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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (92498)	10/30/2008 9:41:23 AM
From: Sam	Respond to of 541791

Here is a more recent analysis of Halcro on the pipeline deal 9still written before Palin was picked for VP--July 30, 2008). It is easier to read in the original, here: andrewhalcro.com Debating AGIA...like it matters A Legislative Alert was recently sent out encouraging constituents and state employees alike to call their lawmakers and tell them to vote for AGIA. The alert to recipients lists the "Top 10 Reasons to Vote Yes on AGIA". Meanwhile, we offer just one reason why lawmakers should vote no; it will be a costly failure. Now we debate their ten. LEGISLATIVE ALERT – CALL YOUR ALASKA SENATOR TODAY! Top 10 Reasons to Vote “Yes” on Authorization to Issue the AGIA License to TransCanada Alaska Company, LLC and Foothills Pipe Lines, Ltd. 1. TransCanada Alaska Company, LLC (“TC Alaska”) and its parent corporation, TransCanada Corporation, are high-quality companies in the business of building and operating natural gas pipelines throughout North America. TransCanada is a high-quality company but AGIA sets them up to fail. The producers have already stated that they will not commit gas to a TransCanada pipeline under AGIA. The problems range from the withdrawn partners liability to the restrictive tariff terms that are not commercially viable and actually conflict with federal law. 1. Through an AGIA license, TC Alaska makes legally enforceable commitments to: * Hire Alaskans; * Meet in-state energy needs; * Adhere to a firm timeline for project development all the way through FERC certification; and * Reduce tariffs and increase expansion opportunities that encourage exploration and development of the North Slope gas basin, which provide the basis for long-term careers, economic security and energy security for Alaskans. TransCanada will not be able to hire Alaskans, meet in-state energy needs or reduce tariffs and encourage exploration if they don't build the pipeline. The only way they will build the pipeline is if they get participation from the people who will pay for the pipeline; the producers...who as noted above, have already stated that AGIA does not provide for a commercially viable project. In addition, AGIA requires TransCanada to push on to federal certification even without customers even though FERC has already testified they've never granted a FERC permit to such an applicant. 1. If TC Alaska violates any legally enforceable commitments made under the AGIA license, consequences include recoupment of state reimbursements made under AGIA and state acquisition of project data acquired by TC Alaska during the license term. These commitments mean very little when the state is picking up 85% of the cost. In addition, TransCanada has stated for years that they cannot build this pipeline without the producers agreeing to financially backstop the project. In the words of TransCanada; no customers, no credit, no pipeline. The state doesn't need to worry about TransCanada failing to meet their commitments, why should they when the state is picking up most of the cost. This is a free ride with the possibility of treble damages if the state tries to get out of this marriage. If that happens, it will be another messy divorce with a lot of complaints filed. 1. TC Alaska offers a project that is economically and technically viable, and that maximizes benefits to Alaskans. TransCanada offers a project that rests on their ability to talk the major producers into forgetting all of their economic and legal concerns and committing to pay for a pipeline where they have no say in the costs or flow of gas. 1. TC Alaska faces fewer permitting obstacles in Canada, and, as an independent pipeline company, does not raise the antitrust legal issues that might affect a producer-owned gas pipeline. Committee testimony stated that either project would be able to negotiate the Canadian portion and to say TC would have an advantage, there are others that have raised questions about how much of an advantage that would really mean. In addition, the concern about anti-trust is a red herring. Last month, the FERC testified that they manage all kinds of producer owned pipelines and with the Alaska gas line they have significant tools to ensure the pipe is an open access pipeline. 1. Award of an AGIA license to TC Alaska provides the opportunity to bring all parties together while still protecting Alaska’s interests. This is flat out false. The producers have testified consistently that they won't commit gas under the terms of AGIA. Even Exxon said that AGIA does not offer a commercially viable project. The idea that there will be a shot gun marriage under the terms of AGIA, ignores everything the gas producers have said and also ignores the fact that their current concerns are exactly why they didn't bid on AGIA to begin with. 1. Award of an AGIA license does not commit the state to anything more than the inducements specified in the Alaska Gasline Inducement Act: * Up to $500 million reimbursement for qualified expenditures; * Benefits of an AGIA coordinator and expedited state permit review; * Exclusive enjoyment of the AGIA inducements prior to the commencement of commercial operation. The reason why this seems so easy on the state's pocket book is that TransCanada will derive all of their benefits from building the project and operating the pipeline. A 14% guaranteed rate of return on capitol costs, 7% guaranteed return on cost overruns, gas flow through their hub that will generate a fee for every molecule of gas that flows in and out. All of this while assuming little or no risk. 1. Award of an AGIA license to TC Alaska allows the state to assist smaller pipeline projects that can provide gas for instate needs or spur line projects off the AGIA mainline. There is nothing stopping the state today from assisting smaller pipeline projects that can generate in-state gas needs. You don't have to grant an AGIA license to any company to start moving gas around in-state. However AGIA actually limits the size of pipeline that the state can assist with to protect TransCanada's AGIA license. 1. A gas pipeline company owned by major North Slope oil and gas producers, and that is not licensed under AGIA, may be subject to management decisions that reflect the best interests of the owners, rather than the pipeline company. For example, the gas pipeline company may benefit from expanding the pipeline, but if such an expansion competes with producers’ interests, the producer-owners may not allow the expansion. This is silly. Do you honestly believe that TransCanada is not going to make decisions that reflect the best interests of their owners as well? Just look at their AGIA application and how it is peppered with contingencies. In addition, whoever builds the Alaska gas pipeline must provide an expandable pipeline or it can be ordered by the federal government. 1. Without authorization to issue the AGIA license to TC Alaska, Alaska will once again be dependent on the major North Slope producers for pipeline development and that means: * Project development on the producers’ timeline that fits with their worldwide plans; * Negotiations on fiscal concessions with the producers holding most of the cards; and * Far fewer tools to protect Alaska’s interests or to develop Alaska’s natural gas resources in a way that maximizes benefits to Alaskans. With an AGIA license this state is doing little more than spending $500 million to prop up a straw man. This is a company who testified last month that the reason they need the $500 million inducement is because AGIA requires them to do things they wouldn't do in a normal transaction. This pipeline will be the most expensive oil & gas project in the history of the United States. It is not going to be built by a straw man holding a list of unreasonable demands, while expecting others to assume all of the financial risk. andrewhalcro.com

To: Sam who wrote (92498)	10/30/2008 10:39:45 AM
From: Snowshoe	Read Replies (1) \| Respond to of 541791

>>this Transcanada deal does not appear to be in Alaska's interest--it is all fluff and pretense, with no substance<< That may be true, but Sarah Palin did what the voters and legislature wanted! She fulfilled a major campaign promise by getting AGIA passed and awarding a pipeline license through an open bidding process. AGIA may end up being a stupid and costly waste of money, but it was a bipartisan group effort. >>The person who was in charge of negotiating this deal worked for Transcanada in the past<< So what? She's had a long career with the State of Alaska, and just a brief association with TransCanada some years ago. AGIA held a public open bidding process. Two other major natural gas infrastructure companies, MidAmerican Energy and BG Group, were expected to make serious bids but failed to show up. TransCanada was the only company that submitted an acceptable bid. >>the companies that Transcanada is counting on to use the pipeline and to provide the financing for its construction, were the same companies that were virtually excluded from the bidding!<< But the companies that own the gas have always been free to propose their own pipeline project, and they don't need the state's financing! BP and COP are now working on such a proposal. Ultimately, if the economics support a pipeline then it's widely expected that the two projects will be combined via negotiations. I'll comment further in my response to Mme Syb.