TransCanada touts substantial interest in Alaska gas line

TransCanada Corp. received a number of bids for a substantial volume of Alaska natural gas, the first step toward building a gas pipeline, the Calgary-based company said Friday.

But the bids also came with significant conditions, and the months-long process of trying to work out those details with potential gas shippers means Alaskans are still little closer to knowing whether the long-talked-about gas line will ever be built.

Moreover, TransCanada officials won't say whether the bids were for an Alaska natural gas pipeline from the North Slope into Canada for sale to North American markets or for a line that would move gas to Valdez for processing and liquefied shipment overseas.

Bids come with 'key conditions'

TransCanada, which is partnering with Exxon Mobil Corp. in a state-supported venture called the Alaska Pipeline Project, "received multiple bids from major industry players and others for significant volumes" of Alaska gas, Palmer said.

He immediately cautioned that the bids were made with "key conditions" that would need to be resolved before a pipeline -- estimated to cost up to $40 billion -- could eventually be built. But Palmer said he was "encouraged by the bids received, the interest expressed in our initial open season and the shippers' willingness to take the ongoing steps needed to continue to advance the project."

Palmer said the next step would be to begin negotiations with the shippers that could eventually lead to "precedent agreements," in essence legal contracts that govern shipping terms and conditions. He said he hopes those would be in place by the end of the year.

Canada or Valdez?

The opening of the bids, in Houston at 2 p.m. Alaska time, marked the end of the 90-day period in which the Alaska Pipeline Project sought to test interest by potential customers to ship North Slope gas either to a central facility in Alberta, Canada, or to a liquefied natural gas (LNG) plant in Valdez. Palmer also declined to say if the bids expressed interest in either the Canadian line or the Valdez line. He did say that in recent weeks potential bidders reviewed documents for both options when they visited data rooms that had been set up in Anchorage, Calgary, Whitehorse and Houston.

A separate open season is also underway for the Denali project, a joint venture of BP and ConocoPhillips that envisions a gas line into Canada. The open season closes Oct. 4.

Palmer reiterated Friday concerns that revealing details of the bids could "disadvantage our project" because of the competing Denali open season, as well as create problems for bidders who might also be interested in other projects elsewhere.

The state, through the Alaska Gasline Inducement Act, has already agreed to spend up to $500 million to get the pipeline off the ground, primarily for costs related to the open season and getting the precedent agreements in place. The proposal was first championed by former Gov. Sarah Palin and is now backed by Gov. Sean Parnell, who is running for election this year.

Palmer estimated TransCanada has spent about $150 million since AGIA was passed through the close of the open season Friday, and that the state will be on the hook for about half of that once allowed costs are agreed upon. State officials said Friday that it's likely the entire $500 million will be spent whether the gas line gets built or not because it will be needed to keep the process moving forward.

But the secrecy of the bidding process when so many public dollars are on the table has drawn criticism, especially from political opponents of Parnell, who issued a prepared statement Friday calling the apparent good turnout of bidders a major milestone. He indicated that Alaskans interest will be projected by the terms of its license agreement with TransCanada.

Parnell's opponents want bids unveiled to Alaskans

Ralph Samuels, a former state lawmaker who is running against Parnell in the Aug. 24 GOP primary, issued a press release saying Alaskans deserve to see the bids and the conditions now, not after the election.