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Alaska Awards North Slope Pipeline License to TransCanada

The Alaska Gasline Inducement Act's (AGIA) 20-month process came to its conclusion Friday with the approval of a natural gas pipeline license for TransCanada Corp. on a state Senate vote of 14-5.

The legislation awarding the license to TransCanada previously passed the House on a vote of 23-16 (see NGI, July 28). The company now stands eligible for a state subsidy of up to $500 million to help it develop the long-sought pipeline to commercialize Alaska's vast North Slope natural gas reserves.

During a hastily called press conference Friday afternoon Gov. Sarah Palin -- who made the gasline the top priority of her administration -- was elated when she thanked lawmakers and members of her gasline team. "Alaska has never in our history before had a commitment to build this line. Now we do."

She was quick to emphasize that the state stands ready to work with all parties to move the project forward, particularly oil and gas producers with whom Palin has at times been at loggerheads. Her administration has garnered criticism in some quarter for not being welcoming enough to producers. Friday Palin said her administration would sit down with the producers that want to participate in the gasline, including smaller producers. Commitments from producers will be necessary to finance the project.

"We think this is a significant milestone day for Alaska and it's certainly that for TransCanada," said Tony Palmer, TransCanada vice president of Alaska operations, during the press conference.

Palmer said the company would be working to advance the project to an open season in two years for a project that will move gas to Lower 48 markets and potentially to international markets via an optional liquefied natural gas (LNG) component. "We have worked on this project for 30 years, as some of you have as well...It is a huge and momentous day for TransCanada, and we look forward to success with you.... There are still many miles to go before we sleep."

The gasline would be the largest construction project in the history of North America, the state said Friday. The line would ship 4.5 Bcf/d through 48-inch diameter pipe. The line will also have the expansion capability of up to 5.9 Bcf/d. Further expansions would include a combination of additional compression and looping.

There still is a producer-backed pipeline proposal in the running to build the gasline, although not under the AGIA process.

TransCanada was the only successful applicant under the AGIA. Four others were disqualified for submitting applications that were deemed to be incomplete. Last month a competing gasline proposal backed by producers BP and ConocoPhillips was approved for pre-filing review at the Federal Energy Regulatory Commission (see NGI, June 30).

The project, known as Denali, is not in line for the same $500 million state subsidy that TransCanada could receive if it gets the AGIA license. The Denali backers say they don't need the subsidy, and that appeals to some Alaska lawmakers. However, the Denali proposal has been criticized for lacking the detail of the TransCanada proposal.

The TransCanada proposal is for a 4.5 Bcf/d, 48-inch diameter, mostly buried pipeline running 1,715 miles from a gas treatment plant at Prudhoe Bay on the North Slope to the Alberta Hub in Canada. The Alaska section would be about 750 miles long with six compressor stations at startup and five gas delivery points in Alaska. The application includes an expansion capability of up to 5.9 Bcf/d. Further expansions would include a combination of additional compression and looping.

According to the state, commitments made by TransCanada include:

"This plan puts Alaskans first. Everything we asked for in AGIA to protect Alaska's interests is in the TC Alaska project. In fact, because of the competitive process, TC Alaska's proposal is a better proposal than we'd even hoped for and everything in its proposal is binding and enforceable," Palin said at the time her gasline team selected TransCanada's proposal over the Denali proposal.

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