Alaska gas pipeline proposal progressing

Jan. 14, 2008
TransCanada’s application to build a natural gas pipeline in Alaska is open for a 60-day public comment period, Alaska Gov. Sarah Palin said.

TransCanada’s application to build a natural gas pipeline in Alaska is open for a 60-day public comment period, Alaska Gov. Sarah Palin said. It’s the only one of five formal applications to meet all the state’s requirements.

Other applications were submitted by Sinopec of China, AEergia of California, and two Alaska groups: the Alaska Gasline Port Authority and the Alaska Natural Gas Development Authority.

Palin said the public comment period for TransCanada’s proposal began Jan. 5. Following the allotted period for comment, she could submit the proposal to the state legislature, whose session begins Jan. 15.

“We’re thrilled to have a project sponsor willing to build a pipeline on terms that benefit all Alaskans,” Palin said.

TransCanada proposes a 48-in pipeline extending from Prudhoe Bay to Alberta, where it would tie into existing pipelines that transport gas to US markets. The project’s estimated cost is $26-35 billion, and it’s estimated that—if authorized by lawmakers—the proposed pipeline could start operation in 2017.

The proposed pipeline would follow the route of the existing trans-Alaska oil pipeline and the Alaska Highway, and continue through northern British Columbia to link with the pipeline grid in north-western Alberta.

State’s role

In 2006, Alaska Gov. Frank Murkowski reached a privately negotiated pipeline agreement with North Slope producers ConocoPhillips, ExxonMobil Corp., and BP PLC. But that agreement was dropped when Palin was elected governor.

Upon taking office in 2007, she outlined elements of an open bidding process. The Alaska Gasline Inducement Act (AGIA) calls for the state to provide $500 million for a gas pipeline project and fixed tax rates for 10 years (OGJ, Mar. 12, 2007, Newsletter). Those incentives are for a pipeline project that meets state requirements.

AGIC replaced the Stranded Gas Development Act, a 1998 law that allowed companies to apply for state incentives for a large gas project.

Meanwhile, Palin said the state continues to review a pipeline proposal from ConocoPhillips that was made outside the AGIA solicitation.

ConocoPhillips has said a fiscal terms agreement on gas production would be needed in order for a gas pipeline project to proceed. Previously, ExxonMobil and BP made similar comments, but ExxonMobil and BP have not submitted any gas pipeline proposals to Palin.

A ConocoPhillips spokeswoman in Alaska said Jan. 7 that the company’s proposal “has the best chance of leading to a successful Alaska gas pipeline project, and we look forward to working with the state.”