Alaskan Pipeline Project

By Stephen Barlas, Washington Editor | November 2008 Vol. 63 No. 11

FERC officials say they aren’t pressuring the competing Denali and TransCanada Alaskan pipeline projects to merge. But the two projects – one already in the pre filing process – are heading toward submitting construction applications to FERC at roughly the same time in 2011 or 2012, depending on who one talks to, in what would be a regulatory clash and crash that the agency hopes to avoid. Congress is also pressuring the two Alaskan gas transportation contestants, though very subtly. Legislation the House passed in late September, whose primary purpose was extending the congressional ban on offshore oil and gas drilling, included a symbolic amendment meant to strengthen the president’s hand in twisting the arms of Denali and TransCanada/Alaska to combine their efforts.

In an interview, Tony Palmer, vice president, Alaska Development, TransCanada, says his company continues to talk with BP and ConocoPhillips, the Denali partners, about taking an equity interest in the TC pipeline, whose proposed route is essentially the same as Denali’s. “No one has slammed the door,” he states, noting that TransCanada will not make hard and fast offers to the two companies, plus ExxonMobil and other potential shippers, until the start of the open season in spring 2010.

Palmer says FERC has publicly encouraged the two Alaskan pipeline bidders to get together. “That would be positive if it occurs,” adds Palmer. “We favor shippers joining our project.”

Scott Jepsen, spokesman for Denali, is a bit more restrained. “The owners of Denalihave stated that they will consider participation by other parties that add value and reduce risk,” Jepsen states.

Denali has a bit of a head start with FERC, which will approve only one of the two projects. FERC approved Denali’s entry into the pre filing process in June. Palmer notes, however, that FERC granted TC a number of exemptions when approving its “very short” pre filing application, which, he implies, was less than complete. Tamara Young Allen, a FERC spokeswoman, acknowledges that FERC let TC slide on a number of pre filing requirements such as providing a list of landowners along the project’s route.