Our Moratoria Story Makes Master Resource Blog - Tony Palmer Seeks Alignment With All Producers

Master Resource by Dave Harbour.  At the NARUC Winter Meeting in Washington D.C. last week, a Study Group composed of regulatory commissioners, consultants, government and university economists, and non-profit association sponsors released their energy research report: ANALYSIS OF THE SOCIAL, ECONOMIC AND ENVIRONMENTAL EFFECTS OF MAINTAINING OIL AND GAS EXPLORATION AND PRODUCTION MORATORIA ON AND BENEATH FEDERAL LANDS.  (See our earlier NGP Moratoria Stories here, here, and here.)  (Assessment of the Combined Relative Impacts of Maintaining Moratoria and Increased Domestic Onshore and Offshore Oil and Gas Resource Estimates).   *   Related PNA story on Moratoria Study by Alan Bailey (NGP Photo).  Research downloads Here.  Go here to review significant, national media coverage.

 

Tony Palmer Addresses Alliance

Report and Commentary by

Dave Harbour

 

Yesterday, TransCanada's Vice President of Alaska Development, Tony Palmer (NGP Photo), told Alaska Support Industry Alliance (Alliance) members that his company's gas pipeline contract with the State of Alaska included, "significant risks and significant benefits".  View his slides, here.

 

The contract to which he referred arises from legislation known as AGIA, the Alaska Gasline Inducement Act, which provides TransCanada with financial "inducement" (Sec. 43.90.110) and other benefits in preparing its application to the Federal Energy Regulatory Commission for a certificate of public convenience and necessity to own and operate an interstate, Alaska natural gas pipeline.  AGIA is also replete with requirements to be met by the licensee, TransCanada.

In answer to my question as to whether TransCanada would be willing to immunize the State against the treble damages clause (Sec. 43.90.440) included in the contract, in conjunction with construction of an in-state 'bullet line' to Southcentral Alaska, Palmer said it would not.  He said the parties entered into the contract in good faith and if one party wishes to terminate the contract there are provisions within the contract for doing so. 

Note: a few days later in Calgary, Palmer said, ""We believe the best and most effective way to bring the project forward is in the alignment of five key parties: the state of Alaska, the three major North Slope producers and TransCanada," said Tony Palmer, TransCanada's vice-president of Alaska development."    *    New Brunswick Business Journal (CP) by Lauren Krugel.  Tony Palmer, TransCanada's vice-president of Alaska development, said having government and industry on the same page for a project of this scale is critical.  "... knowing the rules of the game is always important," he told reporters at the conference.  ... "We're pleased today that we are aligned - ExxonMobil, TransCanada and the state of Alaska. We do believe that the best way to advance the project is to align BP and Conoco with us as well," he said.

Meanwhile, today Rena Delbridge of the Alaska Dispatch reports that, "With a large-diameter gas pipeline uncertain and years out, some lawmakers want to put an in-state natural gas pipeline on the fast track by turning plans over to the Alaska Railroad.    While a huge pipeline such as TransCanada is proposing could link Alaska's natural gas with North American markets, flow is still a decade away, and only if major hurdles are overcome."  Though details associated with such an in-state effort may not be sufficient to trigger the treble damages clause of the AGIA contract, such effort could give rise to arguable ambiguity and allegations of contract violation.  There is not question about the honorable and diligent effort TransCanada has brought to its obligations under AGIA.  But the intensity and chaos emanating from Juneau surrounding state spending, saving, gas pipeline, tax issues should be sufficient to keep TransCanada as alert to mischief--in this election year--as North Slope producers and Southeast Cruise line operators must be.  After all, unpredictability of government action is one of the very worst deterrents to investment and I believe no one would dispute that Alaska has become in the last several years one of the most unpredictable investment climates anywhere.