May 28, 2008

Natural Gas Distribution

TransCanada moves to ahead in race to build Alaska-Alberta pipeline

Richard Gilbert

staff writer

Calgary-based TransCanada has regained its status as the front-runner in a race to build a multi-billion dollar natural gas pipeline from Alaska to Alberta.

Last November, the Alaskan government began reviewing proposals for a pipeline to move natural gas through the Yukon, British Columbia and Alberta to markets in the U.S. Midwest.

Six companies including TransCanada Corp., and a joint venture between ConocoPhillips and BP PLC submitted proposals that were assessed to determine if they meet the requirements of the Alaska Gas Inducement Act (AGIA).

The governor announced early this year that the application from TransCanada was the only proposal that met all the mandatory requirements set out in AGIA.

However, TransCanada faced mounting competition when BP and ConocoPhillips announced they are combining resources to start construction on their own pipeline.

Alaska Governor Sarah Palin and the state’s administration put TransCanada back at the head of the race last week, when they tipped their hat in favour of TransCanada’s US$26.6-billion natural gas pipeline plan over the competing proposal from partners ConocoPhillips and BP PLC.

“This plan puts Alaskans first,” Governor Palin said during a press conference.

“Everything we asked for in AGIA to protect Alaska’s interests is in the TC (TransCanada) 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.”

TransCanada Corp.’s proposal included building a 48-inch diameter, mostly buried pipeline, which will move natural gas 2,700 kilometres from Prudhoe Bay in northern Alaska through northern B.C. to link with the pipeline grid in northwestern Alberta.

The Alaska section will be about 1,200 kilometres in length with six compressor stations at startup and five natural gas delivery points in Alaska.

“We spent months reviewing the TC (TransCanada) Alaska project and there are many reasons why this project stands above other proposals and deserves to receive the AGIA license,” said Tom Irwin, commissioner with the Department of Natural Resources.

ConocoPhillips and BP proposed their own US$30 billion natural gas pipeline project called Denali.

Their plan is to build a 3,200 kilometre mile long buried large-diameter pipeline to the Alberta Hub.

The submission presented an option to move gas to Alberta and then on to Chicago through a bullet line, which means the gas would bypass the Alberta grid.

The Alberta system is largely owned by TransCanada.

The AGIA findings were presented to the legislature on the week of May 19.

The legislature has 60 days to approve the license.

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