Competitive markets at center of TransCanada debate
Published Sunday, July 13, 2008
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Stumble It!JUNEAU — The Denali gas pipeline project continued to play a role Saturday as state lawmakers debated whether or not to support TransCanada’s pipeline plan.
Executives representing North Slope producers ConocoPhillips and BP touted the benefits of the Denali project, a joint venture between the two companies, while state lawmakers debated whether issuing a state license and seed money to TransCanada would ensure competition between the two potential builders or unfairly favor the Canadian company.
Sen. Charlie Huggins, a Wasilla Republican chairing the gas line hearings, suggested backing TransCanada would be unfair.
Awarding a license under the Alaska Gasline Inducement Act would block the state from offering certain fiscal incentives to gas producers for the Denali project, so Huggins asked why the state wouldn’t want to offer “equal opportunity” to both projects.
Revenue Commissioner Pat Galvin responded that the state could in fact offer those incentives, but would face penalties under AGIA for breaking its agreement with TransCanada. He added that the incentives unique to TransCanada’s proposal are offset by the commitments the company is making.
Other lawmakers suggested there would only be a level playing field if the state turned down the license, noting that nothing in state or federal law stopped any company from pursuing a pipeline project outside AGIA.
Galvin responded that TransCanada wouldn’t be able to compete with the producers without some state backing because the producers have the advantage of controlling the North Slope gas through leases.
“Unless we have a licensed project moving forward, we have inherently no competition,” he said.
TransCanada vice president Tony Palmer echoed the idea, adding, “If you grant TransCanada the license, you know that there will be competition.”
Later in the day, Galvin stressed that voting on TransCanada’s proposal was not about choosing TransCanada over Denali but ensuring TransCanada would continue to be an option.
“What this vote is is giving you a choice,” he said.
During a break, Huggins said he was still uneasy about favoring one project over another with a state license.
“I’m still concerned, from the average Alaskan’s standpoint, do we have a level competition?” he said.
Sen. Gary Wilken, a Fairbanks Republican, agreed with Galvin.
“I don’t think it’s unfair,” he said. “We’re trying to get a pipeline; we’re trying to keep all parties involved.”
If the state didn’t back TransCanada, it would end up going “(with) our hat in our hand” to the gas producers, Wilken said. “We wouldn’t go back two years, we’ll got back four years if we don’t grant the license.”
Fiscal stability
Representatives of the three major North Slope producers — BP, ConocoPhillips and Exxon Mobil — hinted Saturday at the fiscal terms they would seek as gas producers in a pipeline project.
Sen. Hollis French, an Anchorage Democrat, asked specifically whether the producers would demand stability on oil taxes in addition to gas taxes — something that was included in the deal worked out between the producers and former Gov. Frank Murkowski.
ConocoPhillips’ Wendy King noted that when her company proposed last year to build a pipeline, it was willing to forego stability on oil taxes, but said ConocoPhillips was waiting to see an updated cost estimate for the Denali project.
Dave Van Tuyl of BP said he didn’t know what the state’s needs were, adding, “We need to get all the parties together (and) sit down in a room.”
Exxon’s Marty Massey said the question would depend on the scope of the deal as a whole.
“There’s many ways to skin a cat, as you all know,” he said.
Lawmakers are scheduled to discuss legal issues related to the pipeline project when hearings continue today.
Community Discussion
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Stefan, did any of the legislators ask the most obvious question about the Lower 48 markets? The Lower 48 market is reported to be closed to Alaska's gas due to massive news gas discoveries there.
Why award a license to take our gas to a market that is closed? At best, we would be dealing with years of delay and a profoundly lower price for our gas. At worst, there will be years and years of delay while Fairbanks dies due to the lack of a gas line and affordable, clean energy.
The level playing field was established when AGIA was signed into law. At that time all parties had an equal right to propose a line that meets state requirements. Trans Canada Alaska met the requirements and the deadline. Exxon is going to lose in court after 22 unacceptable proposals to produce gas on their leases. They have proposed a 23rd plan. Are we going to wait for number 29, or 30 to get the gas flowing?
The in-state line proposed by Denali is being held up by who? The producers waiting to get updated cost estimates?! What a shocking revelation! As for Fiscal Terms, the producers have made their own beds and are on the brink of losing their gas leases, thus they should be the ones coming to the state with hats in hand and figuring out a way to meet their contractural obligations rather than delaying the will of the people.
Senator Huggins needs to remember the reasons we had to pass ACES and AGIA are because Alaska is, has been, and allways will get the unfair end of the stick from the producers. That is their business and they are good at it because they deal with unfair business practices in foreign countries daily so they have no incentive to play fair with us when we are so easily manipulated.
