Blog: Capital Focus
Gas line chatter 3
Published Wednesday, February 20, 2008
Wow. Lots of gas line news in the last few days. Here's a quick roundup.
-Exxon Mobil announced a new plan yesterday for developing the Point Thomson oil field, which contains a good chunk of the known gas reserves on the slope and is pretty critical for a gas line. There's been a question for years over how the field would be developed, and this proposal, from what I can tell, is closer to what the state has been calling for -- it would produce gas liquids in addition to gas, which means less resource waste and a quicker production start. It remains to be seen how the offer plays out in the middle of the state lawsuit.
-U.S. Sen. Ted Stevens made some fairly stark comments on the gas line during his address to the Legislature yesterday. Don't count on Congress to put pressure on the producers to ship their gas; don't count on the feds to provide financial support if the producers don't commit their gas; and you probably need to offer some fiscal certainty to get the companies to commit their gas. House Speaker John Harris said the comments are just one man's opinion but would surely factor into the Legislature's review of TransCanada's plan. Sen. Gene Therriault said Congress could change.
-The Federal Energy Regulatory Commission just issued its annual update on the gas line. It's kind of blah, although you can read what you want into the conclusion that the state "has made progress completing the initial phase and entering the application evaluation phase of AGIA." Also, FERC notes that a pipeline project that has firm shipping commitments when it applies for a FERC license will have a "greater chance of ultimate success." AGIA stipulates that a company seek certification even if it doesn't have shipping commitments.
-Nearly two dozen lawmakers signed onto a Jan. 31 letter to Palin and TransCanada asking for the release of TransCanada's application to the state in 2004. Palin reportedly says she hasn't because of confidentiality issues but will try to get TransCanada to release it anyway.
-And handful of Representatives and a handful of Senators (all Democrats) have both formally asked the state's three major producers to commit now to shipping their gas in a pipeline. Excuse my editorializing, but this seems like a bit of a stunt. My understanding is that no company would commit gas without knowing the detailed tariff information offered during an open season. The authors' argument that lease requirements force leaseholders to ship their gas once there's a "viable gas pipeline" seems simplified. Those letters were dated Feb. 19.
Alright, so I talked with Rep. Les Gara about this last item -- the letter asking the producers to commit their gas to the line. (He was one of the Dems who signed on.) His point is that the companies should be able to offer some qualified answer even at this early point. They could say, for instance, "We'll never commit our gas to a third-party line." Or they could say, "Sure, as long as the tariff and terms of the commitment are reasonable, we'll commit our gas to a third-party pipe." I see how that might help the state plan, but I still doubt they'll get much response.
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