ANCHORAGE, Alaska (Reuters) - Gov. Sarah Palin on Wednesday signed a bill giving the state authority to award TransCanada Corp TRP.T a license to build and operate a multibillion-dollar pipeline to ship natural gas from the North Slope.
The line, which the company estimates will cost $26 billion to build, would ship about 4 billion cubic feet of natural gas a day starting in 2018, according to TransCanada’s plan.
Two big oil producers, BP (BP.L) and ConocoPhillips (COP.N), are pushing a competing natural gas pipeline plan. But the license to TransCanada would ensure that the state would not negotiate with any other developer.
The bill, passed by the legislature in a special session, goes into effect in 90 days, after which state officials will have the power to officially award the license.
Palin called the bill a milestone in Alaska’s decades-long effort to secure a pipeline to deliver the North Slope’s known 35 trillion cubic feet of natural gas to markets.
“It’s a huge step forward on the new road of making that Alaska gas pipeline a reality,” the Republican governor said before signing the bill at the Alaska AFL-CIO’s biannual conference.
TransCanada proposes to build a 1,715-mile line from Prudhoe Bay to an existing pipeline hub in Canada.
The company’s bid was the only one of five proposals submitted last year that met all the terms of the Alaska Gasline Inducement Act, which established state mandates for a natural gas project.
Palin reiterated her belief that TransCanada is right for the project. “We have North America’s premier independent pipeline company working with us now,” she said.
Although it will be months before a license is formally awarded, TransCanada has started field work, said Tony Palmer, company vice president for Alaska natural gas development.
Palmer said at the bill signing that TransCanada was seeking shipping commitments from natural gas producers including the major North Slope oil producers -- BP, ConocoPhillips and Exxon Mobil (XOM.N) -- which hold leases to most of the North Slope’s known natural gas.
Supporters of the competing Alaska natural gas pipeline project, called Denali, say it has better financial backing than TransCanada’s project. But TransCanada backers consider it crucial to ensure that any new pipeline is owned and operated independently of the resource producers so there is ready access to new shippers.
Palmer said TransCanada would do “whatever we can to put forth an attractive commercial proposal” to producers and shippers.
BP, ConocoPhillips and Exxon Mobil declined to submit bids for a state license, saying the law had overly rigid mandates that they could not meet.
Reporting by Yereth Rosen; Editing by David Gregorio