Legislature starts to question TransCanada’s role in building LNG line

5839204_mMembers 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.

Contact Amanda Coyne at amandamcoyne@yahoo.com

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.


5 thoughts on “Legislature starts to question TransCanada’s role in building LNG line

  1. Princeton

    I am disappointed that the State of Alaska is promting and protecting Trans Canada. Just because Exxon wants them in the deal doies not mean it is gooid for Alaska. The state should open up more to other potential contractors.

  2. Gunner

    Get away from those Cannooks. Buy USA. This project is the biggest construction project in America. It should be built by Americans. I will oppose any and all politicians that give Trans Canada a favored advantage over USA companies. Buy America!

  3. Lynn Willis

    Thank you Amanda for this report and letting us know earlier this week that there seems to be disharmony aboard the ship of state regarding this latest pipe line project. This latest project has the potential to cost we Alaskans a lot of money which we truly now cannot afford plus we consumers may not realize any benefit if our domestic gas prices exceed what we could have paid for imported LNG.

    We are a sovereign state not an investment bank. Why should we assume that another group of albeit well meaning Alaska Legislators and Governor, which includes many in the legislature or executive branch who brought us AGIA in the first place, are any more capable of negotiating this deal? Despite another round of expensive consultants what is different this time around other than a lot more gas has been discovered world wide? Remember AGIA has bound us to Trans Canada since 2008 despite not an inch of pipe being purchased or a cubic inch of gas being pledged by the producers and with no concurrence by the AOGCC to release any gas that could better serve to extract oil. We apparently have no clear justification to end our relationship with Trans Canada unless we pass SB138 or risk huge financial penalty for breach of contract. .

    I would advise all interested Alaskans to listen to the Senate Resource Committee hearing held on Friday February 7, 2014 at 3:30PM. In that hearing Mr. Pawlowski of the DNR states that we have reimbursed “roughly 330 million through the AGIA phase”. Slide number 3 of Mr. Pawlowski’s presentation during that hearing sheds some light on our commitment to Trans Canada. A note on the slide states that only after passage of SB138: “State and Trans Canada mutually abandon AGIA license” and “ No more reimbursement”.

    Otherwise when does this relationship with Trans Canada end or at least when do the reimbursements end? Also, what is this process doing to the chances of success for the upcoming AGDA/ASAP project open season if yet another Alaska pipe line project is on the horizon?

  4. Balash Basher

    Does Anyone Think That DNR Commissioner Balash f competently sitting across the table from a bunch of Exxon lawyers ?

  5. Doubtful in Fairbanks

    What makes anyone think this is different than the last several attempts or acts to build a gas pipeline. The State of Alaska is so unprepared to sit at the table even with the producers. The people raising the concerns about TC are doing the right thing for sure. Their involvement is not good for the state.

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