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TransCanada and Allies defend gasline pipe effort but AGIA faces powerful opposition

Former Gov. Palin’s Alaska Gasline Inducement Act faces powerful opposition

Posted: April 4, 2011 - 10:04pm
Tony Palmer, vice president of major projects development for TransCanada Corp., testifies during a House Finance Committee hearing at the Capitol Monday. TransCanada is working, with state support, to advance a gas pipeline project.   Michael Penn / Juneau Empire
Michael Penn / Juneau Empire
Tony Palmer, vice president of major projects development for TransCanada Corp., testifies during a House Finance Committee hearing at the Capitol Monday. TransCanada is working, with state support, to advance a gas pipeline project.

Changing the terms of the Alaska Gasline Inducement Act could threaten not only TransCanada’s plans to bring Alaska’s vast natural gas reserves to market, but future development efforts as well, the company told lawmakers Monday.

TransCanada executive Tony Palmer told the House Finance Committee House Bill 142, sponsored by Speaker Mike Chenault, R-Nikiski, and other AGIA opponents, would renege on the deal the Canadian pipeline company has with the state.

“It appears to violate the AGIA license agreement,” Palmer testified Monday.

TransCanada won the license, with $500 million in state backing to get a Federal Energy Regulatory Commission license for a pipeline to develop North Slope gas. The company last year held an “open season,” during which potential shippers entered bids to move gas through the pipeline.

That open season was the first held during the 30 years of state’s efforts to start selling its gas. TransCanada sought bids for both a pipeline to Alberta to take gas to Midwest markets, and an all-Alaska line to a Valdez export terminal. Results of the open season have not been made public.

Palmer said the company is on track with the AGIA timeline to get its FERC license. If Alaska goes back on the deal, it has the potential to hurt future development efforts, he said.

“I do believe that any businessperson, any corporation, looks to the counterparty, and whether or not they honor their agreements,” he said.

Rep. Beth Kerttula, D-Juneau, led House Democrats who joined with then-Gov. Sarah Palin to seek a natural gas pipeline for Alaska and opposed House Bill 142.

“I think it would be devastating to both our agreement with TransCanada and other potential pipeline developers,” she said.

Chenault’s bill would undermine AGIA by pushing the Parnell administration to declare it “uneconomic,” a declaration which is one of the ways to end the TransCanada contract, Palmer said.

“It raises uncertainty of the state’s support for AGIA at a critical time,” he said.

Alaska’s natural gas lease holders, including ConocoPhillips Co. and BP p.l.c. urged Alaska to have them building by negotiating tax breaks to make it more profitable.

Palin instead persuaded the Legislature to subsidize development of a pipeline with key conditions to make it more beneficial to Alaska.

TransCanada won that license. Palmer said Tuesday it had spent $240 million already, and had been reimbursed $50 million of that.

As the AGIA process went on over the oil company objections, BP and ConocoPhillips began their own pipeline called “Denali.”

Oil industry allies in the Legislature fought the adoption of AGIA, but Palin won its approval with some Republican and solid Democratic support.

Monday, Rep. Mike Hawker, R-Anchorage, an AGIA critic, challenged Palmer’s view of House Bill 142. He is a co-sponsor of Chenault’s bill.

Hawker said Legislators are representatives of the people of Alaska, and have a right to know what the open season’s bid volumes were.

“I understand the people of Alaska, legislators and other bidders all wanting to know what the volumes are that are bid, but that’s not the practice in the pipeline business,” Palmer said.

Despite Palmer’s reassurances the project was on track, a skeptical Rep, Tammie Wilson, R-North Pole, said her constituents needed natural gas and she wasn’t sure the TransCanada pipeline could bring it.

“I’m glad you are hopeful, but hopeful doesn’t get us gas,” she said.

Deputy Natural Resources Commissioner Joe Balash said the years-long process of getting a FERC certificate and a pipeline was going as expected.

“We’ve been very pleased by the performance of our licensee and its partners to date,” Balash said.

• Contact reporter Pat Forgey at 586-4816 or at patrick.forgey@juneauempire.com.

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