Anchorage Daily News

JUNEAU -- TransCanada Corp. wants a license to proceed on a pipeline project that will move North Slope natural gas to Midwest markets, but it will have to wait another week before the Alaska Legislature takes a vote.

Some lawmakers hoped the final vote would be taken no later than Tuesday, before many of them leave the capital for at least five days to attend the Council of State Governments West annual meeting in Anchorage.

But there are hearings on the calendar through Tuesday and an early vote seems unlikely. This troubles some lawmakers mindful of energy assistance bills that still need vetting and approval before the special session ends Aug. 7.

Legislators have an Aug. 2 deadline to either approve or reject Gov. Sarah Palin's recommendation to award TransCanada an exclusive license to pursue federal permits and commitments to ship natural gas in a 1,715-mile line.

It's a vote lawmakers deem among the most important in the state's 50-year history because energy production is the state's economic lifeline.

"The harm in waiting another five or six days is you only have so many days," said Rep. Mike Doogan, an Anchorage Democrat.

"The last time I've looked at (the session agenda), we've got four or five other things to do," he said. "Even if you go right to the end of the hearing schedule, you've still got time to deal with this."

House Rules Chairman John Coghill, R-North Pole, said he understands the concerns, but the state committed to hosting this conference several years ago.

"If it was in Seattle, I would not encourage people to go, but we requested to host this," Coghill said. "It's the obligation, not necessarily the group, that I pay a higher respect to.

"The closer you get to people having to make a decision, the higher level of intensity you're going to find the questioning. All of this takes reflective time on an issue like this."

The Senate plans to let the House vote first, said Senate Rules Chairman Gary Stevens, R-Kodiak, who added he believes the 20-member Senate has the votes to back Palin's selection of TransCanada.

"My position is let's wait until the House votes yes," Stevens said. "If the House votes yes, and passes it out, then the Senate will be here to take a vote.

"If they don't vote yes, then there is no reason to be here to take a vote. I'd like to see the House pass it out, so we can consider it."

TransCanada was one of five companies that applied under the bid requirements of the state's Alaska Gasline Inducement Act on Nov. 30, 2007.

In early April, BP PLC and Conoco Phillips announced a joint venture named Denali that would pursue a competing project, and lawmakers suddenly had two projects to weigh.

Lawmakers are directly considering one project, but essentially have two choices: approve a license for TransCanada and let the company go forward; decline it and thereby give default approval to the Denali project.

TransCanada supporters like the Calgary-based company's proven record for building and maintaining pipelines and believe an independent pipeline owner is friendly toward future expansion and North Slope exploration.

Some say a pipeline owned by North Slope leaseholders BP, Conoco Phillips and Exxon Mobil Corp. creates a monopoly that is not conducive to further exploration by other companies.

Recent federal regulatory rulings saying owners of the 800-mile, trans-Alaska line -- primarily the oil producers -- overcharged for shipping oil have enhanced this concern.

A license to TransCanada, however, in no way assures pipeline construction. It does provide up to $500 million seed money toward a guarantee TransCanada will embark on an expensive pursuit of federal certification.

The $500 million is one problem for those looking to turn down Palin's backing of TransCanada, especially when BP and Conoco Phillips aren't asking for any upfront money and have already begun field work.

Critics also aren't convinced TransCanada can negotiate a deal with North Slope leaseholders to ship gas. These are called firm transportation commitments and underpin the financing of the multibillion dollar project. Without them, there is no project.

But Denali doubters are dubious of the two companies' intentions, saying the companies are dangling their late arriving proposal to lure away TransCanada supporters.

And lawmakers also have fresh memories of BP's pipeline maintenance troubles that led to a partial shut down of the nation's largest oil field two years ago.

Maintenance issues led to a 200,000 gallon leak and produced a misdemeanor guilty plea to a federal environmental crime for failing to prevent a crude spill across a swath of delicate tundra.

House Rep. Mike Kelly, a Fairbanks Republican, said he likes what he sees in TransCanada, but also sees nothing disruptive with Denali's late entry.

"I'm an options guy, and it's my strong preference that we keep TransCanada in play," he said "The fact that (Denali) is advancing a project as well certainly gives us more choice and indicates more interest than we've seen in the past."

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