UPDATE 1-US, Alaska mull pipeline options if Big Oil balks
(Adds comments. In U.S. dollars)
CALGARY, Alberta, March 6 (Reuters) - The U.S. government and Alaska are weighing options for getting a massive natural gas pipeline started should gas producers turn their backs on TransCanada Corp's (TRP.TO) $26 billion proposal, officials said on Thursday.
Alaska Governor Sarah Palin has threatened to revoke leases for oil fields such as Prudhoe Bay if BP Plc (BP.L), Exxon Mobil Corp (XOM.N) and ConocoPhillips (COP.N) refuse to participate in her process for putting forward a pipeline that maximizes benefits to the state.
The producers have said they are leery of co-operating with Canada's biggest pipeline firm on its plan, the only one to win favored status under Palin's Alaska Gasline Inducement Act, leaving the risk that it could have no committed gas supply.
However, Hal Kvisle, TransCanada's chief executive, said he doesn't expect the North Slope producers to agree to ship on the line until the Alaska government firms up its royalty expectations for the gas, and the planning for the line advances.
The producers "are not going to display any enthusiasm until all the pieces of the puzzle are put together," Kvisle told reporters after a speech to an Arctic gas conference in Calgary.
Drue Pearce, federal co-ordinator for Alaska Natural Gas Transportation Projects, said Congress is keen after decades of delay on tapping the 35 trillion cubic feet of North Slope gas reserves to meet fast-growing U.S. demand.
"(Lawmakers have) said: 'Alaska, you need to move because, if we have to, eventually, Congress will step in and make sure this pipeline gets built'," Pearce said after a speech to the conference.
"I don't know what that will look like, if indeed it happens. But it's fair to say that on both sides of the aisle in both the House and the Senate, there is a motivated Congress to bring this gas to market."
The U.S. Department of Energy is studying a "universe" of alternative construction schemes and other undisclosed remedies if there is no agreement, she said. Results of the study have not been made public.
ConocoPhillips has also proposed a gas pipeline, and is doing field studies for a route, officials said. But the company has floated its plan outside the AGIA process and Palin has said it is "critically short of meeting the state's objectives."
Public comments on TransCanada's proposal, which would initially ship 4.5 billion cubic feet of gas a day to its Alberta system from Alaska, starting in 2017, are due Thursday.
The state will take up to about three months to study the feedback before presenting the proposal to the legislature, said Patrick Galvin, commissioner for the Alaska Department of Revenue.
Alaska is well aware that a pipeline could win most of its necessary approvals and be left without producer backing after an "open season" call for shipping commitments, Galvin said.
"It is a clearly identified challenge for the project and AGIA is designed basically to maximize the opportunity to overcome that challenge," he said. Continued...
