TransCanada Corp proposed a $40 billion natural gas pipeline from the North Slope through Canada has no customers lined up despite dialogues and a competitive project’s death. 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 its inability to sign shippers over the dotted line. According to him, critical agreements haven’t been signed because of the North Slope’s gas supply’s uncertainty due to the Point Thomson oil and gas field, long term taxes and royalties, and the market for gas in the Lower 48 and overseas.
Although the Point Thomson oil and gas field may be resolved shortly and the project’s cost 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 Congress will encourage a federal loan guarantee to relieve financial restrictions.
Another issue 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 fervour 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 scrapped in May, citing the same reasons for getting potential customers due to a challenging North American environment.
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.