Blog: Capital Focus
The idea isn’t new, but Dan Dickinson probably explained for the first time in real lay terms how TransCanada and the producers might work out a deal.
The way he sees it, the state is still in the very early stages of getting a gas line. AGIA was a process to get a pipeline builder, and it worked. Now there’s a whole other process needed to secure the shipping commitments to finance the line.
According to Dickinson, there’s a wide range of things TransCanada -- and the state -- can do now to help make that happen. Roughly speaking, there are things that can happen under AGIA and things that can happen outside AGIA.
Under AGIA, TransCanada has already offered partial pipeline ownership to producers that commit a certain amount of gas during the first open season. According to TransCanada’s Tony Palmer, the company could also seek partners outside those parameters. TransCanada can also negotiate shipping terms with producers, shortening the length of the commitment or locking in rates to sweeten the deal for shippers. According to Sen. Gene Therriault, TransCanada could do other things, too, as long as they didn’t violate the basic requirements in AGIA. It could, for example, agree to earn a lower profit on the pipeline, thereby reducing shipping costs for producers. (An AGIA licensee can modify its project as long as the modification is approved by the state and doesn’t reduce the value of the project to the state.) The state, in turn, could adjust its tax terms or agree to lock them in for a certain period of time, which it already has done to some extent.
Dickinson also suggested TransCanada could negotiate outside AGIA. While he denied that his idea was to keep TransCanada in the game just to get a better deal from the producers, he did imply that a commercial agreement between TransCanada and the producers outside AGIA wouldn’t be the end of the world if it resulted in a pipeline. Today, Rep. Ralph Samuels also suggested a scenario outside of AGIA, in which TransCanada struck a deal with the producers that wasn’t subject to AGIA’s terms.
So far, both the administration and TransCanada have flatly refused to consider any deal-making outside AGIA. In response to Samuels’ comment today, Palmer said TransCanada would adhere to its obligations under AGIA, although he did note that leaving AGIA would require the state’s consent, suggesting TransCanada would consider such a deal if the state was on board.
My prediction? TransCanada teams with Exxon.
If Exxon is to team with TransCanada, it would mean Exxon has reconsidered the Point Thomson lease case with the State. And perhaps the general recognition that Exxon is being squeezed out of the North Slope future oil and gas development for failure to develop the gas resource. Or to slow down AGIA TransCanada in an effort to protect Exxon's other gas production projects.
The Russian and Chinese interest in Alaska's North Slope gas may be likely co-partners with TransCanada, too. Along with Shell and other large and small producers moving forward with the open season as shippers or minor investors in the gas line.
Greatest concern is the in-state use of Alaskan gas for present and future domestic and industrial needs. And second is; the fair distribution of natural gas or equal equivalent to other ALASKANS not on the pipeline route or systems.
Post a comment