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Palin pushes TransCanada project

by Bill McAllister
Wednesday, May 28, 2008

The Palin administration began its sales pitch for awarding a gas pipeline license to the Canadian company TransCanada.

The administration is holding a three-day public forum on TransCanada's application to build the 1,700-mile line, trying to gain support from the public and the Legislature before a special session begins Tuesday.

But lawmakers want proof her project is best for the state.

Gov. Palin kicked off the public forum Wednesday morning in front of about half the Legislature and dozens of other interested parties. She's trying to make the case that after decades of dashed hopes, a gas line is finally on the horizon.

The governor says her Alaska Gasline Inducement Act created competition for commercializing North Slope gas.

As she recommends to legislators that they award a gas line license to TransCanada, BP and ConocoPhillips say they are pursuing a project outside of AGIA.

"The problem is we can't afford to keep craving and waiting and hoping and dreaming about a gas line," said Gov. Sarah Palin. "It's time to get the thing built."

Palin says under AGIA TransCanada has committed to moving the project forward under a known timetable, as well as meeting other state objectives.

"Benchmarks, reasonable transportation rates for those who want to ship gas through that pipe, distance-sensitive rates for Alaskans, pipeline expansion provisions and gas available in-state and for the rest of the nation -- those are just a few of the commitments that meet the terms that are crucial to the success of getting our gas to market.

"They're vital to serving Alaskans. Again, we don't have any of those commitments with any other plan or proposal," Palin said.

As they prepare to go into special session next week to consider the gas line license, legislators are split about whether BP and Conoco's Denali Project affects their decision on TransCanada.

"And so is it a distraction?" asked Rep. Mike Chenault, R-Nikiski. "If you're an AGIA supporter, it probably is a distraction. If you're trying to look at the interests of Alaska and how to move Alaska forward, you certainly have to take that into consideration whenever you have two of the major players in the state that are saying, 'We're ready to build a pipeline.'"

Rep. Mike Doogan remains skeptical about the producers' project.

"It sort of keeps them in the game, which is why they're doing it, but I don't think that the prospect of a producer pipeline is sufficiently appealing to enough legislators to derail the TransCanada proposal," said the Anchorage Democrat.

The Legislature has 60 days, starting Tuesday, to make a decision on TransCanada, or else the application dies from inaction.

Some lawmakers say that's possible.

"I think it's a very viable project and if we don't get going on that project in the immediate future, we're going to suffer the long-term effects of sitting and waiting and doing nothing," said Sen. Tom Wagoner, R-Kenai. "And that's my biggest fear."

The Senate's majority leader believes there are still many reasons for the Legislature to be split on the subject.

"You know, there are folks that want the TransCanada proposal to go down in flames so that the Denali Project could go forward," said Sen. Johnny Ellis, D-Anchorage. "The three major producers are calling on their allies in the Legislature, or will soon be calling on their allies in the Legislature, to vote down the TransCanada proposal so they'll have their day in the sun."

This summer, lawmakers will decide if AGIA is the path to a pipeline, or just another dead end.

In addition to the producer's competing project into Canada to Lower 48 markets, there will be some support in the Legislature for an all-Alaska project involving a pipeline to tidewater and shipping out liquefied natural gas on tankers, an option the administration says is not as lucrative as TransCanada's proposal.

There also could be some pushing for a so-called bullet line to get gas to Alaskans faster than the minimum of a decade it will take to get the bigger project operational.

As for the value of the TransCanada project, there are different scenarios for prices and therefore a range of estimates. But according to the Palin administration, the state could receive $66 billion in revenue over the 25-year life of the project.

To put that in perspective, that's more than 51 times as much money as the governor proposes to spend on her plan this summer to help Alaskans with high energy costs.

Meanwhile, the administration says that by selling their gas for the pipeline project, the producers would realize rates of return of 50 percent for producing the gas, for a profit of $13.5 billion.

Contact Bill McAllister at bmcallister@ktuu.com