July 28, 2008

Alaska approves state license for TransCanada to pursue federal pipeline certification

JUNEAU, Alaska

The Alaska State House of Representatives has approved a state license for a Canadian company to pursue a natural gas pipeline project that could unlock 130 million cubic metres of North Slope gas reserves daily.

Legislators in Alaska’s House voted to support Gov. Sarah Palin’s proposal to award TransCanada Corp. an exclusive license to pursue federal certification for the 2,760-kilometre pipeline.

TransCanada Vice President Tony Palmer wasn’t ready to celebrate just yet, nor would he make any predictions on how the Senate’s vote will play out.

“I’m always uncertain until I see the votes,” Palmer said. “I had no expectations as to how the votes would go until I saw the buttons pressed.”

The license doesn’t guarantee pipeline construction. It simply calls for TransCanada to embark on a costly process of pursuing a federal certificate, but also with up to US$500 million in state seed money.

There’s the rub, said Rep. Mike Hawker, an Anchorage Republican who spoke out against the Alaska Gasline Inducement Act, or AGIA, license before casting a dissenting vote.

“We have to make it very clear that this AGIA license is not a commitment to do anything other than process a whole lot of paper,” Hawker said.

Rep. Les Gara, an Anchorage Democrat, backed Palin’s endorsement of TransCanada with the same understanding as Hawker, but with a different outlook.

“I think this is going to put the state on a stable footing,” Gara said. “There is no clear path to a gas line. This is the clearest path to a gas line that protects the state’s interest. That’s all it is.”

The vote takes the state another step away from a contract unsuccessfully pushed by former Gov. Frank Murkowski.

He settled in principle with BP, Exxon Mobil Corp. and ConocoPhillips on fiscal terms — taxes and royalties — for producing the North Slope gas.

The deal would have frozen oil taxes for 30 years and gas taxes for up to 45 years for the three major oil companies, but it did not guarantee a pipeline would get built.

The Legislature would not vote on it because many members believed it was too much of a giveaway to the energy industry, about US$10 billion over the lifetime of the deal.

This Legislature, however, acted under AGIA, a year-old law that established bid requirements for those interested in building a pipeline.

Associated Press

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