Overseas gas line may not get loan guarantee

Alaska Gov. Sean Parnell, left, speaks to reporters on Thursday, Jan. 5, 2012, in Anchorage, Alaska. Parnell met with chief executive officers of three major oil companies operating in Alaska _ Bob Dudley of BP, James Mulva of ConocoPhillips and Rex Tillerson of ExxonMobil _ to discuss commercialization of Alaska North Slope natural gas. (AP Photo/Dan Joling)

JUNEAU — An Alaska natural gas pipeline project that would serve overseas markets seemingly wouldn’t qualify for a loan guarantee under federal law.


The Alaska Natural Gas Pipeline Act contains incentives aimed at speeding a project, including authorization for a federal loan guarantee. But Larry Persily, federal coordinator for Alaska natural gas transportation projects, notes that a qualified project under the law is one that would bring gas from Alaska’s North Slope to the continental United States.

Changes in the years since the 2004 law’s passage, including the rise of shale gas, have given rise to concerns that there will be little demand for Alaska gas in the Lower 48. Gov. Sean Parnell has asked the slope’s major players — Exxon Mobil Corp., BP and ConocoPhillips — to unite behind a project that would allow for liquefied natural gas exports to the Pacific Rim if the market has truly shifted from the Lower 48.

Persily said Wednesday that such a project could still qualify for the loan guarantee if, say, a tanker brought liquefied natural gas to the Lower 48. But he said that doesn’t appear to be what people are talking about.

Federal loan guarantees for the pipeline are currently estimated at about $21 billion.

TransCanada Corp., which has an exclusive license with the state to advance a project, has proposed two options. One, estimated in January 2010 to cost $32 billion to $41 billion, would run from the North Slope to Alberta, Canada, where gas could then be moved on existing systems to North American markets. The other, estimated to cost $20 billion to $26 billion, would run from the North Slope to Valdez, where gas would be liquefied at a facility that an unidentified entity would build and shipped elsewhere. The estimate does not include the cost of the liquefaction plant.

TransCanada, which is working with Exxon Mobil in its effort and has focused attention mainly on the Alberta option, hasn’t announced any agreements with producers since ending an open season, or process of courting companies, in July 2010. A TransCanada official said talks with the three energy companies about the liquefied natural gas option began late last year.

Robert Dillon, a spokesman for Sen. Lisa Murkowski, R-Alaska, said Murkowski’s office would look at changing the loan guarantee language to help the project, as appropriate. He said it’s not clear yet what any project might look like or whether there will be a need for loan guarantees or financing support.

If a liquefied natural gas project proceeds, he said Murkowski would hold federal agencies accountable and ensure the approval process for things like an export license moved along.


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