Coinciding with the commencement of the Alaska Pipeline Project’s simultaneous open seasons in Alaska and Canada, TransCanada Corp. on Friday reported that weaker power prices and higher business development costs lead to an 11% drop in 1Q2010 net income from 1Q2009.

The Calgary-based diversified energy firm posted 1Q2010 net income of C$296 million, or C43 cents/share, down from C$334 million, or C54 cents/share, during the same quarter last year. Earnings excluding certain one-time charge were C$328 million, or C48 cents/share, down 4% from C$343 million, or C55 cents/share, for 1Q2009.

“TransCanada’s pipeline, power and gas storage businesses posted solid results against the backdrop of an economy that is slowly moving toward recovery,” said TransCanada CEO Hal Kvisle, who in early April announced his retirement effective June 30 (see Daily GPI, April 16). “The company’s disciplined, low-risk approach produced comparable earnings of C$328 million — within 5% of our earnings in the first quarter of last year. Weaker power prices and higher business development costs associated with advancing the Alaska Pipeline Project contributed to the slightly lower business unit results. On a per share basis, lower reported earnings were primarily due to an increase in the number of shares outstanding resulting from our prudent approach to financing our unprecedented capital program.”

Friday also marked the next step for the monumental Alaska Pipeline Project, a joint effort between TransCanada and Exxon Mobil Corp. to develop a natural gas pipeline under the Alaska Gasline Inducement Act (AGIA). The open season launched Friday will run through July 30.

The competing BP and ConocoPhillips-backed Denali — The Alaska Gas Pipeline, filed its open season plan in April with the Federal Energy Regulatory Commission (see Daily GPI, April 8).

Two options will be provided in the Alaska Pipeline Project open season, TransCanada said. The first option is a pipeline from Alaska’s North Slope, through Alaska, the Yukon Territory and British Columbia, to Alberta, a distance of approximately 1,700 miles, where the gas can be delivered on existing pipeline systems serving major North American markets.

Option number two would transport natural gas from the North Slope to Valdez, AK, a distance of approximately 800 miles, where it would be converted to liquefied natural gas in a facility to be built by others and then delivered by ship to North American and international markets. The project’s sponsors anticipate that the results of the open season will determine the preferred option.

“Both options would provide opportunities for Alaska communities to acquire natural gas from a minimum of five delivery points on the pipeline,” TransCanada said. “The Alberta option would additionally provide the opportunity for local natural gas deliveries in Canada.”

For both options a gas treatment plant (GTP) and a Point Thomson natural gas transmission pipeline are standard. The GTP would be built next to the North Slope’s Prudhoe Bay facilities to treat the gas so it can be shipped on the pipeline. An approximately 58 mile pipeline would connect the natural gas supplies of the Point Thomson field to the plant and pipeline.

TransCanada said Friday that the project will work with shippers over the summer and fall to resolve any issues within the project’s control. Other key issues such as Alaska fiscal terms and natural gas resource access at Point Thomson will need to be resolved between shippers and the State of Alaska. The company said it expects the results of the open season to be available near the end of 2010.

As for the Mackenzie Gas Pipeline Project (MGP), which would run 746 miles from Inuvik to the top of TransCanada’s NOVA gas network in northern Alberta, TransCanada and the other partners involved are continuing to pursue approval. The focus is on obtaining regulatory approval and the Canadian government’s support of an acceptable fiscal framework. The National Energy Board recently concluded the final argument hearings for the project and is expected to release its conclusions on the project’s application in September 2010.

In early April Kvisle said the regulatory process in Canada has pushed back the timeline on the pipe project (see Daily GPI, April 5). MGP has “been through the most horrendous regulatory process that mankind has ever invented,” he said.

Going forward, Kvisle said most of TransCanada’s current projects are on track. “TransCanada continues to make excellent progress on an outstanding suite of major projects that are part of our C$22 billion capital program,” Kvisle said Friday. “We look forward to first oil reaching refineries in Wood River and Patoka, Illinois through our Keystone pipeline system in the coming months. The North Central Corridor gas pipeline is now operating, our Halton Hills generating station is nearing completion and construction is set to begin this summer on our Groundbirch gas pipeline that will bring BC shale gas to market.”

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