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PENDING FERC ISSUES RELATING TO
THE ALASKA NATURAL GAS
TRANSPORTATION PROJECT
Presentation by
Karol Lyn Newman
Morgan, Lewis & Bockius, LLP
November 30, 2006
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REGULATORY OVERVIEW
 Federal Statutes
Natural Gas Act
Alaska Natural Gas Pipeline Act
Alaska Natural Gas Transportation Act of
1976
 Federal Regulations
18 C.F.R. Part 157
Subpart A – General Requirements
Subpart B – Open Season for Alaska Natural Gas
Transportation Projects
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PURPOSE OF THE OPEN SEASON
REGULATIONS – FURTHERANCE OF
DUAL STATUTORY GOAL
 Expediting the processing of an
application for a certificate of public
convenience and necessity;
 Promoting competition in the exploration,
development, and production of Alaska
natural gas.
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FERC ORDER NOS. 2005 AND 2005-A
REGULATIONS GOVERNING OPEN SEASONS
FOR ALASKA NATURAL GAS
TRANSPORTATION PROJECTS
 Open Season for capacity required before an
application may be filed;
 Open Season must be conducted in accordance
with FERC regulations under 18 C.F.R. Part 157,
Subpart B;
 Failure to comply with the Open Season
regulations will result in rejection of the
application.
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MOST SIGNIFICANT ASPECTS OF
THE OPEN SEASON REGULATIONS

Initial Capacity may be pre-subscribed – but :
 Capacity must be offered on the same terms to all prospective bidders in the
open season
 All pre-subscription agreements must be made public by posting on Internet
Websites and press releases within 10 days of execution

Public Notice containing extensive and detailed information about the project
including:

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Size and design capacity
Possible designs for expansion
Estimated dates for expansion
In-service date
Rates (interstate and in-state)
Estimated cost-of-service
Negotiated rate options
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OPEN SEASON REGULATIONS
(CONTINUED)

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Terms and conditions for each service
Methodology for valuing bids
Methodology for awarding capacity
Projected filing date
All information in the applicant’s possession pertaining to the proposed
service, capacity, design, tariff provisions and cost projections
All information made available to or obtained from any potential shipper
prior to the public notice of the open season
Organizational structure of applicant’s parent corporations
Identification of all Energy Affiliates and affiliated sales and marketing
units
Statement that officers and directors of the applicant's affiliated sales
and marketing units and Energy Affiliates involved in the production of
gas in Alaska will be prohibited from obtaining any information about the
conduct of the open season that is not posted or otherwise made
available to the public and other open season participants
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OPEN SEASON REGULATIONS
(CONTINUED)

Pre-Open Season Approval Process
 90 days before the Public Notice of the Open Season applicant must file a
detailed plan for conducting the open season including all the information that
must be in the Public Notice.
 Notice and Comment
 Commission decision within 60 days.
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Duration of Open Season – At least 90 days
Bids tendered after the close of the open season must be considered and
may not be rejected unless they cannot be accommodated due to:


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Engineering;
Design;
Capacity;
Operational constraints;
Adversely affect the timely development of the project.
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OTHER IMPORTANT ASPECTS OF
ORDER NOS. 2005 AND 2005-A
 Rebuttable presumption of rolled-in rates for expansions
 FERC to consider the extent to which proposed project
has been designed to accommodate all conforming bids
and low-cost expansion in the certificate review process
 FERC to require changes in project design where
necessary to promote competition and offer a
reasonable opportunity for access to the project
 For any expansions, the open season must provide the
opportunity for the transportation of natural gas other
than from Prudhoe Bay and Point Thompson
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THE COURT APPEAL
• One Issue – Statutory Authority of FERC
to require design changes where
necessary to promote competition and
offer a reasonable opportunity for access
to the project
• Argument Scheduled for December 5
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EXAMPLES OF OTHER REGULATIONS
THAT FERC MIGHT WANT TO CONSIDER
 Regulations to carry out ANGPA Section 105 –
Mandatory Expansion of An Alaska Natural Gas
Transportation Project
 NOPR to address the applicability of lower 48 policies
and rules on capacity release, blanket certificates,
affiliate, and preferential rate treatment for foundation
shippers
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FERC’S STATUTORY AUTHORITY TO
ISSUE REGULATIONS
 NGA, Section 16
 ANGPA, Section 103
 ANGPA, Section 105
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WHEN SHOULD FERC BEGIN THE PROCESS
OF DEVELOPING NEW RULES?
 As soon as possible
 Why?
Expedited processing of certificates;
Federal Coordinator;
Efficient and cost effective;
Expedite and facilitate approval process.
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