41.0°

TransCanada Corp. assured the Alaska Legislature on Wednesday it could build a gas pipeline to bring the state's abundant North Slope gas reserves to market, despite the doubts of some lawmakers and competing companies.

The companies that now hold rights to the state's gas - ConocoPhillips, BP and Exxon Mobil Corp. - have said that only those who hold the gas can successfully build the pipeline.

TransCanada Vice President Tony Palmer told the Senate Resources Committee that elsewhere in Canada and the United States, companies that produce oil and gas don't handle transporting their product themselves. Instead, they rely on companies such as his to move gas and oil to market.

"We are an independent pipeline company," Palmer said. "We do not own any of the gas we move across North America."

In TransCanada's first testimony after being named the only qualifying applicant under the Alaska Gasline Inducement Act, Palmer introduced his company, based in Calgary, Alberta, and its capabilities to the legislators.

The departments of Revenue and Natural Resources are now reviewing TransCanada's proposal, and by March will make a decision on whether to recommend to the Legislature that Alaska award an AGIA license to the company.

Palmer said his company proposes building a 48-inch pipeline through Alaska to Alberta, Canada, capable of throughput of at least 4.5 billion cubic feet per day. Trans-Canada's existing pipeline system today ships 15 billion cubic feet every day, he said.

Palmer said concerns that Alaska's gas would go not to U.S. Midwestern markets but would instead be consumed in Alberta were groundless.

"Gas from Alaska will flow on to U.S. markets, as has always been contemplated," he said.

That's an important issue to keep federal political support for the project, supporters think. If Alaska's gas provides dependable power for homes and factories there, it is likely to continue to have strong support in Congress.

Exxon Mobil last year urged the Legislature not to adopt the AGIA process, but instead negotiate tax breaks with the gas holders to encourage them to develop the gas themselves. They argued that Exxon was one of the few companies that could build a project of the size and hold costs down.

Palmer said TransCanada could do that as well.

"TransCanada is very proud of its construction record," he said.

Palmer said the proposal it submitted to the state reduces the company's return, in the event of cost overruns.

"TransCanada will be highly motivated to be sure we do the best job we can possibly to do to control costs," he said.

In its application, TransCanada recommended that the state negotiate tax agreements with the gas producers, ConocoPhillips, BP and Exxon Mobil.

Sen. Bill Wielechowski, D-Anchorage, asked if that a tax deal was required to make a go of it.

Palmer said all TransCanada was asking for in its application was a "review" of the issue by the state.

A skeptical Bert Stedman, R-Sitka, said "You must think it is an obstacle or you wouldn't even have addressed it."

AGIA opponents, including a number of oil and gas producer allies in the state, have said TransCanada application may not meet AGIA's criteria because it includes qualifications such as the request for a review.

Palin administration officials say TransCanada meets AGIA's requirements.

TransCanada has the credentials and capacity to build, own, operate and expand the project," Palmer said.