Alaskans should have some idea Friday afternoon of the success or failure of the first open season bidding process for a proposed natural gas pipeline, the head of the project says.
Tony Palmer, vice president of Alaska development for TransCanada Corp., said in an interview Thursday morning that his company intends to release some "generic information" about the bids once the open season closes and the bids are opened, at about 2 p.m Friday.
"If we have no bids, we'll be able to say so immediately," Palmer said.
If bids are received, he said the company will be able to say whether or not there were significant bids accounting for substantial volume of the proposed large diameter pipeline.
But Calgary-based TransCanada does not intend to reveal individual bids or bidders or total volume until all contractual agreements are in place, which Palmer hopes would be by the end of the year. Ultimately, the federal regulatory process requires that contracts be revealed 10 days after they are executed, and the company must disclose names, volumes and terms of the agreements, he said.
Palmer heads the Alaska Pipeline Project, a joint venture of TransCanada and Exxon Mobil Corp.. The proposal was first championed by former Gov. Sarah Palin and is now backed by Gov. Sean Parnell. Alaska has already committed up to $500 million in subsidies to the TransCanada project through the Alaska Gasline Inducement Act, which was approved by the Alaska Legislature when Palin was governor. That proposal has two options -- a line running from the North Slope into Canada or, under certain circumstances, one from the Slope to a plant in Valdez, where natural gas would be liquefied and shipped out on tankers, perhaps overseas.
A second open season is also underway, this one for the Denali project, a joint venture of BP and ConocoPhillips that envisions a pipeline from the North Slope into Canada. That open season closes Oct. 4.
'Most sophisticated players in the industry'
Palmer emphasized that no bids have been opened and won't be until the close of the open season, at 2 p.m. Friday. He said he did not even know at this point whether any bids had been received.
He said TransCanada intends to protect the confidentiality of the bidding process, which he described as a highly competitive one that involves some of "the most sophisticated players in the industry." Those potential customers need to keep their business plans confidential because they regularly compete to buy gas from the same producers and also to sell gas in the same markets. The TransCanada project is also competing in the North American and international marketplaces and against the Denali project as well.
"We wouldn't want to disadvantage our project against that," he said.
Palmer said TransCanada also will not reveal details of the bids to state officials, even if they ask, which he says no one from the state has done so far.
"I don't have a request from the state at this point," he said, adding that TransCanada could share general information with the state but will continue to hold the bids close. "We have strict confidentiality agreements with the customer," Palmer said. "The state has the right in certain circumstances to see certain generic information but we will respect the confidentiality agreements."
Bids could come with conditions and many Alaska observers think gas shippers -- including BP, ConocoPhillips and Exxon themselves -- will want promises of low tax rates and other concessions. Palmer said it may take awhile to sort out conditioned bids but that he will nonetheless make a generic statement about what's come in.
If very few or no bids are received, Palmer said the company is still required by the Federal Energy Regulatory Commission to continue trying to put it together until fall of 2012.
"If we are successful and get bids tomorrow that's a very positive signal for the project," Palmer said. "If there are no bids that will be disappointing, clearly."
Pipe dreams?
Palmer said the potential bidders include some with deep industry experience, including LNG shippers. "If customers don't bid we'll be asking them why they're not in a position to bid and we'll be trying to understand why that's not the case," including what parameters TransCanada might change in order to entice them to buy in.
A gas line to a central distribution point in Alberta, Canada, is the most discussed idea on the table. But some experts believe that market has disappeared in recent months as other natural gas supplies -- including shale gas in the Lower 48 -- are thought to be more cost effective for customers.
Palmer declined to discuss market conditions for an Alaska gas line and said both markets and financing questions would have to be resolved for the project to move forward. The first thing is to see if anybody wants the gas, he said.
"What's really important now is what our customers think," Palmer said. "This is the most sophisticated group of players that this project could imagine. If they believe LNG is the best market I guess they'll nominate that project." If they don't think the project is viable, TransCanada should know that soon as well, he said.
Gov. Sean Parnell's office did not return a phone call seeking comment.
'It's politics at it's worst'
But the fact that Parnell hasn't asked TransCanada to share information on the bids at this late date drew immediate criticism from his political opponents, including Bill Walker, who is running for governor against Parnell in the Aug. 24 Republican primary.
"The biggest concern I have is that the state hasn't even asked them to make anything public," said Walker, who several weeks ago submitted public records requests to the state for bid information.
"The intention is clearly to keep Alaskans in the dark as much as possible," he said. "It's politics at it's worst."
Walker, an Anchorage attorney, doesn't buy the argument that bids need to be kept secret to protect potential customers' proprietary business deals, especially when it comes to how Alaska gas purchases might affect their business elsewhere. The release of generic information isn't good enough at this point, he said, because the success of the gas line depends in large part of the conditions potential buyers want the state to agree to.
"My goodness, we paid for half of that," Walker said, referring to the state's commitment to the gas line and its share of the cost of running the open season. "I couldn't care less about projects elsewhere, that's not what we're paying for. The state has an absolute right to know what's going on. They have an absolute fiduciary obligation to Alaskans to reveal the information."
Ralph Samuels, another Parnell challenger in the GOP primary, also has been trying to get Parnell to reveal bid information. A spokesman said he was flying to Juneau Thursday morning and would call with comment later in the day.
Contact Patti Epler at patti(at)alaskadispatch.com.