TransCanada and Exxon Join Forces on the Natural Gas Pipeline to the Lower 48 - Major Victory for the Palin Administration! UPDATE: Palin Interview

Alaska Governor Sarah Palin celebrates a landmark agreement between TransCanada and ExxonMobil to partner together in building Alaska’s natural gas pipeline – the largest and most complex construction project in North America. Governor Palin, center, is joined by (left to right) Marty Massey, Joint interest Manager for Exxon Mobil; Alaska Department of Natural Resources Deputy Commissioner Marty Rutherford; Rich Krueger, President of Exxon Mobil Production Company; Hal Kvisle, President and CEO of TransCanada Corporation; and Dennis McConaghy, Executive Vice-President of Pipeline Strategy and Development.

This is a major victory for the Palin Pipeline, and yes, that is what we are calling it -- the Palin Pipeline!

The News-Miner reports:

Exxon and TransCanada say they have reached a deal to work on an Alaska natural gas pipeline.

The announcement said in part:

"TransCanada Alaska Company, LLC and subsidiaries of Foothills Pipe Lines Ltd. will remain the Alaska Gasline Inducement Act (AGIA) licensees and TransCanada will continue as the primary point of contact with the State of Alaska and the general public for this project.

"As TransCanada and ExxonMobil work together with the goal of successfully advancing a pipeline project, the AGIA contract obligations of TransCanada to the State remain unaffected."

What is not clear from the announcement is whether Exxon would be part of the AGIA "obligations of TransCanada to the state."

Update: TransCanada's press release:

ANCHORAGE, Alaska – June 11, 2009 – TransCanada Corporation (TSX, NYSE: TRP) (TransCanada) today announced that TransCanada and ExxonMobil have reached an agreement to work together on an Alaska gas pipeline.

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.

“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.”

TransCanada Alaska Company, LLC and subsidiaries of Foothills Pipe Lines Ltd. will remain the Alaska Gasline Inducement Act (AGIA) licensees and TransCanada will continue as the primary point of contact with the State of Alaska and the general public for this project. As TransCanada and ExxonMobil work together with the goal of successfully advancing a pipeline project, the AGIA contract obligations of TransCanada to the State remain unaffected.

In November 2007, TransCanada Alaska and Foothills jointly submitted an application under AGIA to build a 4.5 billion cubic feet per day 48-inch diameter natural gas pipeline running approximately 2,700 kilometres (1,700 miles) from a new natural gas treatment plant at Prudhoe Bay on Alaska’s North Slope to Alberta, Canada with an LNG option to deliver gas supplies to a liquefaction facility at Valdez. In December 2008, TransCanada was awarded the AGIA license after prevailing in an open and transparent competitive bid process and receiving the approval of the Alaska legislature. TransCanada has moved forward with project development, which includes engineering, environmental reviews, Alaska Native and Canadian Aboriginal engagement, and commercial work to conclude an initial binding open season by July 2010.

Update II: Tweets from Governor Palin:

Info on today's announcement re: deal reached by TransCanada & ExxonMobil thru AGIA. Historic deal & day in AK & US energy history. (@ about 11:00 a.m. AKDT)

Here's link to presser & photos re: TC/Exxon partnership. http://www.gov.state.ak.us/news.php?id=1901 & http://gov.state.ak.us/large_photo.php?id=343. (@ about 11:10 a.m. AKDT)

For previous coverage of AGIA, please read here, here, here, and for an explanation of AGIA read “AGIA Lives!”.

Update III: Press release from the governor's office:

Historic Agreement Moves AGIA Forward Governor Applauds Private-Sector Alignment

June 11, 2009, Dallas, Texas - TransCanada Corporation and ExxonMobil announced today they have reached terms on a gas pipeline development agreement. TransCanada and ExxonMobil have agreed to work together to progress the Alaska Gasline Inducement Act (AGIA) Gas Pipeline Project.

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. "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.”

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. The next major milestone in the AGIA process is the 2010 Open Season, slated to begin sometime in the second quarter of 2010. The regulatory, design, engineering and cost work leading up to this, and the feedback received in the form of commitments made, will play an important role in continuing the progress made to date.

AGIA Facts:

* Governor Palin introduced Alaskans to AGIA in January 2007, promising swift movement to get Alaska's gas to market.
* Alaska legislators passed AGIA 58 to 1 in May 2007.
* Five entities expressed interest in applying for the AGIA license to proceed with specific commitments from the State of Alaska.
* Private-sector competition created by AGIA encouraged another pipeline project, Denali, to begin down another path to bring Alaska's gas to market.
* Alaska legislators awarded the AGIA license to TC Alaska in August 2008.
* TransCanada pre-filed with the Federal Energy Regulatory Commission (FERC) in May 2009.
* When built, the natural gas pipeline is expected to carry roughly 4 bcf/day, supplying up to 8 percent of the United States' annual consumption.
* TransCanada is a leader in developing and operating energy infrastructure in North America.
* ExxonMobil is the largest publicly traded international oil and gas company.

A copy of the press release issued by TransCanada and ExxonMobil can be found at: http://www.gov.state.ak.us/pdf/AK-TC-EM_ProgressPipelineProject_June11-2009.pdf

A photo from Wednesday’s meeting in Dallas can be found at: http://www.gov.state.ak.us/photos/AGIA-Progress_June10-2009.jpg

Update IV: More tweets from the governor:

More context on AGIA: Here's presser re unveiling of AGIA, my 1st few months in office: http://www.gov.state.ak.us/archive.php?id=170&type=1. (@ about 11:20 a.m. AKDT)

Presser on AK Legislature's 57-1 vote to pass AGIA: http://twitter.com/AKGovSarahPalin/status/2120875388. (@ about 11:22 a.m. AKDT)

More info re: a historic FIVE companies bidding for AGIA license. Landmark progress on project 30 yrs in making. http://www.gov.state.ak.us/archive.php?id=777&type=1 (@ about 11:23 a.m. AKDT)

Final Link: Presser announcing TransCanada as worthy recipient of AGIA license. http://www.gov.state.ak.us/archive.php?id=1375&type=1 (@ about 11:24 a.m. AKDT)

Update V: Statements from Senator Lisa Murkowski, Senator Mark Begich, and Representative Don Young.

Update VI: The ADN Politics Blog post on this announcement includes some quotes criticizing the deal from State Rep. Mike Hawker, whose wife, you might remember, works for Conoco Phillips (who is partnering with BP on the competing Denali pipeline project). The ADN now has a story up on their main page as well, which they say will be updated throughout the afternoon.

Update VII: Gov. Palin is going to be on the Eddie Burke radio show. Listen live here. We will have audio of it later.

Update VIII: Another tweet from Gov. Palin, this time with links to audio and pictures from this afternoon's press conference. Be sure to follow the links:

Audio from today's AGIA press conf. http://www.gov.state.ak.us/audio/AGIA_TransCanada_Exxon_06112009.mp3 & pics from the historic announcement http://www.gov.state.ak.us/photos.php (@ about 4:30 p.m. ADKT)

And one more tweet:

Here's a link to AGIA page providing detailed info on TC/Exxon partnership http://www.gov.state.ak.us/agia/agia_tc-em.php (@ about 8:15 p.m. ADKT)

UPDATE by Daniel: Here's the audio of Governor Palin on the Eddie Burke Show this afternoon: