Alaska picks TransCanada pipeline bid

Alaska picks TransCanada pipeline bid
David Ebner, Globe and Mail, 04-Jan-2008

Gas pipeline applicants pared to one
Jeannette J. Lee, Anchorage Daily News, 04-Jan-2008

AGIA Completeness Review Finalized
TransCanada Meets Statutory Requirements
News Release, Governor Sarah Palin, 04-Jan-2008

TransCanada's Alaska Highway Pipeline Project
AGIA application: Executive Summary

See also:
Role of major north slope producers unclear with signing of AGIA

CALGARY — TransCanada Corp.'s proposal to build a massive natural gas pipeline from Alaska to Canada is the only one that will be officially considered by the state, Gov. Sarah Palin said on Friday.

Five companies, including Calgary-based TransCanada, had submitted applications to build the pipeline about a month ago under the Alaska Gasline Inducement Act. Gov. Palin on Friday said only TransCanada's was considered complete and the state will not further evaluate the other applications.

“We have long stated that it only takes one good application,” Gov. Palin said in a statement. “We're thrilled to have a project sponsor willing to build a pipeline on terms that benefit all Alaskans.”

There has been talk since the 1970s of an Alaskan gas pipeline connecting the major reserves on the state's north slope with the rest of the continent. In 2006, Exxon Mobil Corp., BP PLC and ConocoPhillips Co., the companies that control the gas, reached a deal with Alaska's former governor to develop the line but it was scrapped by the new administration.
TransCanada Corp.

The Globe and Mail

For TransCanada, Alaska's decision is an early win but doesn't mean the company has won the contest. There is now a two-month public comment period, after which the state will decide whether to submit TransCanada's application to the legislature for approval.

Even if TransCanada is politically successful, it would still need to secure long-term shipping contracts from Exxon, BP and ConocoPhillips before it could proceed. TransCanada has said it has always worked closely with the potential gas shippers.

The big name not mentioned in Alaska's Friday news release is ConocoPhillips, which has proposed a $30-billion (U.S.) pipeline to connect Alaska with Alberta, carrying four billion cubic feet of gas a day –roughly 5 per cent of demand in the U.S. ConocoPhillips made its application outside of the gasline inducement act, saying it didn't need state funds to proceed with its proposal.

Office of the Governor Sarah Palin
No. 08-002

January 4, 2008, Anchorage, Alaska – Governor Sarah Palin today announced that the State of Alaska has finished its completeness review of the five AGIA applications. The application from TransCanada Alaska Company, LLC/Foothills Pipelines, Ltd. (“TransCanada”) satisfied all of the mandatory requirements set out in AGIA. Thus, TransCanada’s application will move to the next phase, the evaluation phase, of the AGIA process.

AGIA requires that, before an application can be evaluated, it must first undergo a “completeness review” by the commissioners of Natural Resources and Revenue to determine whether it complies with the requirements of AGIA. Then, the commissioners must evaluate the application to determine whether it will sufficiently maximize the benefits to Alaskans and merit issuance of the exclusive AGIA license. The commissioners are now soliciting public comment to help them evaluate the TransCanada application and make that determination.

The five companies which had applied under AGIA to develop and build a natural gas pipeline to transport North Slope gas to market were: AEnergia LLC, the Alaska Gasline Port Authority, the Alaska Natural Gas Development Authority, Little Susitna Construction Company, Inc. (“Sinopec ZPEB”); and TransCanada. While TransCanada’s application was deemed complete, the commissioners determined that the other four applications did not meet the requirements of AGIA. Those applications will not be evaluated further.

“We have reached another important milestone in bringing our Alaska’s natural gas to market,” said Governor Palin. “We have long stated that it only takes one good application. We’re thrilled to have a project sponsor willing to build a pipeline on terms that benefit all Alaskans. Today’s result is tremendously satisfying.” Public review and comment will begin on January 5, 2008 and will last 60 days, closing March 6, 2008. The public may review all applications received and provide comments to assist the commissioners in their determination of whether TransCanada’s application proposes a project that will sufficiently maximize the benefits to Alaskans and merits issuance of the exclusive AGIA license. If the commissioners find that the TransCanada application meets that test, they will forward it to the Legislature for approval.

All applications and public comment procedures have been posted online at www.state.ak.us.

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AGIA Review Finalized

Only one of the five applications submitted for the exclusive license to build a natural gas pipeline to transport North Slope gas to market will advance to the next round of public scrutiny, Gov. Sarah Palin announced today.

The application from TransCanada Alaska Co./Foothills Pipelines Ltd. was the only one that met all the state's requirements, Palin said during a press conference in Anchorage.

"We have long stated that it only takes one good application. We're thrilled to have a project sponsor willing to build a pipeline on terms that benefit all Alaskans," Palin said.

The application will be evaluated by the state to determine whether it provides the maximum in benefits to Alaskans and merits issuance of the exclusive license. As part of that, a 60-day public comment period on TransCanada's application opens Saturday and ends March 6.

After that process, if the state determines it meets those requirements, the application will be forwarded to the Legislature for approval. Winning the state license would entitle TransCanada to a package of financial incentives under the Alaska Gasline Inducement Act, or AGIA, a law passed by the Legislature in May.

The winner commits to move forward with plans for a multibillion-dollar pipeline rather than committing to actually building the line.

Winning the state license also doesn't preclude another company from pursuing the pipeline project. Conoco Phillips, the state's biggest oil and gas producer, has made a proposal that falls outside the scope of AGIA.

Other applications with TransCanada's under AGIA that were submitted but did not meet state requirements were from the Alaska Gasline Port Authority, AEnergia, Sinopec ZPEB and Alaska Natural Gasline Development Authority.

Officials from those companies were notified today that their applications did not meet all the requirements set out by the law and will not be evaluated further.

TransCanada is a leading Canadian energy and pipeline company with a long interest in an Alaska gas line.

A North Slope gas line has been discussed since before oil first moved down an 800-mile trans-Alaskan pipeline in 1977. But the prospects only gained momentum in the last few years with natural gas futures trading in the mid-$7 range for 1,000 cubic feet of gas.

In 2006, former Gov. Frank Murkowski settled in principle with BP, Exxon Mobil Corp. and Conoco Phillips on fiscal terms -- taxes and royalties -- for producing the North Slope gas.

It would have frozen oil taxes for 30 years and gas taxes for up to 45 years for the three major oil companies.

Still, that deal did not guarantee a pipeline would get built; the hope was it would enable producers to move forward with a pipeline.

The line would ultimately have delivered 4.5 billion cubic feet of natural gas a day, which is about 7 percent of the current U.S. demand.

But state lawmakers felt the deal had too many giveaways for big firms, including locking in the tax rates. The Legislature never voted on the deal.

That led Palin, who took office 13 months ago, and her administration to chart a different course. Rather than negotiate with one group, her plans called for new guidelines designed to stimulate competition among oil and pipeline companies.

While energy analysts have estimated there to be about 35 trillion cubic feet of proved natural gas reserves in the North Slope, they believe that figure will rise in the future.

A large amount of natural gas comes to the surface when oil is being pumped from Alaska's large-but-dwindling oil fields. But for now, the industry reinjects the gas into the ground.

All the applications are available online at www.gov.state.ak.us/agia.

TransCanada at a glance

* The business: A top Canadian pipeline and power company with 36,500 miles of natural gas pipelines across Canada, the U.S. and Mexico.

* Headquarters: Calgary

* Work force: 3,550 employees

* Chief executive: Hal Kvisle

* 2006 financials: $1.1 billion profit on $7.5 billion in revenue

* Web site: www.transcanada.com

Source: TransCanada Corp.