The Calgary-based pipeline company plans to hold in mid-2010 an open season for both development alternatives to transport North Slope natural gas to market.

"We are doing and will do the necessary work over the next 18 months to conduct an open season of equal validity for both locations," said Tony Palmer, TransCanada's vice president handling the Alaska gasline project. "Shippers can commit gas in either direction, or in both locations. After we see what the customers propose in response to our open season, we'll see whether there is sufficient gas to build to Alberta, or to Valdez, or to both, or to neither."

When briefly describing the two alternatives to state legislators during a Senate Resources Committee earlier this month, Palmer said that "…the market will decide where the gas goes."

The Prudhoe to Alberta gas pipeline, estimated to be about 1,700 miles long, would connect to the existing natural gas transportation infrastructure in northwestern Alberta, which would allow delivery of Alaska gas to a variety of Canadian and Lower 48 markets.

A Prudhoe to Valdez gas pipeline, roughly about 800 miles long, would likely include transportation by ocean-going liquefied natural gas tankers to other Pacific Rim ports, either in the Lower 48 or to Asian markets.

Palmer also told state legislators that TransCanada has been active in its continued discussions with potential shippers, part of his update on the company's current activities to advance the Alaska gas pipeline project.

"TransCanada has had discussions since August with potential customers who want delivery in Alaska, who want delivery in Alberta on the way to the Lower 48, and who want delivery to Asia," he said.

In a follow up response, Palmer told legislators that the LNG option from Valdez is being considered by "…potential customers that are examining that as alternative as they examine how to participate in our open season."

While the focus of the company's efforts under the Alaska Gas Inducement Act has been a Prudhoe to Alberta gas pipeline, Palmer noted that TransCanada's application filed in November 2007 included an LNG alternative.

"TransCanada has committed to provide all potential customers with the opportunity to nominate delivery to Alaskan customers, to the Alberta hub, or to Valdez in its open season," he said in an e-mail response. "Customers in the open season will determine the delivery points for their gas."

During a telephone interview, Palmer added that the two-option plan for the open season has been discussed in previous meetings with regulatory agencies. "They know we're looking at both," he said.

Over the past three decades, several different entities have looked at building a gas pipeline from Prudhoe to Valdez, then shipping LNG Outside. Asian markets have previously been targeted as the primary potential customers.

TransCanada's current competitor in advancing the Alaska gas project is the Denali coalition, formed about a year ago by North Slope oil producers BP and ConocoPhillips.

The two producers have considered the Valdez route and LNG option in past work examining development scenarios for the vast North Slope gas resource.

"They have concluded that an overland pipeline makes the most environmental and economic sense, and creates the most value for both the state and shippers," said David MacDowell, director of media and communications at the producer's Denali group.

More recently, the Alaska Gasline Port Authority has looked at the Prudhoe to Valdez gas pipeline to feed an LNG project.

The port authority, which recently teamed up with Japan's Mitsubishi Corp. to continue investigation of an LNG project, acquired rights to an LNG export license issued in 1989 to Yukon Pacific Corp.

Yukon Pacific also acquired in the 1980s a conditional right of way for that pipeline route from the state of Alaska, a permit that recently was denied renewal by Alaska Natural Resources Commissioner Tom Irwin, due to lack of progress required by the conditional permit.