"We think we'll be after Mackenzie's in the ground, and up and running," Mr. MacDonald said. Globe and Mail 2/23/06
theglobeandmail.com
Oil firms strike deal on Alaska pipeline
Whether TransCanada, Enbridge will take part in construction remains unresolved
DAVE EBNER
CALGARY -- A proposed natural gas pipeline to connect Alaska with the midwestern United States has taken a big step forward with a deal between the state's governor and three major energy companies.
Exxon Mobil Corp. of Irving, Tex., Britain's BP PLC and Houston-based ConocoPhillips Co. are the three firms that want to build the $20-million (U.S.) pipeline project -- but final approval of the project is years away, and construction won't begin until the next decade.
One of the unresolved issues is whether Canadian pipeline companies TransCanada Corp. and Enbridge Inc., both of Calgary, will be involved in building the Canadian portion of the pipeline.
TransCanada has insisted it already has secured the right to build that leg. But it has been opposed by Enbridge, as well as the three energy companies backing the project.
On Tuesday, Alaska Governor Frank Murkowski announced that a deal for a tax-and-royalty regime for the gas pipeline had been reached with Exxon, BP and ConocoPhillips. More details weren't provided. The deal is closely tied to a new proposal for taxes on oil production in the state by the three companies.
Both agreements must be approved by the state legislature.
The gas-pipeline deal was hailed as a significant milestone by all parties involved, but it does not hasten the schedule for the project, which would see gas flowing about 2014.
BP and its partners want to build the part of the line that will run through Canada, said Ken MacDonald, a vice-president at BP Canada Energy Co., but would consider bringing other players into the fold after the fiscal deal with Alaska is completed.
"If there are other parties interested in participating in our project, what we've said is we will sit down and discuss it with them," he said. "If they can bring some value to the project and are willing to accept some risk, then there may be something that can be done."
TransCanada has argued that it already has the rights to build the Canadian portion of the line, granted under the Northern Pipeline Act of 1978, but BP and its partners disagree.
The three pipeline backers need regulatory approval in Canada to build the Canadian portion of the line, and they want to submit their application to the National Energy Board.
Some industry players had expected the Canadian government to settle the issue last year. However, Mr. MacDonald said there was no need for a decision, noting that no individual player is restricted from asking to build it.
A regulatory application from BP and partners to build the Canadian leg won't be submitted until at least 2009. If the Alaska legislature approves the gas pipeline deal, it would take three years to file an application to the NEB for the Canadian part of the line, Mr. MacDonald said. The regulatory process would last another two years.
That means the Alaska line is not in competition with a proposed Mackenzie Valley natural gas pipeline in the Northwest Territories, for which regulatory hearings are now under way. The Mackenzie line is expected to be moving gas in 2011.
"We think we'll be after Mackenzie's in the ground, and up and running," Mr. MacDonald said.
Enbridge hopes to join the group to help build the Alaska line. "Ultimately, I think the project will be developed by a consortium," said John Carruthers, an Enbridge vice-president. "We think Enbridge can play a role. Others can add value as well."
TransCanada spokeswoman Jennifer Varey said her company is still talking with the producers. "We certainly look forward to seeing how the discussions unfold."
It's still unclear how the situation will be settled, said analyst Brian Purdy of FirstEnergy Capital Corp. "It's possible both could get involved but it's hard to say at this point." |
