TransCanada offers gas pipeline proposal

Letter: Independent project viable option beyond BP, Exxon

Posted: Sunday, July 16, 2006

FAIRBANKS - TransCanada Corp., the Canadian company that applied in 2004 to build a natural gas pipeline to transport North Slope gas, has written the governor a letter.

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In the letter, Hal Kvisle, chief executive officer of TransCanada Corp., staked out a role in the pipeline proposed by the state and BP, ConocoPhillips and Exxon Mobil. He asserted that a pipeline built by an independent company such as theirs could in fact be an economic and viable alternative.

He also wrote that, "TransCanada holds valid property rights to build and own the Canadian section of the (proposed) Project, and we have no option but to defend those rights on behalf of our Canadian shareholders."

The company is discussing commercial arrangements for ownership of the Canadian portion with the oil companies. But Kvisle said it would be willing to negotiate an arrangement now that could be included in the agreement between the state and the companies.

Kvisle asked Gov. Frank Murkowski to consider changing the proposed natural gas pipeline contract to "defer determination of ownership in Canada or to reflect the key elements of a commercial agreement with TransCanada."

State lawmakers are reviewing that agreement and related issues during a second special legislative session that began this week in Juneau.

Kvisle said in his letter that if the deal with the producers falls through, the TransCanada pipeline proposal would present a "realistic alternative."

"The shipping terms and risk sharing mechanisms contained in our proposal were innovative, competitive and economically sound," he wrote.

Republican Sen. Gene Therriault of North Pole said Murkowski did not present the essence of the letter when he read from it in an address to lawmakers Thursday morning.

Murkowski read from the first section of the letter, which concluded, "We are generally supportive of the gas pipeline agreement which you have reached."

The two other sections addressed the issues of ownership and the TransCanada proposal.

"They're basically saying, 'You're not going to run roughshod over us in Canada without a fight,"' Therriault said.

Republican Sen. Ralph Seekins of Fairbanks said any competing project that claims it can best serve the state deserves scrutiny. As chair of the Senate Special Committee on Natural Gas Development, he said he would give those projects an opportunity to present their proposals.

"We will invite (TransCanada) to do that," he said.



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