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State seeks to keep up pressure on natural gas line

Posted: July 3, 2013 - 12:00am

JUNEAU — The state is trying to keep the pressure on a Canadian company as it seeks to advance efforts to build a major natural gas pipeline in Alaska.

The commissioners of Revenue and Natural Resources last month agreed to a project plan amendment that would give TransCanada Corp. an additional year — until October 2015 — to file an application with federal regulators for a pipeline that would run from the North Slope into Alberta, Canada. TransCanada Corp. holds an exclusive license with the state to advance a major line.

The Alberta option has almost entirely been shelved as TransCanada and the North Slope’s three major players — Exxon Mobil Corp., BP and ConocoPhillips — last year agreed to instead pursue a massive liquefied natural gas project that could range from $45 billion to more than $65 billion. In 2011, Gov. Sean Parnell, urged the companies to unite behind a project that allows for LNG exports to the Pacific Rim if the gas market had truly shifted from the Lower 48. North American markets were the focus of the earlier option running through Alberta.

But Deputy Natural Resources Commissioner Joe Balash said Tuesday that without specifics yet on an LNG project, the state needs to ensure the companies are still making acceptable progress. The amendment is meant to keep up pressure and force a decision.

Balash said if nothing else happens between now and 2015, TransCanada will approach a point in time where it will have to start spending significant sums of money again on the Alberta option if it is to meet the filing requirement with the Federal Energy Regulatory Commission. Assuming that’s something they want to avoid, “then something’s going to have to give.”

TransCanada had requested a two-year filing extension, or until October 2016. But spokesman Shawn Howard, in an email Tuesday, said the adjusted date is acceptable. He said the company’s focus — along with that of the state and producers — is on the potential LNG project.

The amendment was dated June 11, days before the companies missed one of Parnell’s benchmarks for progress on an LNG project. Parnell in January called for the companies to release more details on the project by Feb. 15, to finalize an agreement by spring to move into a stage that would include preliminary engineering and a financing plan and to conduct a full summer of field work.

The second of those benchmarks — which would have triggered hundreds of millions of dollars in additional spending by the companies, according to their work plan — wasn’t met.

The companies on June 21 announced summer field work plans, which, combined with other activities, they said would allow them to evaluate “major future engineering commitments.”

“Towards this goal, a competitive, predictable and durable oil and gas fiscal environment will be required for a project of this unprecedented scale, complexity and cost to compete in global energy markets,” the companies said in a release.

Parnell said given the missed benchmark, he isn’t obligated to pursue another benchmark he’d set out: taking up possible gas-tax legislation this year. Parnell has said he’s evaluating whether progress made on the project and the state’s interests warrant pursuing gas-tax changes this year or next. The Legislature in April approved an oil tax cut that the producers supported.

Larry Persily, federal coordinator for Alaska natural gas pipeline projects, said his office and FERC will work on an application as soon as they see one.

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Follow Becky Bohrer at http://twitter.com/beckybohrerap.

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