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TransCanada, Denali 'Marching Toward an Open Season'

Although Alaska's lawmakers have given their blessing to TransCanada Corp. for its plan to build a gasline from the North Slope to the Alberta Hub in Canada, that project's competition with a proposal for a similar pipeline from BP and ConocoPhillips, known as Denali, is anything but over.

"It really doesn't mean anything for us," Denali President Bud Fackrell said of TransCanada's recently awarded license under the Alaska Gasline Inducement Act (AGIA). "The granting of this license is not going to affect our work program as long as the state ensures that we've got a level playing field on getting permits. We're marching on. Our first milestone is to start an open season by the end of 2010."

Following the announcement of the Alaska Senate's vote approving TransCanada's license (see NGI, Aug. 4) TransCanada CEO Hal Kvisle said, "This ratification of our license under AGIA will facilitate TransCanada's continuing commercial negotiations with potential shippers, improving the likelihood of a successful open season and the construction of a natural gas delivery system from Prudhoe Bay to Lower 48 markets."

TransCanada said it will now move forward with project development, which will include engineering, environmental reviews, aboriginal relations and commercial work to conclude an initial binding open season by July 2010. The company also said it will continue its efforts to align with potential shippers. If sufficient firm contracts are secured in the open season, TransCanada would begin construction after regulatory approvals are received, with a target to have the pipeline in service by September 2018.

Fackrell, who was named president of Denali in June (see NGI, June 16), told NGI last week that his company had 80 workers in the field recently and that depending on who is scheduled to work, 60-80 employees are at work in the field on the Denali project. That number may peak at 100 this summer. Fackrell said he's about half done staffing his management team and he plans to announce the opening of Denali's headquarters in Anchorage soon. He said the company will be taking about 45,000 square feet of office space.

That physical presence will surely get some attention locally, as will Denali's spending, which Fackrell said is expected to be about $40 million this summer and about $600 million over the next 36 months "to ensure that we have a viable cost estimate that our shippers can have confidence in."

Projecting costs accurately and keeping them down will be critical to Denali and TransCanada as they compete with their respective open seasons, which is when Fackrell said he expects a decision on which project moves forward will be made.

"I think what's happening now is we have two pipeline projects that will be marching toward an open season," he said. "We already have been approved in the Federal Energy Regulatory Commission (FERC) prefiling process [see NGI, June 30]. I would assume that TransCanada would do the same thing. I think that FERC is going to be allowing both parties to move forward and prepare for open season. Of course, our major goal is having a successful open season, which is having a tariff system that gives our shippers confidence and...is attractive to them. I think those are the kind of things that are going to dictate which pipeline project moves forward from there."

Denali has had no trouble getting an audience with the FERC or with Drue Pearce, the federal coordinator for the Alaska gas pipeline (see NGI, July 21). Joseph Kelliher, chairman of the FERC, and Commissioner Philip Moeller were in Alaska visiting Denali recently and so was Pearce, Fackrell said.

"We're very involved with them and they're going to get all the information they need," he said.

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