Anchorage Daily News

Oil companies BP and Conoco Phillips have made the first move toward getting permission from federal energy regulators to build a natural gas pipeline.

Steve Rinehart, a BP spokesman, said Monday the move wasn't meant to upstage TransCanada Corp., which is pushing a rival pipeline project.

And an executive for TransCanada declined to characterize it as a competitive shot.

But word the oil companies sent the Federal Energy Regulatory Commission a letter seeking preliminary review of its pipeline proposal seemed to steal the show Monday at a legislative hearing on TransCanada's project.

One TransCanada backer, North Pole Republican Sen. Gene Therriault, said the oil companies seemed to time their move for maximum impact.

"The letter being delivered today, right before lunch, was good public relations for them," Therriault said Monday.

Nevertheless, "I'm putting it into the positive column" because any progress toward a gas line is good, he said.

The oil companies, working jointly on a project they call Denali, and the Calgary-based energy firm TransCanada each have proposed a roughly $30 billion gas pipeline running from the North Slope gas fields down the Alaska Highway to Alberta.

The major difference between the two proposals is that TransCanada is seeking a $500 million state subsidy under the Alaska Gasline Inducement Act, or AGIA.

The Denali partners say they don't need the state's money.

After more hearings in Anchorage this week and later in other Alaska communities, state lawmakers are expected to vote next month on whether to award TransCanada a special license that carries the subsidy.

Gov. Sarah Palin and her consultants have studied the TransCanada and Denali projects and concluded the TransCanada proposal is superior. They're urging lawmakers to grant the license and money to TransCanada, suggesting the oil companies aren't sincere in their pledge to pursue a gas line.

On Monday, nearly 40 lawmakers gathered in a crowded banquet room in Anchorage's downtown Howard Johnson hotel and spent hours questioning officials from the regulatory commission, a Washington, D.C., agency that oversees the nation's major energy projects.

Mark Robinson, director of the agency's Office of Energy Projects, said repeatedly that a crucial step toward a gas line -- no matter who aims to build it -- is starting a preliminary project review as soon as possible.

Such a review usually lasts 18 months and involves field surveys and other studies to support the filing of a formal application for permission to build a pipeline, Robinson said.

BP and Conoco's seven-page letter requesting a review was signed by the Denali partnership's new president, Bud Fackrell, a former BP Alaska executive.

Tony Palmer, TransCanada's point man in Alaska, said he couldn't say whether the Denali partners were trying to one-up his company.

He said TransCanada has not yet asked the regulatory commission for the same preliminary review as BP and Conoco did.

But that's OK, Palmer said, as TransCanada remains focused on winning the state license and seed money from legislators. After that, he said, the company has a clear schedule for seeking commission review.

Rinehart, the BP spokesman, said the Denali partners want to move as quickly as possible on their pipeline, including field work this summer, and that's why they moved now for the preliminary review.

The Denali letter concedes the partnership is seeking the review "much earlier in the process than is normally the case with major pipeline projects."

Robinson told lawmakers Monday he advised the oil companies to seek the review right away.

He also said the regulatory commission could approve both rival pipeline projects and then step back to see which one can raise the enormous financing necessary to actually build.

Find Wesley Loy online at adn.com/contact/wloy or call 257-4590.

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