As one can see by both crunching the numbers on energy input needs for tar sands expansion proposals or by glancing at the 2030 proposed pipelines map on the sidebar of this site, this gas is not destinted, for the large component, for Chicago. It would be destined for the Albertan energy grid to turn tar sands deposits into "oil".
--M
Pipeline path to Canada assailed
ALASKA GAS: Critics of TransCanada's plan cite profit, exclusivity.
By WESLEY LOY wloy@adn.com
Published: March 25th, 2008 12:03 AM
JUNEAU -- Critics of TransCanada Corp.'s natural gas pipeline proposal are lodging two big complaints against the company.
First, they say TransCanada is looking for too high a profit on the pipeline.
And they say the company wants to funnel Alaska's gas exclusively into its own pipeline network in Canada.
Both have major money implications for the state as well as North Slope gas producers shipping their gas through TransCanada's pipeline.
A high profit and a stranglehold on Alaska gas in Canada could translate into higher shipping costs for producers and less tax and royalty revenue to the state, the critics say.
Calgary-based TransCanada, one of North America's biggest gas pipeline operators, is the only company Gov. Sarah Palin is considering for a state license and a $500 million subsidy for work toward a gas line, one of Alaska's most elusive economic development dreams.
TransCanada is proposing construction of a 1,715-mile, $26 billion pipeline down the Alaska Highway to Alberta, where the Alaska gas could feed into existing pipelines.
The administration and its experts are poring over TransCanada's bid for the license, which requires the Legislature's approval.
Joe Balash, the governor's oil and gas adviser, said questions about pipeline profits and what happens to Alaska's gas once it leaves the state are among an array of issues the administration is still mulling.
"There are things in the TransCanada application that we're looking at hard," he said.
The administration still hasn't set a deadline for making a recommendation to the Legislature, Balash said.
Lawmakers are scheduled to adjourn April 13, but Palin could call a special session on the gas pipeline.
HOW MUCH PROFIT?
Part of the state's evaluation process was inviting public comments on the TransCanada bid. More than 300 came in by mail and online.
Steve Porter, a former Conoco Phillips employee and deputy revenue commissioner now advising the Legislature, commented that TransCanada is proposing a high 14 percent return on its investment that easily could grow to 25 percent during inflationary times under terms of the company's bid.
More profit for TransCanada means higher fees for shipping gas through the pipe, potentially cutting returns to gas producers and the state by billions of dollars over the life of the pipeline, Porter said.
TransCanada, responding to queries from legislators, said if the company wins the license, it will expect the state to support its profit request when it seeks permission to lay the pipeline from the Federal Energy Regulatory Commission and its Canadian counterpart, the National Energy Board.
The investment return is based on the size and risk of the project and other factors, including what regulators have allowed in the past, TransCanada spokeswoman Shela Shapiro said.
"The state should not bind itself in advance to what I believe to be a very generous rate of return, possibly the largest ever granted in Canada," Porter wrote.
Others submitting comments to the state also objected to TransCanada's proposed profit, including Exxon Mobil, the largest North Slope gas holder, and Anadarko Petroleum Corp., a Slope explorer and part owner of the Conoco-run Alpine oil field.
Unlike TransCanada, Exxon didn't bid for the license under AGIA -- the Alaska Gasline Inducement Act, which state lawmakers passed last year. Conoco, however, is offering its own Alaska Highway pipeline project without seeking the state license and seed money.
CHEAPEST PATH TO CHICAGO
Who controls Alaska's gas once it flows out of state also has emerged as a point of contention with TransCanada's bid.
Joseph Kalt, an economics professor at Harvard's John F. Kennedy School of Government, commented on behalf of Exxon that TransCanada is "looking out for its own interests" with a requirement that Alaska's gas flow into its Alberta pipeline network.
"TransCanada is not to be criticized for seeking to maximize and protect its interests," Kalt wrote. But he said the state must understand the costs, and that TransCanada is trying to shift some of the inherent risks in the pipeline megaproject from itself to others.
Alliance Pipeline Ltd., owned partly by TransCanada rival Enbridge Inc., objects to TransCanada's proposed exclusive hold on Alaska's gas.
Alliance told the state its own 1,850-mile pipeline, which began service in 2000, can compete as the cheapest way to move Alaska gas from Alberta to the prime Midwest market at Chicago.
"TransCanada implies that it has a monopoly over the flow of Alaska natural gas," Alliance wrote, but added the gas "should not be held captive to TransCanada's pipeline network."
TransCanada has confirmed to the state that Alaska gas shippers will be required to send their gas into the company's Alberta pipeline system. And they'll have to pay an access fee.
But TransCanada argues this will be the best deal for the shippers and the state. Once the gas is in the Alberta network, it says shippers can then connect to pipelines run by other firms.
TransCanada cites a recent study by the independent, nonprofit Canadian Energy Research Institute it says backs up the claim that putting Alaska gas into its Alberta system is "the best option for Alaskan gas."
The study is available only to subscribers, and the Palin administration and the Legislature plan to spend several thousand dollars to buy it, Balash said.
