JUNEAU -- TransCanada has been trying to bring Alaska's vast natural gas reserves to market for decades, but now the pipeline company that was once viewed as Alaska's savior is on the verge of ending a high-profile relationship with the state.
Gov. Bill Walker is asking the Legislature for money and authority to buy out TransCanada's investment in a proposed 800-mile natural gas pipeline to a liquefaction plant and liquefied natural gas export terminal in Nikiski. Legislators already have spent a week in special session considering the question.
That decision may result in TransCanada going its own way and focusing its efforts on its own plan to export Canadian LNG from Prince Rupert, British Columbia.
Walker said that ending TransCanada's role in the project is not the result of any animosity with the company, and he's relayed that directly to TransCanada CEO Russ Girling.
"I assured him I have no ill will with TransCanada," Walker said. "TransCanada is a very good company — I have a lot of respect for them." But Alaska LNG, the gas pipeline project, is a better deal for Alaska without TransCanada owning a share, he said.
"The numbers are what they are," he said, and could mean billions more for the state over 30 years.
In the Alaska Legislature, which must approve the buyout, some who once bitterly opposed TransCanada's role in Alaska LNG are saying they'll likely wind up supporting the deal.
And in the Legislature, there is animosity -- if not for TransCanada itself -- for the process that selected the company to develop a natural gas project, which was then focused on a pipeline to the U.S. Midwest.
Recently, TransCanada has become known nationally for the controversial Keystone XL oil pipeline it wants to build through the Midwest. But in 2007 and 2008, TransCanada was known in Alaska for months of public testimony as the Legislature selected it to develop a project under the Alaska Gasline Inducement Act, with up to $500 million of state funding.
The key part of the AGIA process was that it was intended to be an independently owned pipeline, not one owned by the companies that owned the natural gas.
The existing trans-Alaska oil pipeline is owned by the companies that also own the oil that flows through it, and critics said that meant much of the value of the oil went to the producers instead of the state. Independent oil producers also said they expected difficulties getting their oil through a line owned by competitors.
The Sarah Palin administration said that's what led it to propose an independent pipeline. But legislative leaders said the best way for the state to get a natural gas pipeline was to partner with the oil companies.
Rep. Mike Chenault, R-Nikiski, said he still remembers the losing battle to stop the TransCanada selection under AGIA and can still count off the the names of the each of the 12 House members who joined him in a failed effort to block it.
Times changed before ground on an AGIA pipeline was broken, and a boom in production of shale gas eliminated the Midwest as a viable market.
After Palin resigned, Gov. Sean Parnell refashioned the project into a mostly producer-owned pipeline that led to an LNG export plant, but with the state and TransCanada owning a portion of the project.
Chenault said that he's not gloating today, even with TransCanada apparently on the way to the exit.
"There's no 'I told you so.' I don't think there's any of that going on, but there's a lot of us with history of how that happened," Chenault said.
Rep. David Guttenberg, D-Fairbanks, backed Palin's AGIA proposal and TransCanada, which was approved over the objections of Chenault and many legislative leaders.
"The leadership in the House, and I think the Senate, didn't like it because the industry didn't like it, and they fought it and they lost," Guttenberg said.
After Parnell became governor, the Legislature approved his switch back to a majority producer-owned project. This time, Chenault supported it and Guttenberg opposed it.
Now, Walker wants to buy out TransCanada's share, which he said would give the state full control of the 25 percent share of the project the producers don't own.
TransCanada's director of major project development, Vincent Lee, said it would be difficult to give up on the project his company had worked on for so long, but if Alaska wants to exercise its buyout rights, the company would agree.
"We take this opportunity to wish our project partners well in this endeavor to bring Alaska's natural gas resources to global markets," he said.
Lee appeared before legislative committees last week, a day after Canadian oil and gas regulators gave TransCanada final approval for the Prince Rupert project, a combination land and underwater pipeline.
TransCanada currently ships about 20 percent of North American natural gas through its extensive network of pipelines, the company said.
Some legislators said they had little knowledge of TransCanada's Prince Rupert project, but that they didn't expect it to cause competition for Alaska's LNG plans, and that TransCanada's pipeline development expertise could be replaced by other companies in the Alaska LNG project, such as Exxon Mobil.
"Oddly enough, though the state and Exxon have been at loggerheads over the years, it's good to have a private party decide whether or not the project is economical to build," said Rep. Les Gara, D-Anchorage.
And among other shifts of position, Anchorage Republican Rep. Craig Johnson, who years ago joined Chenault in opposing bringing TransCanada into the project, now says he's not yet decided on whether to support the buyout.
Chenault said the state needs to embrace its oil producer partners on Alaska LNG as the best way to get a gas line.
"We've got three of the most powerful partners in the world," he said. "They're spending a million dollars a day trying to move this project forward and I think we should be working with them."