March 19, 2004 --- Vol. 10, No. 28March 2004

TransCanada proposes Alaska buy North Slope gas and guarantee shipments

TransCanada Corp. has proposed to Alaska’s governor and legislative leaders that the Calgary-based company would build a North Slope natural gas pipeline if the state buys the gas from producers at the wellhead and guarantees shipments on the line.

The company is looking for guaranteed tariff revenue for at least 15 years, with enough gas to fill the line carrying 4 billion to 4.5 billion cubic feet per day.

“We’re taking their suggestion under advisement,” said John Manly, spokesman for Gov. Frank Murkowski. Manly declined to confirm any details of the TransCanada proposal.

TransCanada declined to discuss its proposal or its meetings with the governor and legislators. “We don’t discuss our private meetings publicly,” said Hejdi Feick, company spokeswoman.

“They want the state to take the risk,” said Sen. John Cowdery, R-Anchorage, chair of the Senate Transportation Committee and one of several Republican and Democratic lawmakers who met with TransCanada the week of March 8 in Juneau.

The company made the point to the governor and legislators that Alaska stands to earn billions of dollars in taxes and royalties from the line, so it makes sense for the state to take some of the risk.

Although his preference would be for the state to stay out of private-sector dealings, House Finance Co-Chair Bill Williams said Alaska might need to consider “sharing some of the risk” if that’s what it takes to get the pipeline built.

Meanwhile, the governor has called a meeting in the state capital for Monday, March 22, with TransCanada, the three major North Slope producers and MidAmerican Energy Holdings Co. to discuss all of the participants’ proposals for building a gas line.

The producers and MidAmerican have each filed an application under Alaska’s Stranded Gas Development Act to negotiate a long-term fiscal contract for payments in lieu of state and municipal taxes for the project. Negotiations continue on both applications.

TransCanada did not submit its proposal as a Stranded Gas Act application, but rather as an informal proposal for how the state could help get the pipeline built.

Editor’s note: see full story in March 21 issue of Petroleum News.

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