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AlaskCan eyes LNG project: Firm applies for permit to collect data on islands in Misty Fjords

Daily News Staff Writer

A recently formed Alaska corporation is considering whether it could base a multi-million dollar liquid natural gas project offshore of two small islands in the Ketchikan Gateway Borough.

AlaskCan International LNG Corp. is interested in developing eight to 10 independent LNG processing and exporting facilities that would float off the shores of Sitklan and Kanagunut islands near the southern border of the borough.

In December, AlaskCan applied for land use permits from the Alaska Department of Natural Resources so that the company can begin collecting data from the area during the next two years.

The company hopes to use the data to determine whether that area can meet the needs of the potential project, AlaskCan President Byng Giraud explained in a Tuesday phone call with the Daily News.

Projects like the AlaskCan LNG project are tremendously expensive, so AlaskCan will be measuring dozens of factors to determine if the area is suitable for the project, including weather, tides, currents, seismic activity, tsunami vulnerability, underwater topography, and the structural integrity of the island's rock foundation.

"(The two islands) seem to us to satisfy our criteria, but we can't know for sure until we do this work," Giraud said.

The two islands, located to the southeast of Nakat Bay, are less than one-half mile from the U.S.-Canada border.

The islands also are about 10 miles west of two existing natural gas pipelines in British Columbia: the Prince Rupert Gas Transmission pipeline and the Westcoast Connector Gas Transmission pipeline. If AlaskCan determines that the islands could meet the needs of its project, one of these two pipelines would serve as the source of natural gas for the processing facilities.

The processing facilities AlaskCan is considering would not be physically built on the two islands. Instead, they would float: each facility would be a vessel 300 meters long and 60 meters wide, permanently moored and completely self-sufficient in processing and exporting natural gas.

At the facilities, the natural gas would be chilled to about 260 degrees below zero. At that temperature, the gas condenses into a liquid, occupying about one six-hundredth the volume it occupies in its gaseous form.

The LNG would then be put on massive carrier boats to be shipped and sold around the world.

Each facility would be capable of processing and exporting up to 3 million to 4 million tons of liquid natural gas every year.

AlaskCan's potential project, with between eight and 10 of these facilities, would have the ability to collectively process and export 24 million to 40 million tons of liquid natural gas every year.

But one thing could complicate progress: Sitklan and Kanagunut islands are located within the boundaries of Misty Fjords National Monument.

Land within the monument is "strategically managed to continue the preservation of this undeveloped, enduring ecosystem," according to its website.

The upland area of the islands — all the land above the high tide water level on the islands, averaged over several years — is under the jurisdiction of the U.S. Forest Service. All land below that level, and extending out three nautical miles from the shore, is controlled by the State of Alaska.

AlaskCan's state land use permit application documents indicate that some of its data would be collected entirely on the state-controlled tidelands, like the 10 to 12 boreholes it would drill at each of the two sites to "study potential locations for heavy load piles expected to bear marine offloading facility structures."

The boreholes "will be approximately 4-6" in diameter and advanced to 50m below seabed elevation or at least twelve meters into competent (slightly weathered to fresh) bedrock," state the applications.

Other data would be collected on the Forest Service-controlled uplands, including a solar-powered weather station to be placed on the islands temporarily to collect data on wind, temperature, humidity and precipitation.

Tongass Public Affairs Officer Paul Robbins confirmed in a Friday phone call that since the temporary weather station would be situated on Forest Service land, AlaskCan would need to apply for a separate federal land use permit for the two weather stations.

Robbins said that the Forest Service notified the DNR that AlaskCan would need a Forest Service permit on Dec. 26, the last day that public and agency comment was allowed for the DNR applications.

That same day, Ketchikan Indian Community President Norman Skan sent a letter to the DNR, asking that the public comment period be extended until Feb. 26.

A DNR official wrote in a Tuesday email to the Daily News that the department is "working to issue this permit within the next couple of weeks."

Giraud said on Tuesday that the land use permits are among the first of many steps needed to make the project a reality.

"This is really really early-stage stuff," Giraud said. "Even an accelerated version of it would be seven or eight years away from the facility being operated."

AlaskCan is still nascent, created only a few months ago with the sole objective of locating and permitting a liquified natural gas facility, Giraud said.

"(AlaskCan was) built for this purpose. (Its) objective essentially is to locate and permit a liquified natural gas facility," he said.

AlaskCan International LNG Corp. is a subsidiary of AlaskCan LNG Corp., a Vancouver, British Columbia based corporation, according to the Alaska Department of Commerce.

Giraud explained Tuesday why AlaskCan International is interested in building the facility in Alaska, rather than in British Columbia.

One factor was the U.S. federal government evaluation process, because the Federal Energy Regulatory Commission has "experience with these kinds of projects."

FERC oversees interstate transmission of natural gas, electricity and oil, among other responsibilities.

"In an industrial project, time is money," Giraud said. "We think that the Alaska process is more ... effective, and also if we can bring some benefits to the community (it) also makes the project ... attractive to everybody."