This Friday, no news may be good news for Alaska's decade-long hopes for getting the state a way to finally get its huge natural gas reserves to markets where it can be sold.
Calgary-based TransCanada Corp., which is developing a pipeline in conjunction with the state under the Alaska Gasline Inducement Act, will conclude Friday its first "open season," during which it solicits bids from customers of the estimated $40 billion pipeline.
Those may come from the North Slope leaseholders, including Exxon Mobil Corp., BP p.l.c. or ConocoPhillips Co., gas purchasers, middlemen, or others.
TransCanada's Tony Palmer, vice-president for Alaska gas development, said the company will announce immediately if, as some critics have speculated, there are no bids by the close of business Friday.
"If we get no bids, we will say so very quickly," he said.
More likely, however, is that there will be bids submitted with conditions.
If that's the case, it may be early next year before TransCanada can release the results of the open season, he said.
That's not good enough for two of the candidates for governor. Republicans Ralph Samuels and Bill Walker, who have both opposed the AGIA process, have called for the open season results to be released before the election. The primary election in which they are competing is Aug. 26, while the general election is Nov. 4.
Gov. Sean Parnell was part of former Gov. Sarah Palin's administration when the Alaska Legislature adopted the AGIA process to jump-start the natural gas pipeline process, and has strongly backed the pipeline effort.
Under former Gov. Frank Murkowski, and in 2007 as AGIA was being developed, the state's big three oil producers and natural gas holders insisted they, and only they, could build the pipeline, and said the state should provide tax incentives for them to do so.
AGIA offers a $500 million incentive for initial pipeline work, in exchange for development of a pipeline to be run with conditions to benefit Alaska, such as open access requirements.
After Palin pushed AGIA through, ConocoPhillips and BP reversed course and began their own pipeline, called "Denali." Exxon Mobil joined TransCanada's effort, formally called the "Alaska Pipeline Project" but more often referred to as the "AGIA" line. It was granted the license after a summer in which the Legislature spent two month in Juneau debating it in special session.
Denali is a few months behind the AGIA line, with its open season concluding Oct. 4.
Palmer said Wednesday that the results of TransCanada's open season, if it does produce conditional bids, will probably not be available for 100 business days while the conditions are negotiated.
The process has so far been "unusually transparent," but releasing bids now could put customers at a business disadvantage, especially with another open season ongoing, Palmer said.
If the open season produces no bids, Palmer said TransCanada will continue push forward with the development of a pipeline. The company has already spent $150 million on work so far, and this summer has field crews doing land, hydrology, cultural, engineering and other work.
Somewhat less than half that amount has been reimbursed by the state as part of the $500 million AGIA incentive. After the open season, the reimbursement rate for qualified expenses jumps to 90 percent, meaning the state will be footing most of the cost of getting a Federal Energy Regulatory Commission license in the project's early stages.
TransCanada doesn't have any choice, Palmer said.
"If we receive no bids on Friday, we will be continuing with the project to meet our obligations to the state," he said.
Palmer said that if bids do come in with conditions that are outside TransCanada's power to meet, such as new tax terms from the Legislature, those may have to be negotiated independently.
"If a shipper indicated they need resolution of fiscal terms, we'll indicate they should go talk to state," Palmer said.
If a bidder wants TransCanada to be an intermediary, they'll have to release the company from the bid's confidentiality requirements, he said.
Palmer said he doubted that those major oil companies would need to use TransCanada as in intermediary.
"They're big boys and I think they'll go and directly talk to the state on those matters," he said.
Contact reporter Pat Forgey at 523-2250 or firstname.lastname@example.org.
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