TransCanada gasline application fails to meet Alaska law: memo
Juneau (Platts)--29Jan2008
platts.com
Alaska legislators have been advised that TransCanada Corporation's
application for a state gas pipeline license under the Alaska Gasline
Inducement Act does not qualify under the law because of conditions the
Canadian pipeline company placed in its proposal, according to a confidential
legal opinion by attorneys under contract to the Alaska Legislature that was
obtained by Platts.
The confidential memo conflicts with the position taken by Governor Sarah
Palin that TransCanada's application does qualify. Palin announced on January
4 that TransCanada submitted the only qualifying proposal of five submitted
under a solicitation for proposals for a pipeline license. One applicant that
was rejected, the Alaska Gasline Port Authority, has asked for reconsideration
of its rejection.
Now, a January 23 opinion prepared by the Washington, D.C.-based law firm
of Saul Ewing, prepared for the Legislative Budget and Audit Committee, argues
that proposals in TransCanada's application for federal loan guarantees to
cover construction cost overruns and a "bridge shipper" provision for the
federal government to guarantee shipping commitments in an initial open season
amount to conditions in its proposal, which is contrary to the state law and
the terms of the solicitation for proposals.
"The application explicitly states... that it is dependent on 'an
acceptable agreement' reached with the U.S. government," the Ewing opinion
said. The law firm cited other provisions in the TransCanada application, that
"If the credit support for the project (from the federal government) is not
sufficient to finance construction of the project" TransCanada will not
proceed with the execution phase.
"Presumably, the credit support would include two major financial
conditions: early access to the $18 billion federal loan guarantee, and the
inclusion of the federal government as a bridge shipper" to backstop
TransCanada if the initial open season failed to attract enough commitments to
ship gas, the Ewing opinion said.
The Palin administration has argued that TransCanada has met the legal
requirements of AGIA and is a qualified applicant. State Resources
Commissioner Tom Irwin told an Anchorage Chamber of Commerce meeting two weeks
ago that the pipeline company's proposals for new federal guarantees are only
ideas the company suggested to enhance the project, and are not conditions to
its agreement to proceed under terms of the state law.
--Tim Bradner, newsdesk@platts.com |
