TransCanada defends gas pipeline project {Alaskan Gas Pipe}

Anchorage Daily News ^ | February 1st, 2010 11:03 PM | SEAN COCKERHAM

[thackney]

News of a higher price tag than expected and competition from other gas supplies are growing skepticism among state legislators that TransCanada Corp. can deliver on the long-awaited natural gas pipeline to the Lower 48.

"Can anyone afford to spend $41 billion and find a way to pay for that investment when natural gas is so cheap?" said Senate President Gary Stevens, a Kodiak Republican. "I think we all have to question that and wonder how it's going. ... There's reason to be concerned, reason to be fearful of what the future is for Alaska."

That was the environment faced by TransCanada Vice President Tony Palmer when he came to the state Capitol Monday and assured lawmakers that the project is right on track. The company on Friday filed its plan for an "open season" during which it hopes the oil companies will commit to be its customers and ship the North Slope natural gas they produce.

"It's our view as a pipeline sponsor that it is viable. But it will be up to the customers to decide their own views in that initial open season. Are they prepared to take that risk?" Palmer said in his testimony to the members of the House Resources Committee. "Because it will be their risk as to what the ultimate commodity price of gas would be."

Documents that TransCanada filed with regulators Friday include much higher cost estimates for the pipeline project than put forth previously. TransCanada is now estimating construction costs of $32 billion to $41 billion, an increase that Palmer attributed in part to inflation in the industry and decline in the U.S. dollar.

STATE SUBSIDIES

...The Legislature committed under the Alaska Gasline Inducement Act to subsidize the project at up to $500 million.