Alaska's gas pipeline plan comes under fire in Legislature

TransCanada's natural gas pipeline seeks to bring resource to markets

Posted: Monday, February 07, 2011

Opponents of Gov. Sean Parnell’s natural gas pipeline plans moved Friday to gut the Alaska Gasline Inducement Act, under which TransCanada Corp. is developing a pipeline to bring the North Slope’s huge gas reserves to market.

In a bill introduced Friday, House Speaker Mike Chenault, R-Nikiski, and others seek to eliminate a key provision of AGIA, requiring TransCanada to continue pipeline work even in the face of opposition from the oil companies that hold rights to the state’s gas.

Two of those companies, ConocoPhillips Co. and BP PLC, began developing their own pipeline after Alaska began the AGIA process under former Gov. Sarah Palin.

The oil companies’ allies in the Legislature have argued they, and not an independent pipeline company, should own and control the $40 billion pipeline.

AGIA opponents are saying the plan is not working, despite statements by Parnell that it is on schedule.

“The bill simply adds something that was overlooked in the initial AGIA legislation — a deadline. That’s something Alaskans have a right to expect,” said Chenault and other sponsors in a statement issued Friday.

The sponsors of House Bill 142 were all opponents of granting the AGIA license to TransCanada, which the Legislature did in 2007.

AGIA is intended to get Alaska a natural gas pipeline, even if the oil companies initially refuse to sell the gas into it. Under AGIA, the state will now contribute 90 percent of the development cost, up to $500 million, toward getting the crucial Federal Energy Regulatory Commission permit the pipeline needs.

Rep. Beth Kerttula, D-Juneau, led the House Democratic Caucus that joined with Palin, Parnell and some Republicans to push the TransCanada license through. She said the Chenault bill would renege on Alaska’s obligations to TransCanada.

“It breaks the deal,” she said.

If it wants to develop its resources, Alaska needs to hold to deals it negotiates, she said.

Chenault’s bill “shows us as not a very good place to do business,” she said.

TransCanada conducted an “open season,” a period during which companies hoping to use the pipeline make offers to do so. The company said it had multiple bids from major industry players and others, which it has been evaluating and negotiating since then.

Under the terms of AGIA, if both the state and TransCanada determine the project is uneconomic, they can pull the plug.

The bill would create a “rebuttable presumption” that the pipeline is not economically viable if there are not binding shipping agreements made public by July 15.

“Let’s get this project started or get on with something else,” said the statement by Chenault, along with Reps. Mike Hawker, R-Anchorage, Kurt Olson, R-Soldotna, and Craig Johnson, R-Anchorage.

“If AGIA leads to a viable project, this bill assures work is launched quickly. If AGIA is not going to work, this bill sets a reasonable deadline for the administration to tell Alaskans,” they said.

The Parnell administration is still analyzing the bill, said Sharon Leighow, the governor’s spokesperson, Friday afternoon.

Sen. Bill Wielechowski, D-Anchorage, said the rush could kill the project in which Alaska has so much invested and which appears to be working.

“We have every major producer on the North Slope vying to build a pipeline and bid quantities of gas,” he said. “If a deal takes a bit longer I’m willing to give them a few more months,” he said.

Setting a deadline for TransCanada that’s not in AGIA would weaken TransCanada’s negotiating position, he said.

“Everyone is frustrated, we all want our gas to get to market yesterday,” Kerttula said.

AGIA anticipated a need for multiple open seasons as TransCanada pushes on towards a FERC license, she said. The reason for the state paying part of the initial development costs was to push past initial open seasons to a license.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.



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