May 22, 2008 / 8:56 PM / in 10 years

Alaska Governor backs TransCanada pipeline bid

ANCHORAGE (Reuters) - Gov. Sarah Palin of Alaska urged state lawmakers on Thursday to back a $26 billion gas pipeline proposal from TransCanada Corp, as the company wooed potential shippers with the prospect of owning part of the massive line.

TransCanada’s proposal for a long-sought pipeline to ship natural gas to U.S. and Canadian markets from Alaska’s North Slope was the only one of a handful that Palin accepted for consideration under state legislation to bolster development.

“We do have great confidence that the lawmakers are going to see the wisdom of this project, approving this project,” she told reporters at a news conference.

Complicating TransCanada’s aims, ConocoPhillips and BP Plc, two of Alaska’s major oil producers, have submitted a competing $30 billion proposal. TransCanada would need their support as shippers on its pipeline.

Palin has said the rival plan falls short of the state’s needs.

“On the one hand you have a series of contractual binding commitments to build the line on terms highly favorable to Alaskans,” Palin said. “On the other hand, we have yet another idea to someday, maybe, build a line but with virtually no detailed information, no commitment, and a need for uncertain billions of dollars of concessions.”

The Alaska legislature will begin considering the competing proposals in early June. If TransCanada is granted a license this summer, it would seek commitments from gas producers in an open season in 2009 or 2010.

TransCanada Alaska President Tony Palmer said his company’s proposal to move Alaska gas through its Alberta pipeline system and onto Eastern Canada and the continental United States, would allow ConocoPhillips, BP and Exxon Mobil Corp to take an equity stake in exchange for committing to pipeline space.

“That should be a way for potential alignment to come about, but I couldn’t speak to how producers will react to that,” Palmer said in an interview.

“We will offer strong and aggressive commercial terms to them. All of that will be public and they will decide at that time how they wish to react.”

He declined to say how much equity TransCanada would be prepared to offer.

Alaska’s North Slope has about 35 trillion cubic feet of proven gas reserves, enough to supply the United States for a year and a half at current consumption rates.

Alaska has been pushing for a pipeline to move that supply reserves to market since the 1970s.

A spokesman for BP Alaska said the rival consortium had already begun work on its line and planned to file for approval with U.S. and Canadian regulators.

“We have already started our project ... we’re not looking for the state’s license, we’re not looking for the $500 million the governor talked about,” spokesman Steve Rinehart said.

Under the Alaska Gasline Inducement Act, the state would reimburse that amount of design-phase spending on qualified projects, such as TransCanada‘s.

BP and ConocoPhillips plan an open season in 2010, he said.

Additional reporting by Jeffrey Jones in Calgary and Matt Daily in New York; Editing by Christian Wiessner

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