TransCanada confident of Alaska gasline prospects

By Yereth Rosen

ANCHORAGE, Alaska (Reuters) - TransCanada Corp., which has an application for a state license pending before the Alaska legislature, is confident of its ability to deliver the long-desired megaproject shipping North Slope natural gas to U.S. markets, its chairman said Thursday.

"Clearly there's a market demand for this project. It is the most significant source of natural gas that can be brought to market. And I would argue that TransCanada is the company to make this project happen," company chief executive Hal Kvisle said in a news conference with Gov. Sarah Palin.

Palin has recommended that the legislature approve a project license for the TransCanada for the line, which would run nearly 2,000 miles from Prudhoe Bay to the Alberta-British Columbia border. The line would ship the North Slope's vast natural gas supplies -- 35 trillion cubic feet of known reserves, and potentially much more yet to be confirmed -- to consumers in the lower 48 states.

Lawmakers will convene in a special session in Juneau next week to start deliberations on the TransCanada application. Thursday was the second of three days of public meetings in Anchorage detailing the application and the state's evaluation of it.

TransCanada is well-qualified for the project, Palin said at the news conference

"This is not some newfangled oddity, never-been-done-before in their portfolio," the Republican governor said.

Kvisle said he is unfazed by a new $31 billion cost estimate unveiled by the state's consultants. TransCanada's $26 billion estimate still stands, he said, adding that both estimates encompass a wide range of probability, appropriate for such an early point in the planning. "We're comfortable with our cost estimate at this point in time," he said.

He is also confident that TransCanada will be able to strike a deal with the three major North Slope oil producers -- BP, ConocoPhillips and Exxon Mobil -- that would result in them shipping the natural gas they have under lease through the new pipeline.

"I am pretty comfortable that we're going to come up with something they find attractive," he said.

He argued that TransCanada produces none of the gas it ships through its 36,500 miles of pipeline throughout North America, and has no problem keeping those lines full and operating. "We didn't become the largest mover of natural gas in North America without having good relations with our customers," he said.

The three producers have argued that they should control any North Slope natural gas line because they are the companies that would bear the financial risk of shipping project.

ConocoPhillips and BP are promoting their own pipeline project, an alternate to TransCanada's, that would follow the same general route and serve the same market but be producer-owned. That proposal needs no state sanction and is not scheduled to be formally considered by the legislature.

TransCanada, meanwhile, has several multibillion-dollar projects scheduled to be built before any construction starts on the Alaska project. Those include the Keystone crude oil pipeline system, the huge Mackenzie Valley natural gas pipeline in the Northwest Territories and various expansions of existing lines.

There is "no better way to get ready to build the Alaska pipeline than to build a lot of other pipelines along the way," Kvisle said.

"We're very careful about not taking on more than we can handle, because the consequences for TransCanada (in) not being able to execute this project would be very severe," he said.