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Globe & Mail: TransCanada vying for $30-billion pipeline project

DAVID EBNER
Globe and Mail Update
November 30, 2007 at 7:35 PM EST

TransCanada Corp. is among the companies vying to build a $30-billion natural gas pipeline to connect northern Alaska with the continental United States.

Calgary-based TransCanada, the country’s largest gas pipeline company, said Friday evening that it has submitted a “strong application” to the state of Alaska to build a line from the north slope of Alaska, home to major stranded gas reserves, to link to the firm’s existing Alberta infrastructure.

TransCanada did not reveal the price of the proposed project or other details, saying it would wait for Alaska to assess its application.

Among other companies that revealed their ambitions yesterday was ConocoPhillips Co. of Houston, the oil and gas producer that controls gas fields in Alaska.

ConocoPhillips proposes $30-billion Alaska pipeline 

ConocoPhillips said its project could cost between $25-billion and $42-billion, saying $30-billion was its best estimate right now. The company’s proposal is similar to that of TransCanada, linking Alaska with Alberta. ConocoPhillips said it would consider a further extension to Chicago, depending on available capacity on existing infrastructure.

Alaska was expected to unveil a complete list of applicants late Friday night.

Because construction isn’t likely to begin before 2013 or 2014, the Alaska project isn’t likely in direct competition with a plan to build a gas pipeline from the Mackenzie Delta in the Northwest Territories to Alberta. Mackenzie construction could start in late 2009 if it receives regulatory approval.

Volume on the Alaska pipeline could be four billion cubic feet a day — more than 5 per cent of estimated demand in the United States in 2025. The Mackenzie Valley pipeline could deliver upwards of two billion cubic feet a day, though initial plans are for 1.2 billion cubic feet a day.”

“[Alaska] is a monumental project and a huge amount of gas,” analyst Fadel Gheit of Oppenheimer & Co. told Bloobmerg News.

A plan to build a pipeline to deliver gas from Alaska has languished for years but this decade has become more realistic as the price of the commodity has averaged roughly $6 per million cubic feet, triple the rate of $2 seen in the 1990s.

Proposals to the state of Alaska were made under the Alaska Gasline Inducement Act, a law passed under Gov. Sarah Palin that outlined rules for ideas for a pipeline. The No. 1 plan is expected to be put before the state legislature in early 2008. The system follows a previous deal that was scrapped that had been negotiated between former Gov. Frank Murkowski and the three largest gas holders, Exxon Mobil Corp., BP PLC and ConocoPhillips.

Earlier Friday, BP reiterated its position that it will not submit a proposal under Gov. Palin’s system. Exxon said it was considering its options.

Exxon owns about 70 per cent of Imperial Oil, the main proponent of the $16-billion Mackenzie pipeline. ConocoPhillips is also involved, as is Royal Dutch Shell PLC.

ConocoPhillips said it would be interested in having partners. TransCanada said it was also interested in that possibility.

“It has been our long-standing position that an alignment of the state, the producers and TransCanada is the optimal path to a successful project,” said Tony Palmer, a TransCanada vice-president.

TransCanada is currently a partner with ConocoPhillips on a proposed oil pipeline to the U.S.

Another possible Canadian player in Alaska is TransCanada rival Enbridge Inc. but Enbridge did not reply to inquiries yesterday. Enbridge and TransCanada in 2005 fought over who should be allowed to build the Canadian portion. TransCanada said it had legal rights under federal legislation from the late 1970s, the last time an Alaska project was close to reality, whereas Enbridge disputed those rights.

http://www.theglobeandmail.com/servlet/story/RTGAM.20071130.wrtanscan30/BNStory/energy/?page=rss&id=RTGAM.20071130.wrtanscan30

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