Borough officials hold Nikiski LNG meeting

This story has been changed to correct the amount of land the Alaska LNG project has purchased in Nikiski. Alaska LNG has purchased about 600 acres of the 800-900 acres needed to build the Nikiski plant and terminal. Larry Persily did not know how many individual properties will have to be purchased for the project. 

Nikiski residents gathered at the Nikiski Recreation Center on Thursday evening for another discussion on the local effects of the Alaska LNG Project — hosted this time not by AK LNG staff, but by the Kenai Peninsula Borough.

Borough Mayor Mike Navarre and Larry Persily, the mayor’s special assistant on oil and gas projects, gave their perspective on the project in an expansive question-and-answer session that ranged from the Kenai Spur Highway relocation project to Navarre’s role on the state Municipal Advisory Gas Project Review Board to the scope of future property purchases in Nikiski.

Navarre and Persily, whom the Borough hired in March 2015 to monitor the LNG Project, plan to host talks in Nikiski every second Thursday of the month. The next is tentatively scheduled for Dec. 10.

Persily began by outlining the LNG Project’s summer activity in Nikiski, where the project plans to end its natural gas pipeline from the North Slope in a liquefaction plant and export terminal to be built on 800 or 900 acres of Cook Inlet-fronting land, near ConocoPhilips’ current LNG export terminal, between miles 19.5 and 21 of the current Kenai Spur Highway.

Persily said the only work the LNG project has planned for the winter in Nikiski is to demolish some buildings — he estimated about 10 — on recently bought property.

“They’ve shut down their field work, and they’ll be back next summer to do more hole-drilling or water-well testing,” Persily said.

He said the project’s summer 2016 fieldwork will be planned in a meeting on Dec. 4. Possible work may include digging a test trench in the inlet floor in front of the export terminal site, in order to observe how quickly the dredged inlet bottom fills back in.

As for the Kenai Spur Highway relocation — in which the AK LNG project will plan, permit, and construct a new segment of the highway that would swerve around the future export terminal and give the road to the Alaska Department of Transportation afterward — Persily said “their plan is to spend pretty much all of 2016 planning.”

In summer 2017, Persily said that the LNG Project will decide on a preferred route for the new road. Persily distributed copies of a borough-created map showing the projected terminal site and 12 possible routes the relocated Spur Highway may take around it, a tangle of possibilities he jokingly called the “spaghetti bowl.”

Persily said the LNG project has bought or signed options on about 600 of the 800-900 acres it will need to build the liquefaction plant and export terminal. He emphasized that AK LNG does not have a power of eminent domain — the power to force landowners to sell their property — and said the variety of potential routes allows the project to operate flexibly without it.

“They need to pick a preferred route,” Persily said. “If they can’t buy the land, then it isn’t going to be their preferred route anymore.”

In order to get eminent domain, AK LNG would have to be granted the power by the state Legislature.

Both Persily and Navarre said the LNG pipeline and the Spur Highway relocation were separate projects, although both are being carried out by the same organization for the same ultimate goal. Persily said there was a possible, though unlikely, scenario in which the highway would be relocated even if the export terminal and pipeline are never built.

The export terminal is scheduled to begin construction in 2019, with the relocated highway already planned to be in place by the end of 2018. If AK LNG decides to cancel the pipeline project between the two construction periods, the Nikiski area could be left with a new highway and no plant or terminal.

“Maybe in 2019, if they don’t get their final permit, or there’s a lawsuit, or the market’s crappier than it is now, they could decide ‘we’re not going to build the plant this year.’ But we’ve already got the highway. So we may end up with a relocated highway regardless of whether the LNG plant goes in. But given how much it’s going to cost them to build the highway, before they start the construction I bet you they’ll be pretty sure they’re going to go ahead with the LNG plant.”

Navarre, a member of the Municipal Advisory Gas Project Review Board created to advise the Legislature on local effects of gasline projects, spoke to the attendees about one of that group’s activities.

Navarre said that the Municipal Advisory Board was currently negotiating for $800 million in local impact aid money during the project’s five-year construction — equalling $160 million each year — to be given to local governments to pay for new costs brought on by construction activity and the large number of people it will bring to the area. Navarre gave examples of needs that could be funded with the impact aid money: hiring new teachers for an increased number of students in local schools, or hiring new emergency response personnel.

Navarre said the local impact aid money would not fund impacts of the highway relocation. Ultimately, he said, the money would be distributed by the Legislature with advice from the Municipal Advisory Board.

Nikiski resident Heidi Hatch asked what would happen to the local impact aid money on the borough level.

“What safeguards will be in place that the borough doesn’t just disperse this money to other communities that aren’t impacted like Nikiski?” Hatch asked. “How will we be sure Nikiski is getting that?”

“Not everybody who works on this project or is part of this project is going to live in Nikiski,” Navarre said. “But Nikiski is going to have a big part of this aid. But for example the airport in Kenai may need something done for the different flights and activities that are going on. … So I can’t say with any certainty how the money will be dispersed.”

Persily gave another caveat.

“The impact aid is not like punitive damages in court, where you get $1,000 to pay your medical bills and you get $100,000 for pain and suffering,” Persily said. “The impact aid, as it’s intended, is to cover direct costs of the project. Expanding the parking lot or terminal at the Kenai airport, or roads in Nikiski, or adding another firetruck and six more full-time staffers and an ambulance. That’s what the impact aid is going to be.”

Many questions received only speculative answers, such as the logistics of the 5,000-person man-camp to be built for workers during the terminal’s construction and the long-term future of the global LNG market. The most consistent message Persily and Navarre gave was that the project is still full of unknowns.

“There are a lot of unknowns at this point,” Navarre said. “There is not even certainty that the project is going to go forward.”

Persily said the next opportunity for public input on the AK LNG project will come after public comment period on the Federal Energy Regulatory Commission’s environmental permitting process ends on Dec. 4.


Reach Ben Boettger at

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