TransCanada CEO Hal Kvisle
Two companies planning to build a massive pipeline to transport natural gas from Alaska to southern markets are getting ready for the project's next major step.
Calgary-based TransCanada Corp. and Exxon Mobil Corp. of Irving, Tex., said Friday they filed a plan to U.S. regulators for an open season, essentially an invitation for producers to commit to move their gas along a pipeline, which under one scenario would stretch more than 2,700 kilometres and cost up to $41-billion (U.S.).
The proposed pipeline would be the first to tie into natural gas fields on Alaska's North Slope.
"The open season plan filing is an important step in the development of Alaska natural gas resources and we have worked diligently to advance the project," stated TransCanada chief executive officer Hal Kvisle.
If the U.S. Federal Energy Regulatory Commission accepts the open season filing, the Alaska pipeline partners will open up their offer to potential shippers at the end of April. The open season would last through to the end of July for U.S. shippers. A separate process will also be held in Canada.
"The work of the Alaska Pipeline Project in preparing a comprehensive and competitive open season package reflects the combined technical, planning, commercial and project management expertise of both ExxonMobil and TransCanada," said Neil Duffin, president of ExxonMobil Development Co.
ConocoPhillips Co. and BP PLC , two major North Slope producers, are working on a competing pipeline called Denali outside of the Alaska government process.
Exxon is the largest of the Alaska producers, so its commitment to the TransCanada proposal last summer was a big boost in favour of that project going forward.
Two options will be weighed in the open season. One is to build a 2,737-kilometre line from Alaska to Alberta, where it would connect with TransCanada's existing network that stretches into U.S. markets.
An updated estimate puts the cost of that option between $32-billion and $41-billion and would deliver about 4.5 billion cubic feet of natural gas per day.
A second option would be to transport natural gas 1,287 kilometres to the port of Valdez, Alaska, where it would be converted into liquefied natural gas and transported by sea to North American and international markets. Other companies would build the facility that would condense the natural gas into a more easily transportable liquid state.
The Valdez option would cost between $20-billion and $26-billion. It would be able to deliver three billion cubic feet of natural gas per day.
Both would have an expected in-service date of 2020.
As the Alaska project charges ahead, doubts remain over the fate of a smaller pipeline further to the east in the Northwest Territories' Mackenzie Delta, in which both Exxon and TransCanada are involved.
After years of delays, a federally appointed panel finally approved the $16-billion (Canadian) Mackenzie pipeline - with conditions - a month ago.
But that project still faces a number of regulatory steps, and many wonder whether there will be enough North American demand to warrant both Arctic pipelines, especially with huge volumes flowing from shale gas reservoirs in Canada and the lower 48 U.S. states.