ANCHORAGE, Alaska (Reuters) - Alaska gave formal approval on Wednesday to TransCanada Corp (TRP.TO) 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), ConocoPhillips (COP.N) and Exxon Mobil (XOM.N) - 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.
Alaska governor Sean Parnell and other state officials announced earlier this year that a glut of natural gas in the lower 48 states from newly developed shale sources had likely made it economically impossible for the domestic market to support new supplies from Alaska’s North Slope.
A Pacific rim LNG export market now provides the best opportunity for a new pipeline to ship the estimated 35 trillion cubic feet of known North Slope natural gas, the governor and other state officials said.
To allow for a transition to an LNG focus, the state commissioners of revenue and natural resources granted a two-year extension for TransCanada to file an application for federal approval.
TransCanada must now file its application to the Federal Energy Regulatory Commission by October 2014 rather than October this year, the deadline previously established under the Alaska Gasline Inducement Act, state officials said.
Editing by Bill Rigby and Paul Tait