Enbridge is prepared to let the best proposal win in the heavyweight contest to secure the lead role in building a natural gas pipeline from Alaska to the Lower 48.
But it has launched a major public relations offensive to advance its case that the choice should be based on a free market competition and not 27-year-old legislation.
The Calgary-based pipeline company took out full-page advertisements March 5 in Canada’s two national newspapers (the Globe and Mail and the National Post) insisting on an open process to determine whether it or TransCanada can build the Canadian segment of the pipeline.
The ad is headlined with the message: “Canada was built on the principles of fairness and free enterprise. A project like the Alaska-Canada natural gas pipeline should be too.”
Enbridge then goes on to argue that one of the world’s largest single private energy investments will also set the stage for exploration, development, production and distribution of a key natural resource for generations to come, “as well as the very essence of a free market.”
It says the Canadian government can take one of two paths: Either it can stick with the 1978 Northern Pipeline Act that gives TransCanada the sole rights to build, own and operate the Canadian leg, or it can permit a free market competition under the National Energy Board and the Canadian Environmental Assessment Agency.
The 1978 legislation would “undermine the free market landscape in Canada,” Enbridge claims and would give an “unfair competitive advantage to one company over other qualified Canadian companies.
“It would be ignoring the advice of the Alaska natural gas producers. It would be turning its back on the contemporary regulatory framework designed to meet the modern challenges of our resource projects and key stakeholders.”
But by opting for competitive bids, the Canadian government would allow all feasible applications to build the pipeline to be “processed in a fair, transparent and modern manner,” ensuring that gas prices were kept lower for all consumers.
Enbridge: tough decisions need to be made
The same message was delivered March 2 to the B.C. Oil & Gas Summit in Victoria by Ron Brintnell, Enbridge’s project director for Alaska gas.
He said it is “not true” that Enbridge wants to scrap the Northern Pipeline Act.
But it does believe that given the magnitude of the capital investment and the risk required, a partnership is required of gas producers, pipeline companies, Native organizations, the state of Alaska and the market participants.
“Policy makers and regulators will need to make some tough decisions,” he said.
To that end Enbridge is only seeking a “full, fair and unfettered” process and once a decision is made “we will move on … we won’t stand in the way.”
He said Enbridge Chief Executive Officer Patrick Daniel has already made it clear that his company has no intention of continuing its fight through the courts if it loses the battle.
TransCanada: Act has ‘no sunset date’
Tony Palmer, vice president of Alaska business development with TransCanada, told the Victoria summit that the 1978 Northern Pipeline Act was the result of 240 days of competitive hearings and carries “no sunset date,” giving TransCanada no reason to surrender its rights in Canada.
He said that rather than a bullet line to Chicago for Alaska gas the thinking is now leaning towards greater market diversity, with connections to California, the U.S. Midwest and the Atlantic Seaboard, with no need to sign long-term contracts.
He said Alaska Gov. Frank Murkowski is expected to announce his choice early this year of a “horse” to build the pipeline and submit a project to the state Legislature.
If the pipeline is to start service as early as 2012, commercial deals must be in place this year, Palmer said.
British Columbia Energy Minister Richard Neufeld told Petroleum News on Feb. 28 that because his province was not a signatory to the Northern Pipeline Act it is neutral on whether the act “takes precedence or whether it’s something new.”
What the province has committed to is facilitating the processing of a pipeline application and working with whatever companies “are going to move the project forward and make sure it happens,” he said.
