Members of the Alaska state Senate are beginning to question whether or not TransCanada is the right company for the state to partner with to build a large diameter natural gas pipeline that all told could cost more than $60 billion. The pipeline, which would carry natural gas from the North Slope to tidewater that would be shipped as LNG, would be one of the largest construction projects in the world. Legislation being considered this session, introduced by Gov. Sean Parnell’s administration, would begin to bind the state with TransCanada for generations.
However, the state has not put the newly conceived LNG project up for bid. Nor has it appeared to consider other companies that might partner with the state to build the line.
“It’s not Exxon, BP and Conoco’s responsibility to see that the state is aligned and to protect our interests. We have to protect our interests with TransCanada,” said Sen. Bert Stedman during a Senate majority press conference. Other members of the majority, including Sen. Peter Micciche, said during the press conference that they will look hard at the partnership.
The administration has proposed legislation that would begin the process of building the natural gas pipeline, a project that’ s been in the works for over 40 years. The initial legislation is just a start, the administration has said. However, it’s a start with a start at binding agreements and a multimillion dollar price tag attached to it.
TransCanada and Alaska go back a long way, most recently when it was the company chosen by the legislature in 2008 to build a pipeline to go from Prudhoe Bay through Canada. It was the only company then that designed a project to fit specific “must haves” that were delineated by Gov. Sarah Palin’s administration.
In exchange, the company was entitled to receive $500 million of state money to allow it to get to crucial commercial agreements with the companies that own the lease rights to the gas—ExxonMobil, BP and Conoco– and companies willing to ship the gas. For various reasons, those commercial agreements all dissipated. Legal contracts that the state has with TransCanada, however, haven’t.
Some legislators are wondering if the state has stuck with TransCanada simply to delay potential legal issues.
Democratic Sen. Hollis French would like the Senate Judiciary Committee to explore the legal contracts the state has with TransCanada. So far, however, Senate President Charlie Huggins hasn’t assigned that bill to the committee.
“There’s discomfort in the Capitol about whether we’re getting shoehorned into this new gasline deal with a partner that didn’t deliver in the last deal,” French said. “What’s the cost of shopping around?” he asked.
Legislators have likened the relationship with TransCanada to a marriage. French continued with the metaphor. “It’s like we’re staying in the marriage for the sake of the children without knowing who the children are,” he said.
The state has hired various consultants to help it understand that contracts. However, the bulk of committee testimony so far has been used by TransCanada, Exxon, ConocoPhillips, and BP, all of whose testimony appears to be coordinated.
Meanwhile, rumors persist that behind closed doors, some of the producing companies are also quietly questioning TransCanada’s role in the project.
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Correction: The original version of the story said that Sen. Hollis French was on the “Judicial” Committee. There is no such thing as a “Judicial” Committee. It’s the Judiciary Committee and Sen. Bill Wielechowski is now the minority member.