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Alaska votes to award TCPL The Alaska Highway Pipeline

Alaska House OKs gas pipeline license for TransCanada Corp.
11 hours ago

JUNEAU, Alaska — The Alaska State House of Representatives has approved a state license for a Canadian company to pursue a natural gas pipeline project that could unlock 130 million cubic metres of North Slope gas reserves daily.

The House backed the plan on a 24-16 vote Tuesday. A reconsideration vote is planned Wednesday, but that's usually a formality. If approved then, the bill will go to the state Senate, which must approve or reject it before Aug. 2.

Legislators in Alaska's House voted to support Gov. Sarah Palin's proposal to award TransCanada Corp. (TSX:TRP) an exclusive license to pursue federal certification for the 2,760-kilometre pipeline.

TransCanada Vice President Tony Palmer wasn't ready to celebrate just yet, nor would he make any predictions on how the Senate's vote will play out.

"I'm always uncertain until I see the votes," Palmer said. "I had no expectations as to how the votes would go until I saw the buttons pressed."

The license doesn't guarantee pipeline construction. It simply calls for TransCanada to embark on a costly process of pursuing a federal certificate, but also with up to US$500 million in state seed money.

There's the rub, said Rep. Mike Hawker, an Anchorage Republican who spoke out against the Alaska Gasline Inducement Act, or AGIA, license before casting a dissenting vote.

"We have to make it very clear is that this AGIA license is not a commitment to do anything other than process a whole lot of paper," Hawker said. "There is no commitment to move a shovel full of dirt toward a pipeline project."

Rep. Les Gara, an Anchorage Democrat, backed Palin's endorsement of TransCanada with the same understanding as Hawker, but with a different outlook.

"I think this is going to put the state on a stable footing," Gara said. "There is no clear path to a gas line. This is the clearest path to a gas line that protects the state's interest. That's all it is."

The vote takes the state another step away from a contract unsuccessfully pushed by former Gov. Frank Murkowski.

He settled in principle with BP, Exxon Mobil Corp. and ConocoPhillips on fiscal terms - taxes and royalties - for producing the North Slope gas.

The deal would have frozen oil taxes for 30 years and gas taxes for up to 45 years for the three major oil companies, but it did not guarantee a pipeline would get built.

The Legislature would not vote on it because many members believed it was too much of a giveaway to the energy industry, about US$10 billion over the lifetime of the deal.

This Legislature, however, acted under AGIA, a year-old law that established bid requirements for those interested in building a pipeline.

It was also a law that North Slope leaseholders BP, ConocoPhillips and Exxon Mobil found too restrictive and they never submitted a plan under those guidelines last November.

TransCanada's was one of five applications and the only one deemed compliant under the AGIA guidelines.

TransCanada is involved in another major Arctic pipeline project, the Mackenzie Gas Project.

Long beset by regulatory delays and budget overruns, that pipeline will eventually carry natural gas from the Northwest Territories' Mackenzie Delta into Canadian and U.S. markets.

The latest official estimate from March of last year was C$16.2 billion, but many analysts have said it could be as high as $20 billion now.

Northwest Territories Industry Minister Bob McLeod said he was pleased with the Alaska decision.

"Arctic natural gas is very important to energy security and supply and it will help reduce the emission of greenhouse gases," he said in an interview, noting that much of North America's electricity comes from coal-fired plants that emit huge amounts of carbon dioxide.

"We also see it as reducing the prices of gas for consumers," he added, since Arctic natural gas reserves in both Canada and the U.S. could supply up to eight billion more cubic feet of gas per day to southern markets.

McLeod said he does not see the Alaska and the Mackenzie pipelines as competing, and that both are necessary to meet the growing demand for energy.

"We have been supportive of both pipelines and we see this as a logical next step," he said.

McLeod said he predicts Mackenzie will start up by 2014, with Alaska following in 2019.

(With files from The Canadian Press)

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