TransCanada drawbacks are mind-boggling

Posted: Monday, July 14, 2008

During "King Murkowski's Reign," I publicly criticized him severely in the media for his proposed pseudo-contract with the oil/gas producers for a natural gas pipeline from the North Slope to the lower 48 states.

Since it really wasn't a contract but promised fiscal certainty and other giveaways to the oil/gas producers for 40 years, and allowed them to start building the gas pipeline when they felt like it, it just didn't seem appropriate for Alaska. Our Legislature agreed.

Recently, I was enlightened by an unnamed legislator that Alaska's Gasline Inducement Act and the discussions with TransCanada might even be worse.

The facts are: 1) Gov. Sarah Palin and the Alaska Legislature may be willing to give TransCanada $500 million as an inducement (incentive) to obtain a license to think about contracting with our state to build a gas pipeline to the lower 48 sometime (date to begin construction not stated). 2) TransCanada has yet to secure all the necessary gas pipeline rights-of-way through Canada, which could be delayed in litigation for years. 3) Neither Alaska nor TransCanada has negotiated with Alaska's oil/gas producers, which control the gas, for any existing Alaska gas reserves to be shipped in the "phantom" yet-to-be-built gas pipeline. 4) There are no provisions in any of these discussions for any Alaska gas reserves to be sent through any North Slope yet-to-be-built gas pipelines to Alaska markets.

Alaska seems to be awash in money right now, and Palin seems to want to find ways to spend it, (to improve her popularity?), whether it's productive over the long term or not. She and her administration are truly beginning to show their naiveté and lack of program management experience.

Why would anyone want to build a $30 billion gas pipeline, when the gas supply to the pipeline cannot be assured? Seemingly, neither Alaska nor the proposed pipeline builder control the gas reserves. At least, "King Murkowski" was talking to the Alaska oil/gas producers, who could assure gas for the pipeline.

The Legislature, in a new special session that began Wednesday, is getting ready to vote on TransCanada's "noncommital license application" and pay TransCanada $500 million for what? There is nothing in AGIA for Alaska or Alaskans, i.e., no construction contract and no date to begin, no gas for the pipeline, no gas or gas pipelines for Alaskans, and no completely secured pipeline rights-of-way to the lower 48.

Our Governor and Legislature are now contemplating spending $500 million for nothing. To me, that is mind boggling. And I thought we had progressed beyond Murkowski? Not.

Richard Hahn


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