State decision expected soon on pipeline changes

JUNEAU — The state could decide this week whether to give TransCanada Corp. permission to shift its attention to a liquefied natural gas project, capable of overseas exports.

TransCanada has asked the commissioners of Natural Resources and Revenue to allow it to "curtail" its work on a line that would run from Alaska's North Slope into Alberta, Canada, to focus on a liquefied natural gas project, said Tony Palmer, the company's vice president for major projects development. TransCanada's piece of that project would be the pipeline.

Last week, the North Slope's major players announced that they were aligning with TransCanada to pursue an alternative liquefied natural gas project. Gov. Sean Parnell wanted the parties to get on the same page as a way to jumpstart seemingly stalled progress on a line.

Parnell said that if the market had truly shifted from the Lower 48, he wanted the companies to unite behind a project that would allow for liquefied natural gas exports to the Pacific Rim.

Deputy Natural Resources Commissioner Joe Balash said a lot of the work that has been done on the Alberta option — notably on its northern stretch — would be transferable to a liquefied natural gas project.

TransCanada, which has an exclusive license with the state to pursue a line, had been focused mainly on the Alberta option but hadn't announced any agreements with producers for it. TransCanada in January filed environmental reports with federal regulators for the proposed line, and it faces an October deadline to apply to the Federal Energy Regulatory Commission for a certificate to build and operate the pipeline.

Under terms of the Alaska Gasline Inducement Act, under which TransCanada has been proceeding, the company can change its plans due to factors unforeseen at the time of licensing or due to regulatory actions, but that is subject to approval by the commissioners. Any changes cannot diminish the value of the project to the state or diminish the project's likelihood for success.

Balash said Wednesday that a decision could come yet this week.

Among the issues that need to be addressed, he said, are the October filing deadline — TransCanada cannot deviate from it unless it's relieved of the obligation or the date is pushed, he said — as well as how TransCanada will satisfy its requirement to solicit the market every two years to gauge interest in a project.

Balash said there's a "tremendous amount" of field work and engineering that would be needed if TransCanada were to complete its application by fall.

TransCanada last solicited the market in 2010, holding what's called an open season for three months. TransCanada offered two options: a line through Alberta and a shorter line that would run from the North Slope to Valdez, Alaska, where gas would be liquefied at a facility that an unidentified entity would build and ship elsewhere.

Another solicitation is planned for this year, Palmer said. While details of the solicitation are being worked out, he said TransCanada's intent is to offer an Alberta option and a liquefied natural gas option. Later this year, TransCanada hopes to have an initial assessment of a project, like its destination and volume, Palmer said.

Balash said that if TransCanada were to shift gears, and work was to continue under the license, TransCanada would be limited to the $500 million in reimbursable costs from the state that it has been working with.

04/05/2012 - 7:29am