Alaska culls gas line field to 1 company

Only TransCanada application meets state requirements

Posted: Sunday, January 06, 2008

ANCHORAGE - A major Canadian oil and gas company has beat out four competitors in a bid to build a natural gas pipeline out of Alaska that would supply energy to millions of consumers throughout North America, state officials announced Friday.

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TransCanada Alaska Company, LLC/Foothills Pipelines, Ltd. is the only company to meet a long list of business terms set forth by the state, which is moving aggressively to bring its natural gas to market as energy prices continue to rise.

"We have long stated that it only takes one good application. We're thrilled to have a project sponsor willing to build a pipeline on terms that benefit all Alaskans," Gov. Sarah Palin said during a news conference at her downtown Anchorage office.

At a projected cost of $26 billion, the pipeline could become the largest, most expensive energy facility ever constructed, or simply the largest private-sector project ever undertaken, in North America.

TransCanada is proposing to root the pipeline in Arctic oil fields on Alaska's North Slope, the bedrock for the state's robust oil industry since the 1970s.

From there, natural gas would flow 1,715 miles southeast to the company's pipeline hub in Calgary, Alberta, that connects to all the major markets on the continent, said Marty Rutherford, the state's deputy commissioner for the Department of Natural Resources.

In its proposal, the company estimates that the pipeline could go into service by November 2017, at the earliest.

"We look forward to working with the state of Alaska and with producers and shippers to advance a project for a pipeline from Alaska to integrate with TransCanada's system at the Alberta hub," Trans- Canada spokeswoman Cecily Dobson said from the company's headquarters in Calgary.

About 35 trillion cubic feet of proven natural gas reserves are believed to lie beneath the North Slope permafrost. Energy analysts believe that figure will rise in the future.

TransCanada owns 36,500 miles of pipe ferrying nearly 30 billion cubic feet of gas out of Calgary each day. The company has long had an interest constructing an Alaska gas line.

The idea gained momentum in the last few years with natural gas futures trading in the mid-$7 range. The U.S. consumed about 21.7 trillion cubic feet of natural gas in 2006, according to the Energy Department. Companies now exploring for natural gas on the North Slope include Chevron Corp. and Anadarko Petroleum Corp.

The pipeline construction applications were submitted under the Alaska Gasline Inducement Act, or AGIA, passed by the Alaska Legislature in May 2007. Other applicants were the Alaska Gasline Port Authority, AEnergia LLC, Sinopec ZPEB and the Alaska Natural Gasline Development Authority.

ConocoPhillips submitted a proposal outside the guidelines of the gasline inducement act, saying at the time that it was "prepared to make significant investments, without state matching funds, to advance this project."

State officials said they will focus on TransCanada for now, but are not ruling out the proposal by ConocoPhillips, which is one of three major oil producers on the North Slope, home to the nation's largest oil field. Calls to the company on Friday were not immediately returned.

TransCanada's application will continue through an evaluation process by the state to determine whether it meets the economic and environmental guidelines required for an exclusive construction license.

As part of that, a 60-day public comment period on Trans-Canada's application began Saturday. The application would then need approval from the state Legislature.

Drue Pearce, federal coordinator for Alaska Natural Gas Transportation Projects, said her office in Washington D.C. will begin a federal review of the application on Monday.

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