Canadian Squabble Could Delay Alaska Gas Pipeline
news.yahoo.com
Tue Nov 9, 3:50 PM ET World - Canada
By Jeffrey Jones
CALGARY, Alberta (Reuters) - A regulatory battle brewing in Canada could spell more delays for a proposed $20 billion natural gas pipeline from Alaska as North American supplies get tighter, top industry officials said on Tuesday.
At issue is nearly three-decade-old legislation governing pipelines that run through the Canadian north, an act major oil companies with gas reserves in Alaska want changed.
The company with certificates under the Northern Pipeline Act to build the line, TransCanada Corp., says it will not consider changes that would strip away its rights after spending C$1.7 billion ($1.4 billion) on connecting lines and preparatory work since the 1970s.
"It's really about historic rights, and it would be our view that we've held the franchise to build the Canadian section for a long time. We've invested significant money to maintain it and make it better every year," TransCanada Chief Executive Hal Kvisle said after speaking to a natural gas conference in Calgary.
"A lot of approvals and permits have been granted under that and we're not very open-minded about any discussion that would take away rights we've earned over the last 25 years."
The stalled pipeline got a big boost in October when the U.S. Senate approved legislation to provide $18 billion in loan guarantees to cover 80 percent of the cost. The bill also has provisions to speed up permitting for the 4.5 billion cubic feet a day project.
But BP Plc, one in a trio of producers with massive gas reserves on Alaska's North Slope, wants three other hurdles cleared before deciding to proceed: a new fiscal plan from the state government, improvements in technology to cut costs and changes to the Canadian regulatory process.
"The bottom line is we have significant concerns about the NPA (Northern Pipeline Act)," said Ken MacDonald, BP's vice-president of Alaska-Canada gas pipelines.
TransCanada's proposal, which includes already-built pipeline segments that carry gas to the U.S. Midwest and Pacific Northwest, is not the same one that was approved under the act in 1978, MacDonald said.
TransCanada wants the line to extend to Alberta, where it would connect with its own huge system, offering access to most major North American markets and lower costs, Kvisle said.
BP is in talks with the Canadian government, hoping to convince officials to allow market forces, rather than the old certificates, determine the route of the line, MacDonald said. That would mean giving jurisdiction to the National Energy Board instead of the Northern Pipeline Agency.
He said the United States has given the industry flexibility to make applications under the equivalent legislation, the Alaska Natural Gas Transportation Act, or through normal regulatory channels for energy projects.
One company with a big stake in changes to Canadian regulation is TransCanada rival Enbridge Inc., which has applied to Alaska for a role in the development.
Enbridge and other companies are unable to compete to build the Canadian segment under the current structure, and Vice-President Stephen Letwin said that could mean litigation, more delays and higher gas prices for consumers.
"(TransCanada is) a great, great company, but I think to take the stand that it's their way or the highway -- that's not our approach," Letwin said. "Our approach is, 'Let's work together.' Maybe there's a better route -- let's find it."
TransCanada also has rights dating back to the 1970s to build the Alaska portion of the line, but has offered to give them to another player if it moves the project forward.
Officials on all sides said the earliest an Alaska pipeline could be in services would be 2012-1014.
($1=$1.20 Canadian) |
