Alaska awards huge gas pipeline project license

22 May 2008 23:51  [Source: ICIS news]

WASHINGTON (ICIS news)--Alaska awarded a license on Thursday to a Canadian-led consortium for construction of a $20bn (€12.6bn), 1,700-mile pipeline that will bring up to 2,000bn cubic feet (bcf) of natural gas annually to the lower 48 US states.

 

Alaska Governor Sarah Palin (Republican) announced the license decision, saying the pipeline proposal made by TransCanada Alaska Co. and its partners represented a better deal for Alaska and was more likely of successful conclusion than a competing bid by BP and ConocoPhillips.

 

The pipeline project has long been sought by US chemicals manufacturers because they are heavily dependent on natural gas as a feedstock and energy source.  Chemical companies have seen natgas prices increase nearly five-fold since 1999, forcing plant shutdowns and squeezing profit margins.

 

The controversial and costly pipeline project has been under discussion and intermittent planning for years, but a spokeswoman for Palin said that today’s license announcement marks the first tangible progress toward actual construction of the huge undertaking.

 

TransCanada Alaska Co., a unit of Calgary-based TransCanada, and Foothills Pipelines make up the consortium known as TC Alaska.

 

TC Alaska’s winning license application calls for a 48-inch diameter pipeline that will run 1,715 miles, mostly underground, from a natural gas treatment plant at Prudhoe Bay on Alaska’s resource-rich North Slope coast to the Alberta Hub in western Canada.  That natural gas hub feeds into the existing pipeline network that serves much of the US west, north central and eastern regions.

 

According to the governor’s spokeswoman, Sharon Leighow, TC Alaska’s application anticipates that construction of the pipeline could begin as early as 2014 and would take at least three years to complete, bringing the additional gas supply to the lower 48 by 2017-2018.

 

The initial pipeline would carry some 4.5 bcf of gas daily or 1,600 bcf annually to the lower 48 states.  The TC Alaska application anticipates eventual capacity expansion to 5.9 bcf daily or slightly more than 2,000 bcf annually.

 

Current US natgas consumption is about 22,000 bcf/year.

 

The license decision announced by the governor must be approved by the Alaska state legislature with 60 days.  Once the license is granted that approval, TC Alaska will solicit gas shipping commitments from North Slope producers and then seek financing and federal environmental approval for the project.

 

($1 = €.63)

 

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By: Joe Kamalick
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