, AGPA announced that Sempra LNG, a unit of Sempra Energy, had joined the 

AGPA and Mitsubishi to keep the project plans moving forward. On August 20, 2008, 

Governor Palin issued an Administrative Order directing state agencies to continue 

assisting the LNG project sponsors such as AGPA in the feasibility and permitting 

process for an LNG project that would be consistent with TC Alaska’s mainline project 

under AGIA. 7

 FERC would have regulatory jurisdiction over any Alaska LNG project. 

 

6

 Such a pre-filing request would be given its own pre-filing docket number, but many of 

the staff’s pre-filing activities for TC Alaska could be combined with the existing prefiling activities for Denali. The proponents of the two projects also might benefit by 

coordinating some of their pre-filing activities. 

7

 On July 7, 2008, Governor Palin announced the formation of a public/private 

partnership among the Alaska Natural Gas Development Authority, ENSTAR Natural 

Gas Company, and the State of Alaska to consider building the first phase of an 

intrastate pipeline to move Alaska gas to Alaskans within the next five years. 

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III. Related Federal and Canadian Activities 

A. Operations of the Federal Coordinator 

 In accordance with section 106 of 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 projects, and (2) ensuring the compliance of federal agencies with the 

provisions of ANGPA. The OFC plans to establish permanent offices in Washington, 

D.C. and Anchorage before the end of the first quarter FY09. 

OFC meets regularly with the federal interagency team and with the Senior 

Intergovernmental Management Team (SIMT), comprised of the Federal Coordinator and 

senior government officials for the State of Alaska and the Canadian federal government. 

The next SIMT meeting will be held during September 2008 to focus on the coordination 

needs of the governments. The OFC also contracted for a data management system and 

for an analysis of potential legal and regulatory gaps for the project. The OFC expects 

both reports to be finalized by September 2008. 

 As part of the OFC outreach activities, it met with the President of the Alaska 

Federation of Natives, the Alaska Native Regional Corporation CEOs group and various 

Alaska-based environmental groups. Alaskans are generally in favor of the gas pipeline 

project being constructed expeditiously. In addition to these meetings, the OFC helped 

coordinate the federal agencies’ efforts to provide the required federal government 

permits and authorizations to allow Denali to conduct field studies this summer that are 

necessary for the preparation of Denali’s FERC application. 

 In May 2008, OFC staff traveled to Whitehorse in the Yukon Territory of Canada 

to observe a workshop hosted by the Alaska Highway Aboriginal Pipeline Coalition 

(APC) with a focus on First Nation issues. The APC is a voluntary initiative formed 

specifically to assess the implications of and communicate information to Yukon First 

Nations on the proposed gas pipeline along the Alaska Highway. The May workshop 

focused on the Canadian equivalent to the NEPA process. 

 The OFC also participated in a State Department-hosted Energy Consultative 

Mechanism meeting with the Canadian federal government. At the meeting, the 

Canadian government expressed its desire to see a gas pipeline project move forward and 

its intention to meet the schedule set by the U.S. regulatory agencies. 

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 also monitored the 

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progress of Alaska's AGIA process, and when a more complete commercial project 

emerges from the TC Alaska, Denali or otherwise, DOE will proceed with structuring the 

loan guarantee program. 

C. Developments in Canada 

The Mackenzie Gas Project has continued to be under consideration by the 

government of Canada but the original in-service date has been delayed. 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 Bcf/d of new Arctic gas to market. The estimated capital 

cost of this project has risen to $16 billion, and it is now planned to be in operation by 

2016. 

IV. Conclusion 

Two proposals for a mainline Alaskan natural gas pipeline from Alaska into 

Canada have emerged and advanced into the early, but detailed, planning and project 

development process. A possible related secondary project to move some of Alaska’s gas 

to an LNG export terminal is still under consideration. Given the magnitude of an Alaska 

gas pipeline, it is very unlikely that more than only one of these mainline projects would 

ever be built. However, it is not unusual or detrimental at this stage that two projects are 

preceding forward. Both Denali and TC Alaska estimate filing a FERC application in 

2011 and both seek a Commission order in 2013 (although their project planning paths to 

that point differ). This timeline also assumes Canada begins and completes its permitting 

of the Canadian segment of the project within the same timeframe. 

 The competition among Denali and TC Alaska and a potential LNG project is a 

positive indication of serious interest by major industry players, which should be resolved 

ultimately in the energy and financial marketplaces. At this juncture, the FERC, as the 

neutral siting agency has no basis to prefer one project over another. The Commission’s 

pre-filing process, which has now begun, may be the best forum for Denali, TC Alaska, 

the LNG sponsors and all other stakeholders to work together under the FERC staff’s 

guidance to move forward with a project of this magnitude. 

Since ANGPA imposed statutory deadlines for the Commission review of an 

Alaska natural gas pipeline application, we continue to seriously caution that reviewing 

multiple projects throughout the complete federal regulatory process would greatly 

challenge the Commission staff, the other agencies on the federal interagency team, and 

state agencies. We believe it to be in the public interest to avoid the consequences of a 

prolonged, duplicative regulatory review in a competitive situation, especially during the 

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application phase. We understand and accept that both Denali and TC Alaska each desire 

to move forward and complete their open seasons, however, in the event that multiple 

projects continue to move forward after that, the Commission may have to consider 

unique and unusual procedures to meet ANGPA’s deadlines. It should be abundantly 

clear that all stakeholders involved must work together with the shared objective of 

getting a project built. The Commission stands ready to do its part and reminds all 

stakeholders that construction and operation of an Alaska natural gas pipeline is the 

ultimate goal. 8

8

 Congress recently considered legislation to give the President the charge of persuading 

the various project stakeholders to join together in a single effort. See HR 6515, 

introduced in the House on July 16, 2008, 110th CONGRESS, 2d Session; the “Drill 

Responsibly in Leased Lands Act of 2008” - SEC. 4. Alaska Natural Gas Pipeline Project 

Facilitation.