June 12, 2009
TransCanada's Alaska Pipeline Project is designed to deliver a reliable and secure source of clean energy to markets for decades to come. With an initial forecasted capital cost of US$26 billion, the project would provide a variety of benefits to Alaska and Canada, as well as the rest of the United States, including substantial revenues, jobs, business opportunities and new, long-term stable supplies of natural gas.
Photo courtesy Office of the Governor
"TransCanada's Alaska Pipeline Project will connect Alaska's natural gas resource to new markets. We are pleased that TransCanada and ExxonMobil have reached agreement on initial project terms to progress this exciting initiative," said Hal Kvisle, TransCanada president and chief executive officer. "TransCanada envisions that our combined activities with ExxonMobil, along with the support of the State of Alaska, the U.S. and Canadian governments, and other interested parties, will result in the timely completion of the project. Today's announcement is an important step toward that goal."
Rich Kruger, president of ExxonMobil Production Company, said, "ExxonMobil and TransCanada have the experience, expertise and financial capability to undertake this project. We have on-the-ground knowledge of Alaska and Canada, experience working in the Arctic, a strong history of technology and innovation, and the proven ability to build and operate projects of enormous scale in the most challenging environments."
"In a volatile world with growing energy needs, the time is now to develop Alaska's valuable resource for the environment, economy and national security," Governor Palin said. She further described this historic announcement as "very encouraging and exciting, but certainly no surprise, because AGIA was crafted to allow just this type of commercial alignment to take place."
The Alaska Gasline Inducement Act (AGIA) was created as a commercial vehicle for advancing the Alaska gas pipeline project through the first stages of development of what will be the largest private energy project in the world.
For the State of Alaska and Alaskans, the owners of the North Slope's world-class hydrocarbon resources, this event represents progress on this long lead-time project. Once construction begins, Alaska will experience economic growth not seen in over a generation, including potentially thousands of jobs created through construction of an open-access pipeline, as well as significant revenues generated from the production and sale of the gas.
Governor Palin said, "The Legislature voted in support of AGIA and subsequently supported issuing TransCanada the AGIA License because the legislators recognized the importance of this investment to our state's economic future. AGIA and its 'must haves' protect the value of the resources that belong to all Alaskans. Of course, we recognize that this step is not the end of the AGIA process, but it is the natural evolution for a project of this magnitude."
Wednesday in Dallas, Governor Palin met with Hal Kvisle, TransCanada president, and Rich Kruger, president of ExxonMobil Production Company, to discuss the proposed alignment. Governor Palin said, "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."
For TransCanada and ExxonMobil, the alignment provides a mutual benefit by bringing together the key skills of two world-class companies to effectively advance a project of maximum value and mutual benefit. For other producer and explorer companies, this project ensures their discovered resources can be transported to market, and at the lowest reasonable transportation cost. For America, this announcement means an affordable and clean source of energy is on its way and that, as a nation, we are much closer to domestic energy independence.
"ExxonMobil recognizes that the State of Alaska has set a course for commercializing the North Slope's trillions of cubic feet of known natural gas reserves," the governor said. "By recognizing the value of Alaska's relationship with TransCanada, ExxonMobil has made a strategic decision that I believe makes good sense. Alaskans will also be pleased to know that TransCanada's obligations to the state as the AGIA licensee are 100 percent intact and unaltered by this alignment with ExxonMobil," a fact that was echoed by Kvisle.
AGIA involved an open and competitive bidding process and resulted in granting a license to TransCanada to move the project forward through one or more Open Seasons and eventual FERC certification. By providing matching funds during the risky development phase of this project, the state has secured commitments from TransCanada to conduct an Open Season by 2010.
The mandated commercial provisions
of the AGIA License also protect the long-term interests of the
state by ensuring that pipeline transportation tariffs will remain
low. This will protect the "net back" value of the
state's natural gas, which will provide Alaska's economic base
for future generations. These same provisions guarantee that
new gas discoveries will be provided access to the pipeline and
that any expansions of the pipeline will not result in tariffs
that unduly burden new explorers for gas.
U. S. Senator Lisa Murkowski (R-AK) said in a prepared statement, "A deal between TransCanada and Exxon is a major sign of progress toward our shared goal of commercializing Alaska's vast natural gas reserves," Murkowski said. "While a lot of work remains to be done, this brings us one step closer to bringing jobs and reliable energy to Alaskans and the nation
"A gas line is absolutely
essential for Alaska's economic future and for the nation's energy
security," Murkowski said. "As the project proceeds,
cooperation between the North Slope producers, TransCanada and
the state will be the key to its success."
U. S. Senator Mark Begich (D-AK) said in a prepared statement, "I am heartened to see this sign of progress on the Alaska natural gas pipeline project. ExxonMobil has always been considered the 'big gorilla' necessary for this project to succeed, so their willingness to get involved and make a substantial financial investment is warmly welcomed."
Begich said, "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."
"Meanwhile, I'll continue
to work with the national administration and Congress to provide
appropriate support in Washington, such as expanded loan guarantees
and other provisions in the energy bill making its way through
the Senate," said Begich.
The North Slope holds an estimated 35 trillion cubic feet of natural gas proven reserves. Exxon holds the rights to slightly more than a third of the North Slope's reserves. The other two major gas leaseholders, ConocoPhillips and BP, are pursuing a separate gas pipeline project called Denali.
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