To some Alaska skeptics, the state is preparing to make a $500 million North Slope gas line deal with an unknown company that has questionable credentials.
TransCanada is not well known to Alaskans. In part, that's the company's own fault. It is low key and publicity shy. It doesn't do a lot of image advertising. Unlike Alaska's major oil producers, it doesn't run high-profile campaigns to win favor among politicians and the public.
But make no mistake, TransCanada is a major player in the North American gas pipeline business. It has 36,500 miles of gas pipelines. It moves 20 percent of North American natural gas production -- 15 billion cubic feet a day. That's roughly three-and-a-half times the amount its Alaska project proposes to handle. The company had sales of $8.8 billion (Canadian) last year and it has assets of $30 billion.
As part of its review of AGIA applicants, the state checked TransCanada's resume. The company has a clean record with the U.S. agencies that regulate pipelines and the sale of securities. TransCanada has a good record of bringing projects on line very close to budget, the state found.
The investment house Goldman Sachs told the state TransCanada "has the financial wherewithal to meet the financial obligations implied in the Proposal."
Conoco Phillips said: "We think highly of TransCanada and they are a valued associate in other large projects in North America." The two companies are partners on a 1,600-mile oil pipeline in the Lower 48, known as the Keystone project.
TransCanada's AGIA proposal is not a take-the-money-and-run deal. The state's $500 million won't be handed out in one big check. TransCanada will get reimbursed -- 50 cents on the dollar to start -- as the project moves ahead. If the company doesn't spend its own money, it doesn't get the state's reimbursement.
Alaskans with long memories can recall many botched state economic development deals. One of the worst was in the late 1970s, with an outfit called Alpetco. Alpetco promised to build a refinery in Valdez, so the state agreed to give the company a significant discount on as much as 150,000 barrels a day of Alaska's royalty oil. The company took the cheap oil but never built the refinery. The fiasco cost the state treasury millions of dollars.
This is not Alpetco. TransCanada is a company that has done what it said it would do.
That's not to say TransCanada can build an Alaska gas line all by itself. No single company can. On a project of this scale -- some $29 billion -- any company, whether it's a multibillion-dollar multinational oil company or TransCanada, would want to spread the risk by bringing in other investment partners.
As Alaskans ponder TransCanada's proposal, they can rest assured that it is a legitimate offer from a company whose resume shows it can do the job.
BOTTOM LINE: Don't write TransCanada off just because you never heard of it before last year.
ALASKA ALMANAC
Who is this TransCanada?
36,500 -- Miles of gas pipelines in TransCanada's system
20% -- Portion of all North American gas that moves on TransCanada's pipelines
$8.8 billion -- TransCanada's revenues in 2007 (Canadian dollars)
$30 billion -- Value of TransCanada's assets
$1.27 billion -- Amount of stock TransCanada sold last month to raise new capital
1,600 -- Miles of oil pipeline TransCanada and Conoco Phillips will build in the Keystone project in the Lower 48
0.6% -- Amount TransCanada ran over budget on 6,683 miles of pipeline and 3 million horsepower of new gas line compression built from 1990-2000
0 -- Number of cases U.S. regulators have handled that raise any questions about TransCanada's business ethics
0% -- Return on investment TransCanada will accept on any cost overruns
$29 billion -- Cost of the Alaska gas line, according to TransCanada
$4.6 billion -- Conservative estimate of annual revenue the state treasury will get if TransCanada gas line is built as planned
Sources: transcanada.com; Office of Gov. Sarah Palin, AGIA Findings; TransCanada AGIA application.