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TransCanada terminates 1st open season 2010 initial open season ended with bids from ‘major industry players;’ company says producers not ready to make commitments Kristen Nelson Petroleum News
TransCanada Alaska filed a notice with the Federal Energy Regulatory Commission May 3 terminating its first binding open season.
The open season for the Alaska Pipeline Project, APP, began April 30, 2010, and ended July 30, 2010.
APP is the project licensed to TransCanada in late 2008 by the State of Alaska under the Alaska Gasline Inducement Act, or AGIA. ExxonMobil joined TransCanada in APP in mid-2009.
“During the open season, producers expressed significant interest in the Alberta Project in the form of conditioned bids for capacity on that pipeline,” TransCanada told FERC. The company said there were “concerted negotiations for many months” between APP and the Alaska North Slope producers, but despite “good faith efforts” by all parties to the negotiations, no precedent agreements — binding commitments to “ship or pay” on the line — were signed.
TransCanada said it is APP’s “assessment that the producers are not prepared to make commercial commitments to the Alberta Project at this time,” and it is withdrawing the transportation service offerings in the 2010 open season notice.
APP is working with the ANS producers on the feasibility of a project including a pipeline to a liquefied natural gas facility at tidewater in Southcentral Alaska, TransCanada said.
If those evaluations lead to a project that appears commercially viable, or if there is renewed interest in taking gas to Alberta, TransCanada said APP would initiate a new open season.
Amendments to the plan in the AGIA license approved by the state May 2 call for initial work on an LNG project to be completed by September with an open season by the end of the year.
Multiple bids After the initial open season closed in 2010, Tony Palmer, vice president of Alaska development for TransCanada, said that while results of the open season were confidential, “The Alaska Pipeline Project can report that we have received multiple bids from major industry players and others for significant volumes.”
Confidentiality agreements between customers and the pipeline company prevented description of the open season results in any detail, Palmer said at the time. He said the confidentiality agreements “exist because the gas business is so competitive,” with gas from Alaska competing with gas supplies coming into North American or international markets.
At the time of the APP open season there was also a competitive pipeline project, the BP-ConocoPhillips Denali project, with an open season which continued two months beyond that for APP, although Denali is no longer a factor. It was discontinued in May 2011 and the company said in a statement that its open season efforts had not resulted in customer commitments necessary to continue work.
Typically open seasons for pipelines are confidential, but FERC has special requirements for an Alaska gas pipeline project because the remoteness of the North Slope and the expense of the project preclude competitive pipelines from being built.
The APP open season accepted bids for both the Alberta line and for a line to Valdez for LNG export. While Palmer did not comment in 2010 on which proposal received bids, TransCanada’s statements to FERC would seem to indicate that only the Alberta project received bids, or that if there were bids for an LNG project, that negotiations over those bids hadn’t been ongoing.
Alignment Alaska Gov. Sean Parnell has been encouraging participation by all North Slope producers in an LNG project since last fall and at the end of March the three North Slope majors — BP, ConocoPhillips and ExxonMobil — said they had reached an agreement to work with TransCanada, under an AGIA framework, to evaluate a line to Southcentral for LNG export.
The companies told Parnell in a March 30 letter that they were making progress on “the next generation of North Slope resource development.” That commitment, released in conjunction with a settlement of the long-standing Point Thomson litigation between the owners of that unit and the state, was directed toward natural gas development.
The companies said that “under the right business climate, the full commercial potential of this world-class resource can be unlocked.” Point Thomson contains about a quarter of known natural gas resources on the North Slope (at 8 trillion cubic feet the largest accumulation next to Prudhoe Bay’s 24.5 tcf.)
The Alaska Gas Pipeline Project Office said May 2 that Natural Resources Commissioner Dan Sullivan and Revenue Commissioner Bryan Butcher had approved a project plan amendment for the Alaska Pipeline Project under AGIA, allowing a shift of focus to LNG.
The governor has said that if benchmarks are met, the Legislature would address gas taxes next year.
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