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PUBLISHED: 4:58 PM on Wednesday, April 23, 2008
TransCanada, Enbridge ready to work with oil majors
TransCanada Corp. and Enbridge Inc. say they're ready to work with North Slope producers BP and ConocoPhillips on a $30 billion-plus North Alaska gas pipeline.

TransCanada said the announcement by BP and ConocoPhillips that they are moving forward in preparations for a 2010 open season for a project they would develop doesn't affect TransCanada's pending proposal to build a pipeline under a special state of Alaska incentive program.

Alaska officials said they are encouraged, but some express caution.

"It's all good. It's all positive," Gov. Sarah Palin said. "But we must still see our AGIA process move forward." She was referring to the Alaska Gasline Inducement Act, a state law that grants incentives to a pipeline developer agreeing to meet certain state objectives.

Tony Palmer, TransCanada's vice president for Alaska development, said his company's proposal to the state under AGIA allows for equity participation by producers and he noted statements by BP and ConocoPhillips that they would welcome a pipeline company partner.

"We believe we are the best independent pipeline to pursue the project because our proposal to the state meets every one of its goals," Palmer said.

But Enbridge Vice President Ron Brintnell said his company is the best potential partner for BP and ConocoPhillips.

Enbridge, a major Canadian natural gas pipeline company, has years of experience with pipeline systems in far northern climates and has the most recent construction experience of any pipeline company.

"We have $12 billion in current projects underway, which gives us current knowledge with construction and steel costs. No one can touch Enbridge's experience with current construction," Brintnell said.

Palmer said the state AGIA law does not preclude any parties from pursuing an independent project outside the statute, a course being taken by BP and ConocoPhillips.

AGIA provides for a $500 million state grant and certain exclusive benefits to a pipeline company that is issued a state license, provided that the license-holder meets certain goals set out by the state. Those are mainly provisions for expansions and rolled-in tariffs intended to encourage new exploration.

Palmer said TransCanada has worked for years on an Alaska gas pipeline and had always pushed for alignment among the three North Slope producers, a pipeline company and the state government.

"The announcement by BP and ConocoPhillips is very positive news for North American consumers and Alaska. The fact that these two major producers are prepared to advance the project creates a good potential for alignment among all the interested parties," Palmer said.

Palin will make a decision on TransCanada's application under AGIA on May 19 and has called the Legislature into special session beginning June 3 to consider it. Palin was positive about Tuesday's announcement by BP and ConocoPhillips but said it won't affect the schedule for release of the TransCanada decision or the special session.

State legislators were mostly encouraged by the BP-ConocoPhillips announcement although some expressed reservations. "It's very encouraging," Senate President Lyda Green said.

However, state Sen. Hollis French, chairman of the Senate Judiciary Committee, said the proposal should be viewed with skepticism. French worries it may cut into support for TransCanada's plan, which has several positive attributes.

House Speaker John Harris said he was pleased to see the two companies moving forward, but the Legislature should still consider TransCanada.

"The announcement has no effect on the special session," Harris said.

But other legislators have doubts about coming back to Juneau this summer. Some believe support for TransCanada has eroded with BP and ConocoPhillips in the game.

"There is a lot of internal discussion underway on how to handle the special session," House Majority Leader Ralph Samuels acknowledged.

One influential legislator now says he will oppose a state license to TransCanada.

"BP and ConocoPhillips aren't asking us for $500 million (in state funds). They're willing to risk $600 million of their own money," said Sen. Charlie Huggins, R-Mat-Su, who is chairman of the Senate Resources Committee. "Five hundred million dollars can build a lot of schools and roads."

However, the $500 million state grant to TransCanada under AGIA is only one item on the table, Harris said. A larger question to be discussed is how to keep a sense of competition in the game if only a producer pipeline is moving forward.

"All of that has to be discussed," Harris said.

Tim Bradner can be reached at tim.bradner@alaskajournal.com.


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