Producers list concerns over TransCanada line
Published Saturday, July 12, 2008
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Stumble It!JUNEAU — The major North Slope producers shared their concerns about a TransCanada natural gas pipeline on Friday in a discussion Revenue Commissioner Pat Galvin tried to paint as entirely predictable.
Top executives with BP, ConocoPhillips and Exxon Mobil all said they thought the Canadian pipeline builder was seeking too much profit, not taking enough of the project risk and asking too much of the main pipeline users — specifically, the three producers.
“We have some real concerns with the terms TransCanada is required to offer,” BP’s Dave Van Tuyl said.
The executives expressed concerns about the requirements TransCanada would have to meet under the Alaska Gasline Inducement Act and about provisions TransCanada proposed in its AGIA application.
An executive with Chevron, another North Slope producer, echoed many of the concerns.
Galvin, representing Gov. Sarah Palin’s gas line team, explained that under AGIA, TransCanada would still be able to negotiate shipping rates with the major producers and could find ways to balance profits and risk between the producers and the pipeline company.
He argued that the oil companies’ testimony amounted to the beginning of those negotiations.
“In the end, this is going to be a deal cut between the state, the pipeline, and the shippers,” he said. “... What you’re hearing today is the negotiating process that’s going to unfold inevitably.”
Galvin argued the requirements imposed by AGIA, which deal with the financing, construction and operation of the line, were critical to ensuring the state’s interests were met.
But some lawmakers suggested the requirements could get in the way of the producers and a pipeline company working out a deal.
“We’re not going to get there if we keep going down the route we’re going,” said Rep. Mike Hawker, an Anchorage Republican.
One of the main concerns expressed by the producers involves a requirement in AGIA aimed at keeping shipping costs low for companies wanting access to the pipeline after it goes into service. The provision requires TransCanada to expand the pipeline every two years if there’s sufficient interest and to ask federal regulators to spread the cost of the expansion among all shippers rather than just new ones.
The executives argued their companies shouldn’t have to subsidize their competitors if the so-called rolled-in rates would increase their shipping costs.
Despite their concerns, none of the executives ruled out shipping gas on a TransCanada pipeline or joining TransCanada as an equity owner.
Van Tuyl and Wendy King of ConocoPhillips said they saw advantages to the pipeline project ConocoPhillips and BP are pursuing outside AGIA through the joint-venture Denali.
But Exxon’s Marty Massey said his company had not yet decided which pipeline project had the greater chance of bringing all parties together. Neither of the two proposals would result in a “commercially viable” project as currently proposed, he said.
Of the three executives, Massey made the strongest demands.
He said Exxon would want to own a fraction of any pipeline equal to the fraction of gas the company committed to ship down the line.
He added that he would not rule out an agreement that broke some of the “must-have” requirements in AGIA.
“That’s what I’m hoping for,” he said.
Galvin said later the must haves were set in law and were “not subject to negotiation by the administration or TransCanada.”
State lawmakers have until Aug. 2 to decide whether or not to award TransCanada a state license and up to $500 million in seed money.
Hearings are scheduled to continue through the weekend.
Community Discussion
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The producers are concerned that future competition could jeopardize their currently held monopoly on North Slope production. Is this really their best argument against Trans-Canada?
Do they really think that 4 billion cubic feet a day is not going to extract our resources fast enough?
The reason we have AGIA in the first place is to protect Alaska's interests. It must be working if this is what the oil companies are saying.
I agree. Sounds to me from their arguments that the big three would rather not support the State requirements which we paid an "expert" panel to develop to protect the interests of the State. AGIA is our best chance to get the gas to market and do it with the State's interest at heart. I think the reason Exxon is holding out is to see who actually builds a line, which is good policy on their part.
Sure we can waive any of the seven "requirements", but Trans Canada Alaska is willing to build and meet the requirements. The question for the big three is whether shipping on TC is less profitable than building their own line. Either way, I think the State should hold the line on the requirements. With the big three on the brink of losing their lease holdings, they better decide soon or some other company is going to be able to sell the gas they found.
Almost everything begins with a discussion of some sort. Let's give them time and not jinks it.
Make The Pirates Walk The Plank
I'm very suspicious about the intent of building a big steel pipeline from Prudhoe to Texas. Why not build a parallel railroad too?
http://www.larouchepub.com/pr/2007/07042...
I think Alaskans should strive to export only gas, and work toward eliminating supertanker hanky-panky risky-business.
Just two [out of twenty] technologies can make the lower48 totally independent for energy, and not need any of Alaska's gas or oil...
...[BTL] Biomass to Liquids, and Microwave-Hydrocarbon[Pringle]
....these are not "new tech", been around for 50years.
The big-pipeline is also an attempt to forge a merging of USA-Canada-Mexico into one large Nation...
...not a bad idea, but only if I was the BigChief TopDog manager of the project. It takes a true saint and a visionary to make great moments in history to actually work....
...and somehow I don't see anybody currently on the political scene except maybe a combination of Mike Gravel and Ron Paul who are even remotely pointed in the right direction.
Even if the MidEast went to Mars, the planet doesn't have a shortage of hydrocarbons, but it will soon have a shortage of clean atmosphere...
...I'm working on that too.
Because methane is 23times worse than CO2, Alaska would do well to consider claiming a "greenhouse gas credit" for converting all of it's orphan-methane that's getting spewed off into captive-CO2.
$500million??
$30billion???
..............what if we took that money and made Gas to Liquids work like a dream, instead?
..wouldn't need a big steel boondoggle then, the total environmental impact would be much-much less. A 16" buried HDPE-pipeline would be all we would need for balanced prosperity in Amerigowacko delNorte.
The smart way to do it is to build a bunch of plastic CNG-gaslines over the Brooks, and build a series of FT-GTL plants along the Koyukuk River. The excess heat from the FT-GTL plants can be co-generated to provide power and heat for the villages in the YuKoy Region.
"Top executives with BP, ConocoPhillips and Exxon Mobil all said they thought the Canadian pipeline builder was seeking too much profit,..."
The irony just drips off of this statement. The pot calling the kettle black!
Woodman, do you really think two more weeks of discussion is going to change the plans that have been discussed for the last fifty years? The legislature spent months discussing this last year. They have had Trans Canada Alaska's proposal since January and spent a month around the state discussing the proposal. Take a vote Monday and finish the unfinished business. Pontificating another two weeks is wasting time and money. Oil hit an all time record high again Friday. With every new record set, the line gets more expensive. Two weeks could save millions on the project and will afford starting this year versus next year.
ONAPA, the "mysterious men behind the curtain" have been discussing building a big steel pipeline to Texas for longer than 50years..
..they've been discussing it since before they burned down Katalla in 1933.
The idea of this big pipeline started immediately after oil was first discovered on the slope in the 1880's.. Drake was already done pumping oil in Pennsylvania. Congress wouldn't have enacted NPR4 in 1923 if they didn't have an idea that someday a pipeline would be built...
...but for what reason?? To promote domestic prosperity??
...more likely to fuel the Conquest for Global Empire when the opportunity arises.
...today I'm gonna go for a boat ride, and if I'm lucky I'll barf up a hairball.
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