Alaska natgas sponsors expect shipper preconditions

ANCHORAGE, Alaska, Sept 15 (Reuters) - Before energy producers commit their natural gas to a costly, yet-to-be-build Alaska pipeline, they are likely to seek firm financial concessions, officials from two companies sponsoring competing projects said at an industry conference on Thursday.

Executives from TransCanada Corp (TRP.TO) and Denali said it is unlikely that future natural gas producers will commit next year to filling shipping space in a still-unbuilt pipeline unless significant fiscal preconditions are met.

Both TransCanada, which holds a state license for a massive natural-gas pipeline and has partnered with Exxon Mobil (XOM.N) on the project, and Denali, a joint natural-gas pipeline company formed by North Slope oil majors BP (BP.L) and ConocoPhillips (COP.N), are seeking to build a 1,700-mile line from Prudhoe Bay to Alberta to carry at least 4 billion cubic feet a day of North Slope natural gas to supply 6 to 8 percent of U.S. needs.

Both are hoping to start deliveries as early as 2018. State officials have estimated the project, which has been pursued for three decades, will cost over $30 billion.

Tony Palmer, TransCanada's vice president for Alaska development, said he expects unclear results from the company's scheduled 2010 open season, the 90-day period from May to July in which shippers are solicited to bid their gas for the pipeline the company proposes to build.

"The larger the project, the more likely it is that there will be conditions-precedent placed on the bids by potential customers," he said at the Alaska Oil and Gas Congress in Anchorage. "I hope we get clean bids to move the gas ... with no conditions precedent. But that, in my view, is highly unlikely."

That means on Aug. 1, immediately after the 90-day open season, "You are unlikely to hear an announcement from this project," Palmer said.

Likewise, Kris Fuhr, vice president of Denali said it would be "naïve" to expect potential shippers to bid decades' worth of natural gas to a new pipeline without preconditions.

"You're asking shippers to make $100 billion commitments," he told Reuters after his speech to the conference. "So we absolutely believe that there are going to be conditions made on those commitments."

Still, in his remarks to the audience, Fuhr seemed more optimistic than Palmer about the likelihood of gaining shipper commitments.

"We fully intend to deliver on a successful open season in 2010," he said in his speech.

Companies that hold leases to the known 35 trillion cubic feet of natural gas on the North Slope -- primarily BP, ConocoPhillips and ExxonMobil -- have repeatedly called for some sort of lock-in of state production taxes, or "fiscal certainty," as a precondition to committing to any new pipeline.

Palmer said that no matter what results from next year's open season, TransCanada plans to continue working on the project.

With its state license, the company is entitled to $500 million in state subsidies, along with a series of other fiscal and regulatory inducements.

Fuhr said Denali has not yet made public a specific date for its planned open season to be held next year, he said. "We are very aware of TransCanada's schedule," he said. "We'll do it when we are ready to do it." (Editing by Marguerita Choy)