Alaska approves TransCanada's switch to natural gas plan

Wed May 2, 2012 9:11pm EDT
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By Yereth Rosen

ANCHORAGE, Alaska (Reuters) - Alaska gave formal approval on Wednesday to TransCanada Corp (TRP.TO: Quote) to switch its plans for a massive North Slope natural gas pipeline, dropping long-held ambitions for an overland, 1,700-mile route to Alberta.

The new plan involves a shorter pipeline project aimed at exporting liquefied natural gas (LNG) by tanker vessel.

Alaska state's Natural Resources Commissioner Dan Sullivan and Revenue Commissioner Bryan Butcher formally authorized the change in a new Project Plan Amendment (PPA) for TransCanada, made public on Wednesday.

The Canadian company has held an exclusive state license to develop a natural gas pipeline since 2008 under the Alaska Gasline Inducement Act.

But TransCanada has failed to attract any shippers or customers to its overland project, which envisioned shipments of about 4 billion cubic feet of North Slope natural gas daily.

TransCanada's switch to focus on LNG marks a dramatic shift from decades of planning for an overland pipeline to deliver natural gas to domestic U.S. markets.

It follows a March 30 announcement by the three major Alaska producers - BP (BP.L: Quote), ConocoPhillips (COP.N: Quote) and Exxon Mobil (XOM.N: Quote) - that they are working together to plan a future LNG project as the best way to market the North Slope's long-stranded natural gas reserves.

"A key benefit of the PPA is that it enables all parties - the North Slope producers, the State and the AGIA Licensee - to come together for the first time to work on commercializing North Slope natural gas," Kurt Gibson, director of the state's gas pipeline project office, said in a statement.   Continued...