Blog: Dermot Cole
Exxon, TransCanada announce deal to "work together"
Published Thursday, June 11, 2009
Exxon and TransCanada say they have reached a deal to work on an Alaska natural gas pipeline.
The announcment said in part:
"TransCanada Alaska Company, LLC and subsidiaries of Foothills Pipe Lines Ltd. will remain the Alaska Gasline Inducement Act (AGIA) licensees and TransCanada will continue as the primary point of contact with the State of Alaska and the general public for this project.
"As TransCanada and ExxonMobil work together with the goal of successfully advancing a pipeline project, the AGIA contract obligations of TransCanada to the State remain unaffected."
What is not clear from the announcement is whether Exxon would be part of the AGIA "obligations of TransCanada to the state."
Gov. Sarah Palin released a statement today about what she called an "historic achievement."
She said she met with Exxon and TransCanada officials Wednesday in Dallas.
“The meeting not only confirmed TransCanada’s commitment to the AGIA License, but also ExxonMobil’s commitment to continue to advance the Alaska Gasline project with TransCanada, including as additional alignments are reached with other stakeholders," Palin said.
The Associated Press said State Sen. Lesil McGuire, a Republican from Anchorage, commented that Exxon will become an equity partner, but it has not agreed to state licensing terms.
Sens. Mark Begich and Lisa Murkowski both released statements saying this is good news for the pipeline project.
Begich added:
“It eventually will be up to the State Legislature to approve changes to state law which may be requested by Exxon and perhaps the other producers to take the gas line project to the next steps. I believe any Alaska gas line project must provide gas to Alaskans and other benefits, such as jobs and a fair share of revenues, to our citizens."
The Anchorage Daily News quote Republican Rep. Mike Hawker as saying that in essence TransCanada is hiring Exxon as a subcontractor to do work on the gas conditioning plant.
“Exxon will pass its expenses back to TransCanada, TransCanada will bill half of them back to the state of Alaska,” Anchorage Rep. Mike Hawker told the Daily News.
One of the most important questions going forward relates to what Exxon and the other companies have long said about their need to know how much the state intends to collect in taxes for the decades ahead.
In testimony to the Legislature, Exxon has repeatedly said, "At some point we will need to align with the state on fiscal and tariff predictability."
TransCanada said today it would retain majority ownership in the project, but it would not disclose what percentage is owned by Exxon.
The company said it would spend $150 million over the next year, instead of $80 million.
An Exxon spokesman said at a noon news conference that "predictable and durable" tax terms with the state will have to be dealt with before Exxon becomes a full participant.
WOOT!!!
R.I.P. AGIA (taps playing in the background)
Big win for Sarah, and Alaska
List Of winners:
People of Alaska
Sarah Palin
List of Failures:
Begich,
Poe,
Berkowitz,
Knowles,
Hakwer,
Ramras,
F. Murkowski,
Mudflats,
French,
Palin haters
Not sure:
Don Yong
Lisa Murkowski
Wow - everybody checked in except one of your personas, In_Sarah_We_Trust...
Let me address, um, "SarahAmerica": The "List of Winners" is a bit premature, don't you think? After waiting, oh, I dunno - 36 years or so for the gas pipeline, I don't think people in Alaska (who know better) will be celebrating anything until a project actually gets underway.
So, why the list of "Failures"? And who's Don Yong?
The Story of AGIA looks similar to The Saga of Bessie's Boil..
http://poemhunter.com/poem/bessie-s-boil...
I think the Begich quote is quite likely the second most important piece of info on here. This announcement certainly clears the largest (but not only) impediment off the table to the project - having a producer on board, which makes the financing a likelihood. Sarah will take a bow and take credit, and may indeed deserve some of it.
However... the Begich quote certainly telegraphs a possible problem - "changes to state law which may be requested by Exxon...". IF Sarah has made a deal with Exxon ala Murkowski to get this through, then she deserves all the "credit" that such a deal would certainly invoke. Time will tell on both the positive and negative.
A trip down memory lane:
Jan 22, 1997- ADN, "Slope gas profitable by 2010" BP sees gas startup by 2008- 2010.
Dec 28, 1998- PNA (Petroleum News), "Project looking for best combination of pipeline, plant, ships, financing" ARCO describes how first LNG delivery should begin in late 2007.
Jan 28, 1999- PNA, "Developer says plans proceeding toward bulding Alaska gas pipeline". ARCO says, "A good targt date is 2007 for the first gas deliveries to the Asian Far East".
March 4, 2000, "BP, ARCO merger summary". "BP will make Alaska a centerpiece of its global gas activities to commercialize North SLope gas."
Sep 16, 2000, ADN "Gas line backers eager". Three North Slope Corps testify before the Senate. They describe gas flowing by 2007, and FERC filings by 2001.
Sep 21, 2000, ADN, "BP aims for gas by 2007". BP executive describes how project is being planned "aggressively".
Jan 27, 2001, ADN "Gas line no done deal". BP's Richard Oliver, says that BP and other major oil companies are commited to building by 2007 a gas pipeline- BP, Exxon Mobile, and Phillips Petro have put "75 of our best people" in a special downtown office to study the gas pipeline project.
Feb 16, 2001 ADN "Juneau hot spots- gas line plan..." Governor assumes right of way application to be filed in 2001.
Sep 11, 2001, ADN "Gas producers spurn tax breaks". "We're not seeking fiscal incentives, says Dave McDowell- BP, Exxon, Phillips consortium manager. Article describes a 100 million dollar effort to investigate building a gasline to the Lower 48.
Feb 16, 2002 ADN "BP's gas pipeline plans go on hold". When describing when the gas line would go on-line: "It might be 2008, but its perfectly liekly in 2009 and it could be in 2010," said Dick Oliver, BP head of upstream oil operations.
Anyone note a trend here? Big Oil, with great fanfare, makes a promise that the gasline is about ten years away.
Exactly where we are today. TransCanada has made it clear that no decision to build the gasline will even be made for five years.
So what today's fanfare does is give cover to both oil companies who are warehousing Alaska's gas, and Alaska politicians who can not comprehend history.
"So what today's fanfare does is give cover to both oil companies who are warehousing Alaska's gas, and Alaska politicians who can not comprehend history."
Alaska politicans fully comprehend history and thus understand us voters have no memory and will vote over and over for the canidate who says, "Here is the pipeline I brought you." all the while it is just more smoke in the corn cob
"Begich has absolutely no background in oil and gas. He is WAY over his head on this subject."
Doggle,
I guess we know a bit about Begich's background, but what exactly is your expertise? Might you be in the wrong end of the pool yourself?
Doggle,
In other words you have no background! What I thought!
Doggle,
I guess the issue is when a person, who may in fact be clueless, calls someone else clueless, that may say more about the namecaller than the namecall-ee.
So that's why we should always consider the source!
Doggle,
Good example of why analogy is the weakest form of argument!
I will continue to consider the source!
Doogle, it would be irresponsible of Begich not to point out areas of concern that most Alaskans (except you apparently) DO have. Recall the bumper sticker "Please god, give us another pipeline--we won't pis* it away" or something to that effect? It sounds to me like he's looking to make sure that doesn't happen in the face of someone who may indeed be acting more out of political motives to get a deal done to further her political aspirations.
And p.s., last time I checked, politicians will indeed be politicians. Applies to both sides.
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