Wednesday, June 19, 2013

News
Senator Presses TransCanada On Pipeline Negotiations
Palmer said one problem in the negotiations is the producers want to know the state fiscal terms they would operate under.
By Bill McAllister
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A year after TransCanada's open season for an Alaska natural gas pipeline, lawmakers are getting increasingly frustrated by the confidential negotiations between the pipeline company and the North Slope producers on the major gas line to Lower 48 markets.


As momentum builds for a stand-alone gas line to serve Alaskan consumers, one senator pressed a Transcanada spokesman on what is holding up agreements for shipping commitments for the big line.


What's obvious is that Transcanada did not meet its self-imposed, first-of-the-year target for completing negotiations with BP, Conoco Phillips and Exxon Mobil on terms under which they would ship their gas through the line.


Now Transcanada is facing a demand for more information on where the project stands.


Senator Bill Wielechowski voted for the Alaska Gasline Inducement Act in 2007, and he voted to give the AGIA license to Transcanada in 2008.


But during a Senate Resources Committee hearing, Wielechowski told Transcanada's Tony Palmer the company should be more forthcoming about its negotiations with the three major producers.


"I guess what I'm asking you is, would you be willing to allow us to sign confidentiality agreements to review this information, to get briefings confidentially? Because for us to make these multi-billion dollar decisions, we need to know this information. We need to know the status of this project, where it is, how far along you are."


Palmer responded: "I don't want to put you in a compromising position and I also don't want to put us in a compromising position."


He said under AGIA's terms, Transcanada already has disclosed a tremendous amount of information about the project that would not normally be made public.


But Wielechowski persisted.


"If your internal calculations show that this project is still profitable, I want to know it. If it's not profitable, I need to know it. If the producers are throwing up unreasonable stumbling blocks, I need to know that. As the owner of the resource, we need to know more information than we're getting."


"What you're asking for is something completely outside the bounds of pipeline processes across North America,” Palmer said. “That's what you're asking us to consider to do. And if we do that, you're asking us to put in the hands of you or other legislators -- potentially 60 -- highly confidential information on this project."


Palmer said one problem in the negotiations is the producers want to know the state fiscal terms they would operate under.


"And at that point, you're really in the same position as most projects are at in the first place. It's a straight-up economic decision by customers. Am I willing to commit this many dollars for this many years to pay this pipeline company, and do I think I can make a profit by doing so?"


But Senate Finance Co-Chair Bert Stedman said that discussion would be premature.


"We know we have to some negotiations with the companies and understanding the structure of five years, 10 years, 20 years -- some time frame -- for this type of capital investment. But until we get a little further along with some parameters on what we're dealing with, it is too early."


So whatever the progress -- or lack of it -- behind closed doors, out in the open it's a stalemate.


Palmer says Transcanada is right on time with its technical and regulatory work -- on-track to submit its permit application to the federal energy regulatory commission in October 2012.


He said Transcanada continues to make concessions to the producers in an effort to reach an agreement.


And he said yesterday's announcement by DNR Commissioner Dan Sullivan, that the state and Exxon are close to settling the Point Thomson dispute, is excellent news for the gas line project.


Despite his strong statements against letting lawmakers see confidential information in private, Palmer did not actually rule it out.