TransCanada Corp proposed $40 billion natural gas pipeline from the North Slope through Canada has no customers lined up despite dialogues and death of a competitive project, a company official testified to the Senate Resource Committee of the Alaska Legislature.
Tony Palmer, vice president of Alaska development for TransCanada Corp. sighted three main points over the company’s inability to sign shippers over the dotted line. According to him, critical agreements haven’t been signed because of the uncertainty of the gas supply on the North Slope due to the Point Thomson oil and gas field, long term taxes and royalties and the market for gas in Lower 48 and overseas.
Although the Point Thomson oil and gas field may be resolved in the near future and the cost of the project is determined by the state & producers, the market is still unclear according to Palmer.
The recent debt crisis and credit rating reduction has made it more difficult to finance big projects. Palmer is aspiring that the Congress will encourage federal loan guarantee to relieve financial restrictions.
Another issue that is plaguing the company is the unwillingness of gas producers to sell gas which is essential to sustain oil production.
TransCanada and ExxonMobil have jointly entered into an agreement for the AGIA under the Alaska Gasline Inducement Act project which opened up with much fervor but no final conclusive results. The companies are liable for $500 million in reimbursements under the act but officials are thinking of moving the gas further from North Slope.
BP and ConocoPhillips rival project, Denali was scraped in May citing the same reasons of getting potential customers due to a very difficult environment in North America.
TransCanada’s 90-day open season to get shipper commitments expired on July 30. Despite the financial struggles, Palmer said that the project’s technical developments were on schedule.