Alaska Dispatch

TransCanada Corp. officials said they'll hold a press conference on Friday with partner ExxonMobil - one of the North Slope's three biggest oil and gas producers - to go over its plans to file paperwork with the Federal Energy Regulatory Commission for an open season.

That's the period when the pipeline company will lay out detailed information on its project, including estimated costs and the price for shippers to move gas down the line. It's also the time during which shippers with gas to get to market or customers seeking gas can bid on space in the pipeline.

And in other terms, it's the point at which Alaskans can see what companies are interested in the project. The open season has long been offered up as a telling point when we'll know how commercial the project may be.

TransCanada's filing with FERC kicks off about three months of bureaucratic procedure, including a public comment period, before the actual bid window opens between May 1 and the end of July.

If companies make bids during the open season, they will likely be conditional. What kinds of conditions? Typically, conditions could include the pipeline company pulling the project financing and regulatory approvals together within a certain timeframe and a given cost range. In this case, conditions are also expected to involve the state and producers reaching some sort of agreement on fiscal terms - tax rates, royalty issues and time frames.

Regardless of the open season outcome, TransCanada is bound by the Alaska Gasline Inducement Act to carry the project on a couple years in pursuit of a FERC permit that allows construction. In exchange for taking that risk, TransCanada is getting up to $500 million in state money - reimbursements for expenses. They'll recoup 50 percent of costs going into the open season, and 90 percent of costs post-open season.

And here's the final caveat. Results of the open season - who bids on what and under what conditions - don't have to be released to the public unless they result in firm agreements.

A similar but separate project by the Slope's other two big producers, BP and ConocoPhillips, dubbed Denali, is scheduled for a little later in the year.

Anyone who has followed Alaska's 40-year quest to commercialize its gas knows better than to bet on what's going to happen, but here are a couple things to consider.

First, Gov. Sean Parnell and Sen. Lesil McGuire, R-Anchorage, are among several who say Denali's recently announced open season dates may be a sign that the two projects are coming closer together - and only one project will ever be built, due largely to the $26 to $40 billion price tag. Watchers say the two projects are likely to merge at some point.

Second, companies could negotiate with TransCanada before an open season starts to commit gas to the line. If so, those agreements would be made public within 10 days. That would indicate early support for the project and be a sign that companies, at least, see real commercial potential.

And finally, the project cost - $26 billion - is a couple years old. Estimates have ranged up to $40 billion, and we'll see what kind of updated figures TransCanada has available.

Name

Email

Title

Comment

Subscribe via email (registered users only)

Post