TransCanada’s proposal for a gasline to commercialize Alaska’s vast North Slope reserves depends upon the state’s three major producers “solving a maze of problems in Canada…and does not merit state support,” a former Alaska governor wrote in a recent newspaper editorial.
Alaska Gov. Sarah Palin and her natural gas pipeline team should initiate a second round of applications under the state’s Alaska Gasline Inducement Act (AGIA) process, and if that does not produce a “viable alternative” to the TransCanada proposal, “the state should build an all-Alaska gasline itself,” wrote Walter J. Hickel in an editorial published Saturday in the Anchorage Daily News.
Hickel was Alaska’s governor from 1966 to 1968 and from 1990 to 1994. He served as U.S. secretary of the interior from 1969 to 1970. He joins another former governor in praising Palin for brining integrity to the gasline process but also calling for the consideration of alternatives to TransCanada’s project, the only one to qualify for consideration under AGIA. In February former Gov. Steve Cowper told NGI that “it would probably serve some useful purpose for there to be a reconsideration of shipping North Slope gas across the top to the Mackenzie Pipeline. It would upset a lot of apple carts, but if we’re speaking about addressing incremental gas needs just in time, that would seem to be a lot easier done than this big bullet pipe” (see Daily GPI, Feb. 25).
In his editorial, Hickel recounted the days of former Gov. Frank Murkowski, during which he said the state gave away far too much to Alaska’s big three North Slop producers — ExxonMobil, ConocoPhillips and BP — during gasline negotiations. “The more they negotiated, the worse the deal became,” wrote Hickel. “By the time they had a contract, the state had accepted the majority of the industry’s demands. The list of giveaways was outrageous, including absurdly low state tax rates locked in for 30 years for oil and 45 years for gas.”
Last week Tony Palmer, TransCanada’s Alaska vice president, met with lawmakers to explain the company’s gasline plan (see Daily GPI, Jan. 7). He was questioned about the potential for TransCanada to face a $9 billion liability under a previous pipeline development consortium. Dissolution of the partnership behind an earlier project provided that TransCanada would owe former partners for their investment if it went forward with a project in the future. With interest, the obligation is said to have grown to around $9 billion. But TransCanada contends that the liability really does not exist and would not affect current gasline plans even if it did.
Palmer told NGI previously, “There’s no $9 billion liability today because there’s no [pipeline] asset today.” Palmer said even if the company does face a liability, the cost of that liability would not be borne by shippers on any gasline it develops in the future (see Daily GPI, Jan. 28).
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