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ANGDA worried about incurring damages Public corporation hopes to avoid falling victim to ‘non-compete clause’ in AGIA; plans to work with any successful pipeline Eric Lidji Petroleum News
The Alaska Natural Gas Development Authority is hoping to avoid becoming an unintended victim of a “non-compete clause” in the Alaska Gasline Inducement Act, or AGIA.
The state legislature is currently in special session to decide whether to give the Calgary pipeline company TransCanada a license to start work on a large-diameter natural gas pipeline from Alaska’s North Slope via Canada to U.S. markets.
To protect the licensee, AGIA prohibits state money from being used to help a competing pipeline project, defined as any project able to carry more than 500 million cubic feet of North Slope natural gas to market each day.
If the state violates this clause, it is required to pay the AGIA licensee “treble damages,” or three times what the company has already spent on its pipeline project.
As a public corporation of the state, ANGDA is run on state funds. But ANGDA is also charged with building a spur line to connect a large natural gas pipeline to markets in Southcentral Alaska. The corporation is also exploring a potential petrochemical operation under its state mandate.
Work with TransCanada Those projects together could surpass the 500-mmcfpd limit stipulated by AGIA, according to Harold Heinze, chief executive officer of ANGDA.
“Do we trip into some sort of damage situation?” Heinze asked the ANGDA board of directors at a meeting on June 11.
ANGDA filed an application for AGIA, but unlike the other applicants, who all proposed ways to bring North Slope natural gas to market, the gas authority submitted an application for a spur line. That spur line was designed to be compatible with any mainline project, no competition was intended, Heinze said.
The issue could be resolved with an amendment to state statutes, but Heinze doesn’t like that solution because “it just becomes a tool of the folks who are against” AGIA.
Instead, Heinze hopes to sign a letter of understanding directly with TransCanada, should the company get the AGIA license. The letter would make it clear that ANGDA is there to help and not compete.
“It seems like the most business-like resolution I could come up with to the problem,” he said.
Heinze said both TransCanada and the Palin administration were “very receptive” to the idea. Nevertheless, ANGDA board member Kate Lamal asked Heinze to get an opinion from the state Department of Law to further guarantee that an letter of understanding would keep the gas authority from falling victim to the non-compete clause.
During upcoming legislative hearings, Heinze plans to make ANGDA’s “whole case.”
“What the case will be is that the in-state part of it, done through a spur line the way we’re approaching it, is good for the big project,” Heinze said. “And so there’s no way you can stretch us into a competitor if we’re aiding their project.”
But that goes for any big project, including the Denali pipeline, a competing project being pushed by BP and ConocoPhillips outside of the AGIA process. Heinze said ANGDA’s willingness to work with whatever project goes forward could create a “tension point” with TransCanada.
“That’s why they may want to sign an agreement,” he said about TransCanada.
Wetlands work one-fifth done The company hired to delineate the wetlands along the spur line route told the ANGDA board on June 11 that it is more than 20 percent finished with the work.
ANGDA hired Shaw Alaska to survey the 370-mile spur line route from Delta Junction to Beluga through Glennallen in order to get a wetlands permit from the U.S. Army Corps of Engineers.
At more than $1 million, the contract is the largest ever issued by the gas authority.
ANGDA has upcoming meetings planned in Fairbanks and Kenai.
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