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TransCanada Defends Its Alaska Pipe Route Against Enbridge Challenge

TransCanada PipeLines owns the right to build the Canadian half of the Alaska project and has deliveries of about 3 Bcf to the United States to prove it, according to company president Hal Kvisle.

About 30% of Canadian natural gas exports only flow to Chicago and southern California because TransCanada subsidiary Foothills Pipe Lines made the supplies possible by being installed 20 years ago as the "prebuild" of the dormant Alaska Natural Gas Transportation System, Kvisle said.

He suggested the Foothills system is the live proof which clinches TransCanada's case that the 1970s Canada-U.S. treaty and legislation on the ANGTS remain in force. Rival Enbridge Inc. has no leg to stand on when its president, Pat Daniel, urges the Canadian government to discard the old regulatory apparatus as obsolete and have the National Energy Board hold a new competition for rights to build Canada's share in the mammoth pipeline.

In a speech delivered in Alaska, where there is also American interest in making a fresh start, Daniel said: "Enbridge is firmly of the view that if the Canadian government relies solely on the NPA (Northern Pipeline Act, cornerstone of the ANGTS apparatus in Canada), it will create project uncertainty and delay, if not stall it in its tracks."

Kvisle said the old legislative and treaty apparatus stands out instead as the most efficient vehicle for making sure the regulatory aspect of the Alaska project works smoothly and efficiently once the commercial side comes together. The Canadian government will review the ANGTS arrangements including the NPA but is setting no deadlines for coming to any conclusions, Natural Resources Minister John Efford said recently.

Using the ANGTS apparatus will enable the industry to skip a giant step, Kvisle pointed out. The treaty and legislation were only put together after the NEB reviewed the alternatives and approved the package that was eventually partially installed as the Foothills "prebuild."

From TransCanada's point of view, the plan has worked exactly as intended -- as a means to establish markets for northern gas and generate a revenue stream to help finance completion of the missing arctic link when it is required to replace Canadian supplies with Alaskan production. The old ANGTS apparatus, including a Northern Pipeline Agency that officially still exists on Canada's books and generates periodic reports on the project's status, remains the ideal mechanism for completion of the international development, Kvisle said.

The system continues to spell out an internationally agreed way "to expedite approval" when the final plan comes together and the project needs to secure passage through Canada, the TransCanada president pointed out. "We intend to continue working with the State of Alaska, the Canadian government, Alaskan producers and key players in the North American gas market to bring the Alaska pipeline to fruition," Kvisle told a telephone conference call for TransCanada's year-end results.

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