NORTH AMERICA: Alaska favours TransCan

Only one of the five applications submitted for the exclusive right to build a natural gas pipeline to transport North Slope gas to market will advance to the next round of public scrutiny, Gov. Sarah Palin announced yesterday.

The application from TransCanada Alaska Co., LLC/Foothills Pipelines, Ltd., a subsidiary of Calgary-based TransCanada Corp. , was the only one that met all the state's requirements, she said during a press conference in Anchorage.

"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," Palin said.

The application will be evaluated by the state to determine whether it provides the maximum in benefits to Alaskans and merits issuance of the exclusive licence. As part of that, a 60-day public input period on TransCanada Corp's application opens today.

After that process, if the state determines it meets those requirements, the application will be forwarded to the Legislature for approval. Applications were submitted under the Alaska Gasline Inducement Act, or AGIA, passed by the Alaska Legislature in May 2007.

Other applications that were submitted but did not meet state requirements were from the Alaska Gasline Port Authority, AEnergia LLC, Sinopec ZPEB and Alaska Natural Gasline Development Authority.

Officials from those companies were notified Friday that their applications did not meet all the requirements set out by the law, and will not be evaluated further. TransCanada is a leading Canadian energy and pipeline company with a long interest in an Alaska gas line.

A North Slope gas line has been discussed since oil first moved down an 1,300-kilometre trans Alaskan pipeline in 1977. But the prospects only gained momentum in the last few years with natural gas futures trading in the mid-$7 range.

In 2006, former governor Frank Murkowski settled in principle with BP PLC, Exxon Mobil Corp. and ConocoPhillips Co. on fiscal terms -- taxes and royalties -- for producing the North Slope gas.

It would have frozen oil taxes for 30 years and gas taxes for up to 45 years for the three major oil companies.

Still, last year's deal did not guarantee a pipeline would get built; the hope was it would enable producers to move forward with a pipeline. The line would ultimately have delivered 4.5 billion cubic feet of natural gas a day, which is about seven per cent of the current U.S. demand.

But state legislators felt the deal had too many giveaways for big firms, including locking in the tax rates. The Legislature never voted on the deal. That led Palin, who took office 13 months ago, and her administration to chart a different course. Rather than negotiate with one group, her plans called for new guidelines designed to stimulate competition among oil and pipeline companies.

While energy analysts have estimated there to be about 35 trillion cubic feet of proved natural gas reserves in the North Slope, they believe that figure will rise in the future.

A large amount of natural gas comes to the surface when oil is being pumped from Alaska's large-but-dwindling oil fields. But for now, the industry reinjects the gas into the ground.


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