Looks like project funding problems at TransCanada have intensified. See Part I here.
Here's a link to the story on Andrew Halcro's blog:
TransCanada Corp. said it could delay parts of its multibillion-dollar Keystone oil pipeline expansion if its oilsands customers, dogged by the credit crisis, want to hold off on shipping additional crude oil to the Gulf Coast. (Canwest News Service; Financial Post
Published:Wednesday, October 29, 2008)
Kay Cashman, publisher and executive editor of Petroleum News says Palin came close (LINK):
I say she has come closer than any other governor to making a pipeline from Alaska's North Slope to market a reality. In her first two years in office, two major North Slope oil producers, BP and ConocoPhillips, decided to build their own gas pipeline without any up front guarantee of fiscal concessions from the state of Alaska.
Trans-Canada, a major North American pipeline company, was right behind them with $500 million in state matching funds that would either result in a completed pipeline or a valuable certificate of convenience and necessity from the Federal Energy Regulatory Commission that would belong to the state if Trans-Canada pulled out.
It's a bad day for Ted Stevens, a bad day for Alaska and a bad day for the Alaska Gas Pipeline. We'll know in a week whether or not this cost him the election. (LINK).
After the election we can ponder the impacts on the Alaska Gas Pipeline project - there's too many variables in the equation right now.
And the results aren't pretty.
Most of the facts are old news to Alaska Gas Pipeline project news followers, but Justin Pritchard and Garance Burke of the Associated Press have put Palin's boasting in context (LINK).
In interviews and a review of records, the AP found:
_Instead of creating a process that would attract many potential builders, Palin slanted the terms away from an important group — the global energy giants that own the rights to the gas.
_Despite promises and legal guidance not to talk directly with potential bidders, Palin had meetings or phone calls with nearly every major candidate, including TransCanada.
_The leader of Palin's pipeline team had been a partner at a lobbying firm where she worked on behalf of a TransCanada subsidiary. Also, that woman's former business partner at the lobbying firm was TransCanada's lead private lobbyist on the pipeline deal, interacting with legislators in the weeks before the vote to grant TransCanada the contract. Plus, a former TransCanada executive served as an outside consultant to Palin's pipeline team.
_Under a different set of rules four years earlier, TransCanada had offered to build the pipeline without a state subsidy; under Palin, the company could receive a maximum $500 million.
As oil and gas prices plummet keep a sharp eye out for the first cracks in the plans of Alaska Gas Pipeline producers and potential builders. Last week we heard that financially strong ExxonMobil is holding steady with it's capital investment plans. This week we're see some signs of potential weakness in Denali Pipeline partner ConocoPhillips.
According to Brett Clanton of the Houston Chronicle:
ConocoPhillips "will not be as aggressive" with drilling in North America and will probably keep its capital spending budget flat in 2009 amid continued volatility in the commodity and credit markets, the company’s chief executive said Wednesday.ConocoPhillips third quarter earnings call was silent on the progress of the Denali Pipeline or the overall outlook for Alaska Gas production and utilization (transcript link, presentation link).
The temporary pullback in the lower 48 U.S. states and Canada would result only in delays, not cancellations, of projects and would be part of a broader effort by ConocoPhillips to watch costs and prioritize spending, Chairman and Chief Executive James Mulva said in a conference call after release of the company’s third-quarter earnings report.
"Until we see more certainty or probability, I think our concentration is to live within our means," he said. (MORE)
From Bloomberg News (LINK)
Exxon Mobil Chief Executive Officer Rex Tillerson said the company’s capital spending program hasn’t been scaled back by the drop in crude-oil prices. “Nothing that we had in our plans has been affected by this change in prices,” Tillerson told reporters today at an American Petroleum Institute meeting in Scottsdale, Arizona.ConocoPhillips and Chevron will announce capital spending plans later this year.
Gazprom eyes role in Denali pipeline project in Alaska
By Steve Gelsi (LINK)
NEW YORK (MarketWatch) -- Officials from Russian energy giant Gazprom on Tuesday reiterated interest in taking part in a pipeline project to transport natural gas from Alaska to the U.S. market, according to published reports. In a recent visit to Alaska, the world's largest gas producer discussed gas production, transport and supply with counterparts in the U.S., including ConocoPhillips CEO Jim Mulva. ConocoPhillips and BPhave proposed the $30 billion Denali pipeline project to connect natural gas fields in the North Slope of Alaska to the lower 48 statesFrom Reuters (LINK)
"Gazprom has accumulated great experience in exploring hydrocarbon deposits, building and using gas pipelines in the Far North environment. Gazprom's experience will be relevant in realisation of similar projects in Alaska," it said in the statement, without specifying what projects were discussed.
Gazprom's Chief Executive Alexei Miller, who headed the delegation, said in June his firm wanted to join a gas pipeline project to pump the fuel from Alaska across Canada to the U.S. market and had made a proposal to oil majors BP (BP.L: Quote, Profile, Research, Stock Buzz) and ConocoPhillips.
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