Enbridge, TransCanada raise spectre of battle to build pipeline
Massive Alaskan project could face delay
theglobeandmail.com
By DAVE EBNER AND SIMON TUCK
Wednesday, March 9, 2005 Page B2
CALGARY and OTTAWA -- Pipeline companies Enbridge Inc. and TransCanada Corp. raised the prospect yesterday of legal battles that could delay the massive Alaskan natural gas pipeline, just as Ottawa said it is almost ready to make a key regulatory decision.
Natural Resources Minister John Efford said he expects the federal government will decide within the next week how to evaluate proposals for the Canadian section of the $20-billion (U.S.) pipeline, which would carry gas from Alaska through Canada and eventually to markets in the United States.
"We need to make a decision sooner rather than later," Mr. Efford said in Ottawa, which is what was told to Alaska Governor Frank Murkowski when he visited the capital 1½ weeks ago to push the government for an answer.
TransCanada believes it has the right to make an exclusive application to build the domestic leg under the Northern Pipeline Act of 1978. Enbridge, based across the street from rival TransCanada in Calgary, wants to make a competing proposal with the National Energy Board, a position supported by the foreign energy giants that have found gas in Alaska, BP PLC, Exxon Mobil Corp. and ConocoPhillips Co.
TransCanada will pursue recourses that could slow the project if the Northern Pipeline Act isn't used, company executive vice-president of gas development Dennis McConaghy said at a conference on Arctic gas in Calgary yesterday. "The NPA is the law of Canada today," he said.
Enbridge vice-president of gas strategy Steve Letwin said that if his company thinks Ottawa's decision isn't fair, "we will fight it."
The escalating tension between Canada's leading pipeline companies comes at a bad time for the state of Alaska and for the United States, both of which badly want to see Alaskan gas flow south to satisfy the lower 48 states' increasing demand for fuel.
On Monday, Mr. Murkowski said the state is considering several options to shoulder some of the risk in building the pipeline, including taking natural gas instead of cash for taxes and royalties from BP, Exxon and Conoco.
It is a "unique position for a state government to take," said Sean Parnell, deputy director of oil and gas in Alaska's natural resources department.
Such incentives could be included in a so-called fiscal contract that may be introduced to Alaskan state legislators this spring, a deal that would set the basis for an application to build a pipeline. The state is negotiating with BP, Exxon and Conoco, as well as TransCanada.
BP said it has "embraced" Alaska's offers.
On the TransCanada-Enbridge issue, BP avoided commenting on the spectre of a fight in the courts. BP simply wants the best project to move forward and said it is too early in the process for any one company to have exclusive rights to anything, said Ken Konrad, a senior vice-president at BP Exploration (Alaska) Inc.
BP could even build the pipe itself, Mr. Konrad said, adding that the British oil major has built more pipelines recently than has TransCanada or Enbridge.
"We don't need them," he said.
Right now, the contract with the state of Alaska is top priority, Mr. Konrad said. "That's what we need to get done."
Commenting on the Mackenzie Valley gas pipeline, which most industry players figure will be built before the Alaska line, Mr. Konrad said it is a "great warm-up act for the big one."
TransCanada has said the Alaska line could be in service by 2012. Mr. Konrad said that was not realistic, predicting 2014-15 as a more likely goal.
An all-Canadian pipeline down the Mackenzie River Valley could be moving Arctic gas south by as early as 2010. |
