Borough, Nikiski seek to have greater participation in LNG export project

The Kenai Peninsula Borough is seeking an official role in federal permitting of plans to export North Slope natural gas to Asia via a 806-mile pipeline to a liquefaction plant and export terminal planned for Nikiski — where the Kenai Peninsula Borough intends to keep it, countering efforts by other local governments to propose other locations.

At their Tuesday meeting, the Kenai Peninsula Borough Assembly voted to petition the agency leading the LNG project’s environmental permitting — the Federal Energy Regulatory Commission (FERC) — for intervenor status in the gasline’s environmental impact statement, which would allow the borough to request rehearing of FERC decisions or appeal them to a U.S Circuit Court.

The borough’s legal representatives sent FERC their intervention petition Friday. It states that “the Kenai Borough has a direct and substantial interest in and will be directly affected by the outcome of this proceeding. No other party can adequately represent Kenai Borough’s interests.”

Two other local governments have previously become FERC intervenors, seeking to locate the terminal in their areas: the city of Valdez in May 2017, and the Matanuska Susitna Borough, which in January 2018 requested that FERC require the Alaska Gasline Development Corporation (AGDC) — the state-owed corporation planning the LNG project – to examine the Mat-Su Borough-owned Port MacKenzie, in the Knik Arm, as a terminal site.

“Right now we have Valdez and Mat-Su hemming and hawing for this project, and they’re intervenors,” said John Quick, Chief of Staff to Borough Mayor Charlie Pierce, in a Monday meeting of the borough’s LNG advisory committee. “And the Kenai Peninsula Borough has not been an intervenor… If we’re not at the table, we’re not at the table. So I think this will put us in a better position to have a bigger voice from the Borough, and do everything we can to make sure this project lands in Nikiski.”

In its January petition to FERC, the Mat-Su Borough stated that AGDC had ruled out Port MacKenzie and selected Nikiski based on “erroneous facts.” ADGC’s analysis hadn’t considered Port MacKenzie at all, according to the Mat-Su Borough, but rather an undeveloped location known as Point MacKenzie.

After FERC made Mat-Su’s requested order in February, AGDC returned a response on July 13 that cited additional dredging requirements, thicker sea ice, inadequacy of existing docking at Port MacKenzie, and the critical beluga habitat of the upper Cook Inlet as reasons to maintain its preference for Nikiski.

On July 20, the Mat-Su Borough replied that it “has already identified several aspects of AGDC’s response with which it disagrees” and that it would it give further comments by Sept. 1.

FERC plans to release a draft of the LNG project’s environmental impact statement in March 2019 and the final statement in December 2019.

Nikiski Representation

Most of the nine members of the Kenai Peninsula Borough’s LNG advisory committee are Nikiski residents who have advocated in the past for Nikiski to have a greater voice in the LNG project’s decisions. In the advisory board’s Monday meeting, Nikiski members spoke unfavorably about AGDC’s plan to supply the terminal’s water from Kenai’s municipal water system, and about traffic patterns on its proposed reroute of the Kenai Spur Highway.

AGDC President Keith Meyer was present and agreed with their general complaint.

“I think Nikiski has been underrepresented in this project,” Meyer said.

Because Nikiski is an unincorporated area, state and project officials have usually recognized the Kenai Peninsula Borough as representing its interest, but on Monday Meyer said he would endorse one way for Nikiski to be more directly represented: through a seat along the borough government on the Alaska Department of Revenue’s Municipal Advisory Gas Project Review Board.

The Municipal Advisory Board is made up of 12 governor-appointed state officials and local government representatives, mainly borough mayors. A central subject of the group’s discussions has been how to distribute future revenue from the gasline that the company will give to local governments in lieu of the property tax it’s exempt from paying as a state entity. The Advisory Board last met in December 2016, when then-Kenai Peninsula Borough Mayor Mike Navarre sat on it as the local representative.

Alaska Gasline Development Corporation Senior Vice President Frank Richards said the Department of Revenue’s Deputy Commissioner Mike Barnhill is planning to re-activate the group. Meyer said he would recommend to Department of Revenue leaders that a representative of Nikiski be included in the nominees.

Reach Ben Boettger at bboettger@peninsulaclarion.com.

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