NGI The Weekly Gas Market Report / NGI All News Access

TransCanada, ExxonMobil to Launch AK Pipeline Open Season

August 3, 2009
/ Print
| Share More
/ Text Size+

ExxonMobil and TransCanada Corp. will launch an open season early next year for capacity on the proposed $26 billion Alaska natural gas pipeline project, which is targeted to make deliveries into Canada and the Lower 48 by 2018.

"Things are lining up the way we would like them to," said TransCanada CEO Hal Kvisle during an earnings conference call last Thursday. After meeting with the new Alaska governor, Sean Parnell, Kvisle said "the state's direction remains unchanged; we had a good discussion about the project." He pointed out that TransCanada has two of the most important parties on board: the state and the largest Alaskan reserve holder, ExxonMobil. "We look forward to gaining support from the other producers."

ExxonMobil has consistently held to a window for the gasline between 2015-2018, based on depletion expectations for the Prudhoe Bay oil reserves and on the market, Kvisle said. "This is the most sensible time" as the need for re-injection of the gas to produce oil will have diminished. TransCanada is targeting start of construction for the 4.8 Bcf/d line in 2016 with deliveries beginning in 2018.

Responding to a question as to whether the Alaska project could connect with the proposed Mackenzie Gas Project, the other major Far North long-line, as a joint effort, Kvisle said he expected Alaska gas to completely fill the 48-inch diameter pipeline. To add Mackenzie Valley gas to the line, it would be necessary to back out Alaska gas, something he said the Alaska sponsors would not be happy about. He also pointed out that the state of Alaska also would not support a joint pipeline route that did not go through Alaska.

A timetable for the open season also emerged from ExxonMobil's quarterly earnings conference call on Thursday. David Rosenthal, ExxonMobil investor relations chief, said the two companies are working to complete a pipeline plan and "planning for an open season in 2010 is under way." ExxonMobil signed on to TransCanada's plan for the 1,700-mile pipeline, which has been ratified by the state, in June (see NGI, June 15). The other major reserve holders, BP plc and ConocoPhillips, are backing another pipeline plan for a Denali gas pipeline.

Rosenthal was asked why ExxonMobil chose a pipeline operator as a partner instead of the producers. "I wouldn't want to get into specifics. It was a combination of Exxon and TransCanada as bringing together unrivaled expertise on the project's parameters, and on each of the things that each party brings to the table. We feel good about working with TransCanada, and we plan to move forward with them."

Rosenthal said it was "too early" to talk about milestones for the proposed gasline. "We are moving the project along...The real next step is the open season, and we are actively working on that...We're looking forward to the 2010 open season..."

©Copyright 2009 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus