A federal gas pipeline official recommended Tuesday that Alaskans understand it could be months before they get information about prospects for a major gas pipeline project while the two competing developers go about testing the market in their open seasons.
Dipping his toes in a couple political issues at a news conference in Anchorage, federal gas-line coordinator Larry Persily said that nothing in state or federal law requires TransCanada or the Denali Project to disclose open-season bids for space to ship gas in the lines. Whether either line has a "successful" open season -- receiving enough bids to fill the line and justify the enormous expense of construction -- won't be publicly known until early 2011, Persily said.
Republican gubernatorial candidate Bill Walker, a foe of the state-backed TransCanada project, has demanded that Gov. Sean Parnell provide the bids before the August primary election. Walker wants to see a line built to Valdez, where the gas could be exported to Asia. TransCanada's line could go there, but is more likely to end up in Alberta.
Parnell has rejected Walker's demand for documents -- the records don't exist, he said.
Persily said that's the way the system is set up.
"Alaskans need to understand it's not like when the city advertises for bids on a new pickup truck. The bids for that pickup truck close at 5 o'clock, everyone knows before you lock the doors at city hall that night who won the contract," Persily said. "Under the open-season process, when a potential gas shipper turns in their bids to the potential natural gas pipeline developer, no one gets a copy of the bids -- there's no 'cc' on it. Federal Energy Regulatory Commission doesn't get a copy of the bids, the state, the president, I don't -- no one does. Those bids are confidential -- they're a financial proposal from one entity to another."
The TransCanada open season concludes in 10 days, while more than two months remain in Denali's. Because bids are likely to be conditional, TransCanada and Denali have factored in several months of additional negotiation time before they expect to reveal signed contracts for gas transportation -- so-called "precedent agreements."
"People need to continue whatever they do during the summer -- if it's fishing, golfing, hiking," Persily said. "They need to get planning on getting their kids back to school in August and September, they need to count their PFD dollars in October, start working on their holiday shopping list. Hopefully, end of this year, early next year, we'll know if we're closer to a deal on gas line -- we'll know if there are any signed precedent agreements out of the open season."
Even for Persily, there will be no fireworks when the bidding ends, he said.
"Open-season close to me will just be like New Year's Eve. I'm going to go to bed early, and I'll get up, and I'm going to have three bowls of cold cereal. It's not going to be any different. I don't expect any phone calls -- I'm sure I'll get e-mails from someone, 'Have you heard anything?' to which I will respond, 'No.' "
On another issue that has generated political controversy, Persily said Alaskans should be paying attention to measures in Congress seeking to curb climate change, such as cap-and-trade bills that would reduce carbon emissions. Such legislation is bound to help pipeline prospects, he said, because they would encourage coal-fired power plants in the Lower 48 and, possibly, diesel power vehicle fleets, to be converted to natural gas, he said.
Parnell, among many other Republicans, has opposed cap-and-trade legislation because he said it would discourage oil development.
But Persily said Alaskans need to look deeper at the issue. "Any Alaskan who opposes any kind of climate change legislation has just got to realize it may also hurt the gas line," he said. "If we've got 4 1/2 billion cubic feet a day of gas you want to sell, wouldn't you want anything that helps create demand for that, assuming it doesn't hurt you in other ways too?"
Persily also had bad news for Walker and other boosters of a North Slope-to-Valdez line, where gas would be shipped to Asia. His office, created by Congress, is only allowed to assist getting permits for a project sending gas to the Lower 48, he said. Federal loan guarantees have the same kinds of requirements. But that's where the larger market is anyway, he said.
"You get gas to Alberta, you can serve anywhere from upstate New York to Southern California, from Florida to Montana and Canada," Persily said. "The East Asian market -- China, India, South Korea, Taiwan, Japan -- is one-third that size."
Copyright (c) 2010, Anchorage Daily News, Alaska. Distributed by McClatchy-Tribune Information Services.