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Canadian company meets AGIA requirements

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TransCanada is now the company the state has pinned its hopes on for the next big boom. (KTUU-TV)
TransCanada is now the company the state has pinned its hopes on for the next big boom. (KTUU-TV)

by Jason Moore and Rebecca Palsha
Friday, Jan. 4, 2007

ANCHORAGE, Alaska -- It was a day of carnage for companies hoping to build an Alaska gas pipeline.    

On Friday, the Palin administration announced only one of the five applicants survived the first winnowing process.    

TransCanada is now the company the state has pinned its hopes on for the next big boom.

After more than a year of legislative battles, commercial jockeying and applications the Palin administration's gas line strategy comes down to this.

"The proposal that satisfied all of AGIA's requirements and abiding by the law -- this application even goes beyond some of what Alaskans dare desired in a gas line plan -- is TransCanada Alaska's application."

TransCanada is the lone survivor in a process that started with five bids.    

Of the five, state officials say AEnergia was nixed because its pipeline plan only ran to the Alaska border with Canada. The market isn't there; it's in Alberta.    

The Alaska Gasline Port Authority's bid was rejected because much of the project's details failed to meet the Nov. 30 deadline.    

The Alaska Natural Gas Development Authority only proposed a spur line from Glennallen or Delta Junction to Anchorage; therefore, it will not be considered.    

Chinese energy giant Sinopec had a proposal but officials say it contained too many conditions, including approval by the Chinese government.

That leaves only TransCanada.    

TransCanada runs more than 35,000 miles of pipelines in North America with profits last year of more than a billion dollars.

DNR Commissioner Tom Irwin said TransCanada complied with every requirement.

"We had the 20 must haves and we went right down the line," Irwin said. "Is the pipeline expandable? Check. They totally agree. Is the pipeline in a position where we will have rolled-in rates? Check. Complete. We went down all 20. Without reservation they complied."    

If awarded the license TransCanada commits to holding an open season in 18 months. Shippers would then buy access in the pipe.

The proposal also includes a liquefied natural gas option to Valdez if problems are encountered going through Canada.    

In the past the company said a successful project would need the cooperation of the North Slope producers. Cecily Dobson, spokesperson for TransCanada isn't saying they have that cooperation yet.    

"I think at this point any information about equity arrangements with producers and shippers would be confidential," Dobson said. "But we're certainly looking forward to working with the state of Alaska and the producers and shippers as we advance the project."

Bill Walker with the Alaska Gasline Port Authority said his organization was surprised and disappointed its proposal was rejected on a technicality.

Much of the Port Authority's data came in too late because Walker said two partners backed out right before the filing deadline.          

"That is, I guess, our biggest disappointment," Walker said. "We're not going to have the benefit of what we think truly is the very best project for Alaska. It's a smaller volume project with larger returns."

One of the governor's biggest critics, Andrew Halcro, says AGIA doesn't work.

He said TransCanada needs the oil producers, but they won't get on board without fiscal certainties from the state.

"This is my impression of the Palin-AGIA press conference this afternoon: ‘Ain't life wonderful? Ain't life wonderful?'" Halcro said. "This is a setback for the state of Alaska, with oil production decreasing this is a set back for people who want jobs and want economic growth."

The only project now under consideration by the state is a $26 billion pipeline from TransCanada.

The company says gas could flow as early as 2017.

The bid will now undergo a 60-day public comment period. All the information on the bids is posted on the state's website.    

After the comment period the state legislature will ultimately decide whether to grant the company a license to build the pipeline.

Contact Jason Moore at jmoore@ktuu.com
Contact Rebecca Palsha at rpalsha@ktuu.com

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