Kick ass, TransCanada! I'd trust a Canadian company a lot more than any of the Alaskan producers.
$500mil is cheap fire insurance...
but only export METHANE.
Alaska only has a surplus of METHANE [CH4].
Alaska only has a surplus of METHANE [CH4].
...we DO NOT HAVE A SURPLUS OF PROPANE.
we do have a TEMPORARY surplus of ethane.
Tell TC to be generous with their nice gift, and share it with the provinces and Tribes they do business with..
Tell TC they can share in FT-gtl if they help to develop it.
Tell TC if they help to make fuels for Alaskans priced at cost of production plus a reasonable profit for an Alaskan owned cooperative, then a fair trade compensation will be shared with them.
The world is beginning to slowly realize that alternative fuels can be [and always have been] much cheaper than petroleum to produce and refine.
http://www.globalresourcecorp.com/Engine...
=======
http://peswiki.com/energy/Directory:Fuel...
I'll bet TC will wakeup and realize that building a FT-gtl plant in Koyukuk and shipping the fuel-product to Whitehorse will be the best profit margin for them, compared to building a big expensive steel-pipeline to nowhere. Alternatives are fast coming online to make the current levels of hydrocarbons consumption in the lower48 sustainable from other sources than crude-oil or drilled-gas.
The best reason to export methane is to keep it from being a greenhouse gas. Methane is an intermediate hydrogen carrier. It can be converted to Butanol with Alaskan Catalysts for improved portability and direct gasoline replacement.
Oh, Canada!!!
http://www.canada.com/topics/news/nation...
The Geological Survey of Canada has estimated that there could be close to 10 billion barrels of oil and 26 trillion cubic feet of gas in the Queen Charlotte Basin off the B.C. north coast.
==================================================
Running a cluster of subsea HDPE-RTP gaslines from Valdez to offshore Prince Rupert to VancouverBC Seattle would be cheaper than building a $30+billion big steel-pipeline.
www.fairbanksgas.com
The McKenzie Gasline would be much better off if it was made from HDPE-RTP and dropped into the bottom of the McKenzie River.
.......flash/rumble
BigMike.... I went to college at one of the worlds most notorious "environmental-wacko colleges"...(;-P)
SamBam is 100% correct. There have been several new large discoveries of gas in the US market making our gas less attractive by the day. Meanwhile, we have two of the largest Asian corporations partnering up with the Port Authority in the hopes of securing an LNG supply. Have you heard one comment from the US saying that they need our gas?
This is from the US Department of Energy on Gas Supplies
"Production and Imports.
Total U.S. marketed natural gas production is expected to increase by 6.4 percent in 2008 and by 1.6 percent in 2009. Production from the Federal Gulf of Mexico, which is now expected to decline by 1.3 percent in 2008, has been limited due to unplanned repairs on key infrastructure in the region. Production in the Lower-48 onshore region is expected to increase by 7.9 percent in 2008, more than offsetting declining production in the Gulf. In 2009, marketed natural gas production from the Federal Gulf of Mexico is projected to increase by 2.5 percent while the Lower-48 onshore region is expected to increase by 1.4 percent.
Import volumes of liquefied natural gas (LNG) to the United States continue to sag. Through the first half of 2008, LNG imports were roughly 60 percent below the amount received during the corresponding period last year. While demand for LNG supplies remains strong in Asia-Pacific and Europe, prices in the United States are becoming more competitive and may attract additional shipments in the coming months. LNG imports in 2007 totaled about 770 billion cubic feet (Bcf), however, delays in new liquefaction projects and persistent world demand are expected to result in a 290-Bcf decline in U.S. LNG imports in 2008 compared with 2007. In 2009, LNG imports are expected to reach nearly 790 Bcf as new supply enters the global market."
The US is expecting a 290 Bcf decline in imports while onshore production is expected to increase 7.9%. They have no need for our gas while the Asian market is screaming for new supplies.
I read the report that the state published about the LNG option and every reason against the project is contrary to what the analysts and markets have to say. I think that Sarah Palin wanted her AGIA plan to succeed so badly that she turned down the best project for Alaska.
http://www.allalaskagasline.com/pages/at...
....after reading this page carefully, I wonder if AGPA is playing Marlon Brando...
"I could have been a contender, I could have been somebody, instead of a bum, that's what I am, let's face it Charlie"
http://www.youtube.com/watch?v=l0waNRaz6...
did you ever see a lawyer try to get a gallon of milk out of a cow?
....they'll burn down the barn everytime
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