Anchorage Daily News

Gov. Sarah Palin is calling for TransCanada to get the state license and $500 million subsidy to pursue building a natural gas pipeline from the North Slope.

"It's a better proposal than we had even hoped for," Palin said this morning.

TransCanada is proposing to build a line from the North Slope to Alberta, where it would connect to the North American pipeline network.

The state Legislature will decide on Palin's recommendation to grant a license and seed money to TransCanada in a special session the governor has called to begin June 3.

Getting the exclusive state license and $500 million in seed money wouldn't guarantee TransCanada is going to build the multibillion-dollar pipeline. But it would bind TransCanada to hold an "open season," where natural gas producers would bid for space in the potential pipeline. That would establish the economics of the line and how large it should be.

An issue for TransCanada is that the major oil companies with North Slope gas leases are not onboard with the plan. Two of them, BP and Conoco Phillips, say they are working on their own pipeline project.

BP and Conoco don't need the state license to proceed and didn't ask for the $500 million in state incentive money offered under the Alaska Gasline Inducement Act.

Palin said the TransCanada proposal includes enforceable timelines, reasonable fees charged gas shippers and commitment to expand the pipeline. Palin also said that although the oil companies don't want the state incentive cash, they will want tax concessions.

"The state, in how we get a pipeline, is best protected with the TransCanada project," said state Revenue Commissioner Pat Galvin.

Palin said she thinks the oil companies will get onboard when they see TransCanada is going to build the pipeline. They'll see the money to be made, she said.

Palin also said the TransCanada plan makes more sense than the idea of an "all-Alaska" plan to build a pipeline from the North Slope to Valdez with export of liquefied gas in tankers.

Galvin said the administration reviewed the liquefied natural gas option. Galvin said it fell short in value provided to the state and North Slope producers and in its likelihood to succeed.

Find Sean Cockerham online at adn.com/contact/scockerham or call 257-4344.

Return to adn.com today for updates of this story and see full coverage in Friday's Anchorage Daily News.

ADVERTISEMENT