TransCanada: Hopes rise for Alaska gas

Now that all of the players in the push to commercialize North Slope gas are “rowing in the same direction,” TransCanada is confident the resource will be produced and moved to market through a pipeline, chief executive officer Russ Girling said Nov. 4.

“The most positive thing about recent developments” is that for the first time the gas owners - ConocoPhillips, BP and ExxonMobil - the Alaska government and TransCanada as a contender to transport the gas are working together on an export project, he told analysts on a TransCanada third-quarter conference call.

But he said it will not likely be until around the mid-2020s that “we will get a pretty good handle” on the future of the gas.

Ruefully noting that a number of TransCanada employees have started and ended their careers over the past 30 years to 35 years working on proposals to develop Alaska gas, Girling suggested the time is approaching when it will no longer be economic to produce North Slope oil while reinjecting 7 billion to 8 billion cubic feet per day of gas.

“We’re not the reservoir owners or the developers, so we don’t know exactly when that date will arrive, but our feeling is that it will be some time in the next decade,” he said. “That’s why we are seeing a continuing push to redirect the gas to market.”

Girling said it is obvious the capital costs of a gas project would be “enormous” if it required the construction of a large-scale pipeline and liquefaction facility.

At the same time, he said, the resource costs are “essentially zero,” putting Alaska in a “pretty competitive position ... and I think that’s the way the producers are looking at it.”

A key issue is now the negotiation of fiscal terms covering taxes and royalties and “we understand those conversations are taking place between the producers and the state,” Girling said. “If we can get those terms right it will give producers the confidence to make a capital investment.”

- Gary Park