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Alaska, TransCanada starting new partnership

Posted: June 17, 2014 - 11:07pm

JUNEAU — Gov. Sean Parnell announced Tuesday that the state and TransCanada Corp. have formally ended their relationship under terms of the Alaska Gasline Inducement Act, clearing the way for a new partnership to pursue a major gas project.

The development was expected, after the state, TransCanada, the North Slope’s three major players and Alaska Gasline Development Corp. agreed to work together to pursue a liquefied natural gas project. State lawmakers earlier this year approved state participation in the mega-project, setting the stage for a new agreement with the Canadian pipeline company.

The next step is for the parties to sign a joint-venture agreement spelling out responsibilities and cost-sharing to ramp up the next phase of the process, which is expected to include preliminary engineering and design and getting a more specific estimate of costs. Natural Resources Commissioners Joe Balash said discussions surrounding these issues have been going on for months and he saw no reason for the agreement and associated documents to not be signed. The state itself is not expected to be a signatory, but the other players are, he said.

Both ExxonMobil Corp. and BP are ready to sign, spokeswomen said Tuesday. TransCanada spokesman Shawn Howard, by email, said his company resolved its issues with the joint-venture agreement. But Howard declined to say what those issues were, saying they were part of the discussions between parties that he could not discuss publicly.

ConocoPhillips spokeswoman Natalie Lowman said there were still “open issues” that needed to be resolved from the company’s perspective. Lowman did not specify the issues, saying negotiations are confidential. She said by email that the company continues to support moving the project forward and all parties were “working closely to bring these agreements to closure.”

TransCanada for years pursued a pipeline project with state support under terms of the act. But the project’s focus shifted from a line that would serve North American markets to one that would serve overseas markets. The players changed, too, causing Parnell to conclude that terms of the act did not fit with the project under consideration.

Some lawmakers questioned TransCanada’s role in the liquefied natural gas project and whether they were involved to avoid a potential legal fight that could arise from terminating the license the company held under the inducement act. The administration defended TransCanada’s inclusion in an arrangement in which the company would own at least part of the state’s interest in the pipeline and gas treatment plant, saying the company brought expertise to the table and would help shoulder costs.

The arrangement also was billed as an amicable end to the relationship under the inducement act, with the understanding the parties would move to terminate the license following execution of a new agreement.

The termination agreement was dated June 9.

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