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TransCanada waits for Alaska gas, wants piece Company expects to participate in Canadian portion of gas pipeline Larry Persily Petroleum News Juneau Correspondent
While Alaskans wait on the North Slope producers to decide if they will build a natural gas pipeline, and as the producers wait on Congress to decide what kind of tax incentives to offer the companies, across the border the Canadian pipeline company TransCanada Corp. is waiting for its chance to participate in the project.
It’s been waiting 25 years, ever since the Canadian government passed the Northern Pipeline Act setting out terms for the exclusive certificate to build and operate an Alaska-to-Lower-48 line as it passes through Canada.
And while acknowledging it’s up to North Slope producers to decide when to bring Alaska natural gas to mid-America markets, TransCanada says it is ready to participate in a gas pipeline project whenever the producers are willing.
“We continue to work to advance an Alaska Highway project with producers and other stakeholders,” said Glenn Herchak, a spokesman for the Calgary-based company. “We recognize that this is the producers’ commodity,” he said, explaining that TransCanada is a pipeline operator and is not looking to assume the commodity price risk of the project.
At $3.50 per thousand cubic feet of gas, the proposed line at 4.5 billion cubic feet per day would carry almost $5.8 billion worth of gas a year — and a lot of risk if market prices dip. It’s up to North Slope producers “It’s primarily their (the producers’) decision when and how to move it to market,” Herchak said. TransCanada would be looking to take a stake in building or owning or operating the line.
The company and its wholly owned subsidiary Foothills Pipe Lines Ltd. operate more than 24,000 miles of natural gas pipeline across Canada. It also holds partial interest in half a dozen other companies that own 4,500 miles of gas pipe in the United States.
TransCanada assumed 100 percent ownership of Foothills this summer when it completed its $257 million (Canadian) purchase of the 50 percent share held by Duke Energy Corp. Duke, based in Charlotte, N.C., had picked up half ownership of Foothills just two years ago when it purchased Westcoast Energy Ltd., of Vancouver, British Columbia. TransCanada holds Canadian rights As the owner of Foothills, TransCanada says it holds the 1978 Canadian “certificate of public convenience and necessity” that granted Foothills exclusive rights for the Canadian portion of the Alaska Natural Gas Transportation System, the U.S. and Canadian governments’ name for the Alaska Highway gas line route from Alaska to the North America distribution grid in Alberta and on to Lower 48 markets.
“We continue to believe those are active and enforceable,” Herchak said.
Foothills also is one of the partners assigned the U.S. rights to the Alaska portion of the gas line project.
That 25-year-old Alaska-line partnership tried to reconstitute itself in 2001, as high gas prices sparked renewed interest in the pipeline. Foothills, Duke, Westcoast Energy, TransCanada, Enron, El Paso, Pacific Gas and Electric, Sempra and Williams Cos. announced their intent to join the newly revived discussions for bringing Alaska gas to market. There were announcements, meetings with state officials in Alaska, and a memorandum of understanding between the pipeline companies. But the effort has slowed since then. Alaska line partnership dormant The effort to reconstitute the partnership for the U.S. portion of the line is dormant, Herchak said. Several of the companies withdrew from the memorandum in 2002. Although TransCanada is still interested in the partnership, it isn’t doing much more than monitoring the situation in Alaska and Washington, D.C.
Williams is among the companies that have stopped active involvement in reconstituting the partnership. The Tulsa, Okla.-based company is not spending any time on it, said spokesman Peter Thomas. Like TransCanada, Williams is following debate over the federal energy bill to see if there are enough federal tax incentives to push North Slope producers into going ahead with the Alaska gas project.
“Everyone’s just hanging out,” Thomas said. But if something happens, Williams would be interested in discussing the opportunities. There is need for two Arctic lines Meanwhile, as TransCanada waits for the North Slope producers to decide if they want to build a $20 billion gas line project, the company is moving ahead in partnership with Canada’s First Nations to take a stake in the proposed gas line along the Mackenzie River valley. The line would connect Mackenzie Delta gas to the distribution grid in Alberta.
It’s not a race with the Alaska project, Herchak said. “We believe demand calls for both. We believe the two pipelines are required to move gas from the Arctic.”
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