Sunday, June 6, 2010

FERC Misinformation

A recent decision by the Federal Energy Regulatory Commission (FERC) has provided the grist for the political mill of those opposing the all-Alaska natural gas pipeline and Bill Walker’s candidacy for governor. However, this is a case of the disinformationistas being aided by the silence of the lamb (Parnell), rather than it being the death knell to anyone’s campaign.

FERC recently declined to renew an application by Yukon Pacific Corporation for an LNG export train at Anderson Bay. This decision has been declared a death knell to Walker’s campaign by Walker’s detractors. Walker’s pipeline advocacy is in support of the all-Alaska natural gas pipeline to Valdez. The decision has been heralded as barring any export of Alaska gas, thereby ending both Walker’s candidacy and the Valdez pipeline option. Nothing could be farther from the truth.

The silence being on the part of the Parnell Administration in keeping quiet an inquiry of Jan. 28, 2010 from Pipeline Coodinator Bob Swenson made to FERC as reported in the Oil and Gas Journal in an editorial dated March 22, 2010.

Cheniere, Inc. is converting its Sabine Pass, TX LNG import facility to receive foreign LNG and to loop it back for export to Asian markets. Cheniere cites a 42% drop in LNG imports between 2007 and 2008 into the U.S. because of increased domestic supplies. This market trend results from increased supplies of natural gas in the domestic U.S. market from shale gas and other unconventional sources.

Cheniere has also applied for permits to export U.S. domestic produced natural gas to global markets. This would be only the second facility in the U.S. built to export domestically produced LNG to foreign markets. The first such facility was built at Nikkiski, Alaska and has been exporting LNG to Japan since 1969.

In his Jan. 28, 2010 inquiry to FERC, Gov. Sean Parnell’s pipeline coordinator Bob Swenson described 3 scenarios and requested to know if FERC would have regulatory oversight.

Scenario 1 was an in-state pipeline with North Slope gas being used in-state only. FERC’s response was that FERC would have no regulatory oversight authority for such use.

Scenario 2 was an in-state pipeline with North Slope gas being used in-state with some of the gas being exported to domestic U.S. markets. FERC”s response was that FERC would regulatory authority over domestic export to the U.S. market.

Scenario 3 was an in-state pipeline with North Slope gas being used in-state with some of the gas being exported to foreign markets. FERC’s response was that FERC would not have regulatory authority over North Slope gas exported to a foreign market.

FERC does not have regulatory oversight over North Slope natural gas exported to foreign markets. Therefore, the issue of FERC’s denial of Yukon Pacific’s permit to export North Slope gas from Valdez to the U.S. domestic market has no bearing whatsoever on Walker’s Valdez pipeline project.

Parnell knows that Walker’s Valdez pipeline plan is viable and economically sound. Cheniere, Inc.’s filing for an export permit to export domestically produced LNG to global markets further supports Walker’s contention that Alaska should export its natural gas to a global market rather than to an oversupplied U.S. market.

Rival Ralph Samuels has also lauded the FERC decision regarding the YPC permit as supporting his position that Walker’s plan is not viable. Obviously, in light of the response by FERC to the Parnell Administration’s inquiry, Samuels is wrong in his position. Samuels knows full well that FERC has domestic market oversight, not foreign, and that Walker’s plan is to export natural gas to Asia.

On the one hand, Parnell acts to withhold information, on the other, Samuels acts, as have others, to promote half truths.

The positions of the various candidates on the issues regarding the pipelines and the looming economic disaster facing the State would be illuminated at public forums where they would debate on the issues. Unfortunately, Gov. Sean Parnell has decided that he does not want to participate in any more debates until just before the Primary Election in August. He was put on the spot by Walker at the Kodiak Crab Festival on May 29th.

Walker asked Parnell about the $20,000,000,000 give-a-way that his refusal to sign SB 305 separating natural gas taxes from oil taxes will cost the State. This give-a-way amounts to a State subsidy for the Canadian route construction of AGIA or Denali. Both benefit from Parnell’s action. Apparently, Parnell chose to waffle and make polite noises rather than answer a direct question.

It appears that Walker’s growing support is making Parnell and Samuels a bit nervous in the service as it were.