The whole world watched Alaska in 2008: from gaslines to Sarah, the Great Land was big news.

• Author: Bohi, Heidi
• Position: YEAR IN REVIEW - Company overview

TRANSCANADA/ AGIA NEGOTIATIONS

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Access to gas for Alaskans, jobs, training opportunities for youth, the creation of a new module building industry, and an economic boost for Alaskan businesses--just a few of the reasons Alaskans popped the cork when Gov. Sarah Palin announced she had accepted the TransCanada bid to permit, develop and build a natural gas pipeline that marked the first step in constructing the largest-ever private-construction project in the history of North America.

"Today, with the affirmative vote of both chambers of the Alaska State Legislature, we now begin a lifelong partnership with a company that has shown its true commitment to Alaska's future," Palin said during a press conference also announcing the passing of House Bill 3001, authorizing the administration to award the Alaska Gasline Inducement Act (AGIA) to the Alberta-based company.

Although the project was quickly touted by her administration as her signature accomplishment that boasted following a fair-bidding process, it was considered a major blow to ExxonMobil, BP Alaska and ConocoPhillips, who Palin accused of blocking construction for decades, saying she had devised a way to circumvent big oil's delaying tactics.

When the $30 billion project is completed--TransCanada projects that to be in 2018--it will bring natural gas from a treatment plant at Prudhoe Bay through Alaska and into the Yukon Territory, northeastern British Columbia (BC) and on to the Alberta border near Boundary Lake. The project will include new-build and certain existing infrastructure. TransCanada is responsible for designing and constructing the portion located in Alaska and Foothills Pipe Lines is responsible for the project from the Alaska-Yukon border to market connections in Alberta.

Although there are sill a lot of unknowns surrounding the development, based on past experience and assumptions, it would support a total of 160,000 construction, manufacturing and transportation jobs and would be the largest-capacity pipeline in America, carrying billions of dollars worth of natural gas into homes, businesses and electric-generating plants for at least the next 50 years. In addition to tapping into the country's largest-known natural gas reserves of 35 trillion cubic feet, it is estimated that an additional 65 trillion cubic feet wait to be discovered, making the possible cumulative economic effect of the development a $300 billion addition to the gross domestic product.

Although the State gasline license does not guarantee the start of construction, it does mean TransCanada can move forward to secure federal permit applications and get approval from the Federal Energy Regulatory Commission, including environmental and safety reviews. The company also will need to secure shipping commitments from the State's energy producers that control most of the North Slope gas resources.

Tony Palmer, vice president of Alaska development for TransCanada, says the company has already initiated contracts for aerial photography, environmental work and engineering planning. The bulk of the fieldwork will be completed by the summer of 2009 allowing the company to complete the engineering and revise its capital cost estimates.

DENALI: THE ALASKA GAS PIPELINE

Named for the tallest mountain in North America, it seems fitting for Denali-The Alaska Gas Pipeline, a competing gas pipeline project completely outside the State's process, to use the mountain as the name of the largest private energy project in North America.

Although the Alaska Legislature voted to give TransCanada an exclusive gas pipeline license under the Alaska Gasline Inducement Act (AGIA), the granting of the AGIA license will not affect the Denali Pipeline work program, and as long as the State ensures a level playing field, it should not affect the group's plan to reach its first major milestone, an open season--where the shippers make long-term financial commitments to the pipeline company, underpinning pipeline financing--by the end of 2010.

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"We have the right technical and financial resources, we have the Alaska and Canadian experience, and we have the right team to deliver," says Bud Fackrell, Denali president. "The granting of an AGIA license does not change those facts nor our focus."

When Denali announced its decision in April, it said it would spend $600 million in the next three years on engineering and fieldwork before pursuing U.S. and Canadian permission to build the pipeline. The new Anchorage-based project headquarters will have more than 100 employees by year's end and fieldwork...