TransCanada Responds to Denali Project Folding

Palmer says everything TransCanada is doing is on pace for an application next year for a federal pipeline certificate.

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By Bill McAllister
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Story Created: May 19, 2011 at 5:23 PM AKDT

Story Updated: May 19, 2011 at 9:08 PM AKDT

Two days after the Denali gas line project was scrapped, TransCanada is finally addressing the perception in some quarters that there is no market in the Lower 48 for Alaska's natural gas.

Tony Palmer of Transcanada is not interested in speculating about why the Denali firm announced that it could not get commitments from North Slope producers to ship gas.
 
But Palmer says TransCanada is making progress on all aspects of its project.
Transcanada of Calgary, Alberta, is the state licensee under the Alaska Gasline Inducement act, or AGIA.
 
Transcanada, like Denali, held an open season last year to solicit gas-shipping commitments from the producers.
 
Denali, formed by ConocoPhillips and BP, announced Tuesday that subsequent negotiations with producers failed to yield sufficient commitments.
 
That has some legislators questioning whether the TransCanada project is simply being propped up by state match money through AGIA.
 
But Palmer says everything TransCanada is doing is on pace for an application next year for a federal pipeline certificate.
 
“TransCanada has made good progress on commercial negotiations with customers. We've resolved most of the pipeline shipper issues. We still have a couple to go. But customers have also been very clear with us that they need to make concurrent progress with the state on issues between the producers and the state. And those are longstanding matters: resolution of the Point Thomson issue, and resolution of upstream fiscal (terms), which is natural gas taxes."
 
Litigation between the state and ExxonMobil on the Point Thomson field is ongoing, as are settlement talks.
 
 As for the economic concerns about the project, Palmer acknowledges that plentiful shale gas in the Lower 48 is meeting demand and is driving prices down.
 
But Palmer notes that it will be at least 2020 before gas could be delivered through the pipeline, so he says what matters isn't the supply and price today, but what those will be in nine years and going forward.

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