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Alaska prolongs agreement with TransCanada on North Slope gas pipe

by Lynell Burdett (2020-10-09)


Alaska has expanded a contract with TransCanada that sees the state deal aids for the firm's work on a natural gas pipe as well as LNG export project in the state, a state official said Wednesday. The previous arrangement ended June 30. Guv Sean Parnell is still dissatisfied with the price of progress on the task, but the state believes TransCanada and North Incline manufacturers are making progression towards an essential milestone, a contract to begin pre-Front End Design and Layout on the project, state Deputy Natural Resources Commissioner Joe Balash stated in an interview.

Parnell had actually expected a pre-FEED arrangement to be in place by June 30, but it was not. The pre-FEED action would represent the initial considerable investment, estimated at numerous hundred million bucks, by the companies associated with the project. TransCanada is dealing with BP, ConocoPhillips, as well as ExxonMobil on the pipe task, which is expected to cost $45 billion to $65 billion to create general if it is built. TransCanada had requested a two-year expansion of work dedications accepted under its state permit, which qualifies the pipe firm to up to $500 million in state funds to support its work.

However, the state only consented to an one-year extension, through October 31, 2015, Balash stated. As of June 30, the state has paid TransCanada $259.4 million under the subsidy contract. Up until June, the business had actually shared the aid with ExxonMobil, which partnered with TransCanada in 2009. In June, nevertheless, all four firms accepted support a summer area program to collect technological data, as well as the aid is now being shared with BP and ConocoPhillips in addition to ExxonMobil, drag reducing agent Balash claimed.

Under the contract, the state is paying 90% of the firms' prices, which should be approved by the state, approximately $500 million. Just exactly how the subsidy is being shelled out in between TransCanada, which holds the state agreement, and also the various other companies, is unclear. Under a previous work strategy, the $500 million would certainly be fully paid by 2016, yet if the business consent to the pre-FEED work their costs would accelerate as well as the $500 million limitations would likely be reached by the end of 2014, Balash stated.

The state provided the license as well as subsidy arrangement in return for TransCanada consenting to certain terms for its plans for a gas pipe from the North Incline to Alberta, as well as a connection with existing TransCanada pipes. The terms consist of accepting use rolled-in tolls on pipe expansions, to help with accessibility for new gas, and certain debt-equity relationships in the funding, which would certainly impact tariffs and also state incomes from gas manufacturing. Most notably, TransCanada consented to file for authorization certifications for the Alberta pipe with the United States Federal Energy Regulatory Compensation as well as Canada's National Power Board.

Although the firms' plan has currently changed from an all-land pipe to an LNG export project since shale gas has actually transformed the Lower 48 states gas market, drag reducing agent TransCanada is keeping its options open up for a possible pipe extension to Alberta at time, TransCanada vice president Tony Palmer has stated in briefings.