ExxonMobil role pushes Alaska pipeline forward - TransCanada

12 June 2009 19:55  [Source: ICIS news]

Major advance made in huge Alaska pipeline projectWASHINGTON (ICIS news)--TransCanada said on Friday that its partnership with ExxonMobil is a significant step toward the long-planned $26bn (€18.5bn) Alaska pipeline, putting the mega-project on course for spade work in 2015.

Tony Palmer, TransCanada vice president for Alaska development, said the agreement announced on Thursday with ExxonMobil moves the project forward in three significant ways.

He said that ExxonMobil’s participation puts to rest uncertainties raised by Alaska state legislators last year that TransCanada’s cost estimates for the huge undertaking would be credible with gas producers.

“Brining ExxonMobil in on this certainly answers that question,” Palmer said.

He said that the energy giant’s participation also gives assurance to other producers that a major player is committed to the project and is confident of its fulfilment.

That level of confidence among natural gas producers also advances the project, Palmer said, because it increases the likelihood of broader participation by other energy companies when TransCanada begins its “open season” solicitation for gas producers who may want to provide natgas to the pipeline when it is completed in 2018.

The open season will begin in the second quarter next year and will close in July 2010.  By July, gas producers must decide whether they will commit to supply product to the pipeline project.

Third, said Palmer, the deal with ExxonMobil “brings a pre-eminent player for the gas treatment part of the project, an area where we do not have expertise”.

The 1,700-mile (2,735 km) pipeline project - which will connect gas fields in Prudhoe Bay on Alaska’s northeast coast to existing TransCanada pipelines at Boundary Lake in western Alberta province in Canada - includes construction and operation of a gas treatment plant at Prudhoe Bay.

When completed, the initial Alaska pipeline is expected to deliver 1,600bn cubic feet (bcf)/year of natural gas to the lower 48 US states. Anticipated pipeline expansion in later years will boost delivery to some 2,000bcf annually, according to TransCanada.

That is seen as a significant volume of additional supply for the US gas market, which now consumes about 22,000bcf/year.

The US petrochemical industry and many downstream chemical makers are heavily dependent on natural gas as a feedstock and energy fuel. 

The prospect of additional and high-volume supply is a critical factor for the industry, especially as developing US climate control legislation and mandates are expected to trigger much greater demand over the next decade for cleaner-burning natgas to replace coal as an electric utility fuel.

TransCanada, which already operates some 36,500 miles of gas pipelines in North America, was awarded the Alaska pipeline project license by the state government in December last year.

($1 = €0.71)

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By: Joe Kamalick
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