Governor Walker responds to HB132

HB 132 seeks to constrain the Alaska Gasline Development Corporation (AGDC) and prevent them from any planning activities related to expanding the size and scope of the Alaska Stand Alone Pipeline (ASAP).



Governor Walker responds to HB132 from Alaska Governor Bill Walker on Vimeo.

Gov. Walker makes good points and  and defends his objective to develop the big gasline project (AKLNG) and work in parallel to make the ASAP option economically viable.

Watch this press conference video - I was real happy to hear the Governor mention competition, the marketplace and potential customers.  This guy understands the trade offs and risk.  He also understands that the neighbors next door are poised to win the LNG race.

Speaking of Canada, they recently came up with a brilliant way to boost the economics of LNG projects. (Globe and Mail Link).  The Canadian approach is to allow LNG projects to depreciate the projects more quickly.  We 'Mericans could benefit from this idea and I don't know why Alaskan politicians aren't taking the hint.  Accelerated depreciation is absolutely the best idea I've heard yet. The idea mitigates the financial risk of spending tens of billions of dollars on a mega project.  I don't agree with the term tax break - it's more of a way of shifting the time the taxes are collected.

Redefining the timing of tax collection is the best idea ever because the government won't collect any taxes from un-built projects.  I hope Senators Lisa Murkowski, Dan Sullivan, Representative Don Young, and Governor Walker warm up to this idea and take note of what Canada has done - it's truly a project enabling action that is 100% in the hands of the politicians. Aside from Gov. Walker exactly what are the rest of Alaska's politicians doing to more the project forward?

The Lastest from TransCanada

The Anchorage Daily News published the following TransCanada story (LINK). According to TransCanada CEO Hal Kvisle everything is full steam ahead as he stated the obvious:

"The most likely shippers that are going to underpin this pipeline are the three existing Prudhoe Bay producers (BP, Conoco Phillips and Exxon Mobil) and so while the open season is out there, in parallel with that we're also holding discussions with those people in advance of the open season and leading up to the conclusion of that.

"And that is probably the single most important step in moving that project forward, are fruitful discussions with the existing producers on the North Slope"

What Kvisle has not explained is why the producers should be compelled to do business with TransCanada. TransCanada expects the AGIA license by late November, but an AGIA license is not needed to build a gas pipeline. So really- what does TransCanada have that the producers actually need?

TransCanada Plans Open Season

June 2010, According to Tony Palmer, TransCanada's vice president for Alaska gas development.

TransCanada to beat Denali in open season (LINK)

By Tim Bradner
Alaska Journal of Commerce

The great pipeline race is on. TransCanada Corp. will begin an open season for an Alaska natural gas pipeline in early 2010, beating a rival pipeline group led by North Slope producers by several months, a senior TransCanada manager told an oil and gas conference in Anchorage Sept. 23.

Meanwhile, TransCanada's rival, the Denali pipeline group, said it is ramping up its work fast and plans to have 300 to 400 people in the field next summer, up from 80 this year.

Tony Palmer, TransCanada's vice president for Alaska gas development, told the annual Alaska Oil and Gas Symposium, sponsored by the American Conference Institute, that his company will conclude its open season June 30, 2010, and will proceed with work toward certifications of the project by the U.S. Federal Energy Regulatory Commission and Canada's National Energy Board.

TransCanada Financials

TransCanada’s high debt to equity ratio and exposure to Lehman’s meltdown prompted me to examine TransCanada in comparison with industry peer Enbridge, Denali Pipeline partners ConocoPhillips and BP, and North Slope producer ExxonMobil. (click to enlarge)

It looks like TransCanada is highly leveraged and not very profitable. What’s not clear to me is exactly how TransCanada would swing the funding for the $40B Alaska Gas Pipeline. Without a successful open season what would they borrow against? If interest rates go up (and they will) will TransCanada plan still turn a profit?

Exxon & The Alaska Gas Pipeline

Here's a good story by the Canadian media on the role of Exxon in the Mackenzie Valley Pipeline and the Alaska Gas Pipeline.

In their opinion Exxon is still a key player in the development of Arctic gas resources.

They quote TransCanada chief executive officer Hal Kvisle as saying:

"Things aren't always as they seem," Mr. Kvisle said. "Exxon is not the front-and-centre party in the press but I know for a fact that they've got very hard work going."

Alaksa Senate Votes 14-5 for TransCanada Eh?

Today the Alaska Senate voted 14-5 to award a license to build a natural gas pipeline to TransCanada.

The license includes a $500 Million (US) payment from the State of Alaska to TransCanada to help the pipeline company move forward with the multi-billion dollar project.

It's not yet a ride on the gravy train with biscuit wheels for the Canadians. They will have to contend with the Denali Pipeline.

The Denali Pipeline doesn't have $500 Million of State handout money, but they do have gas to fill their pipeline. Committed gas is needed to secure funding to build the gas pipeline.

Competing ideas for a All Alaska / All American pipeline for LNG export are off the table for the time being.

It's a big gamble. The $500 Million is actually the smallest sum at risk. The TransCanada plan could derail or delay the ultimate pipeline by years if the process lands all parties in court.

Ironically a total solar eclipse started in the Arctic today over Canada...

A sign from above perhaps?

Column by Ron Oligney

Outstanding article by Ron Oligney.

Oligney puts the Alaska Gas Pipeline in perspective and supports free market solutions over feel-good populism.

Here's another informative set of slides from the same author.

ConocoPhillips Hopes ExxonMobil will Join Denali Pipeline

Conoco CEO Jim Mulva indicates that Conoco is work towards the day when ExxonMobil joins the Alaska Gas Pipeline, dubbed "Denali Pipeline" by partners ConocoPhillips and BP.

When Exxon joins the project it will pretty much rule out other project possibilities and start driving the forward with the momentum of all three major North Slope Producers.

With all three North Slope Producers on board the final key to the project will be some sort of partnership with TransCanada.