TransCant-ada....it is.
Friday's headlines about Governor Sarah Palin's decision to recommend TransCanada for an exclusive license to build Alaska's natural gas pipeline will probably read a little like this; "Palin gives TransCanada the nod" or "Palin selects TransCanada".
In all honesty they should read; "Palin bets Alaska's economic future on Juan Valdez and his mule winning the Preakness". Yes ladies and gentlemen, that is how lame this horse race called AGIA has turned out.
To no one's surprise, Palin and her gas line team picked a company which controls no gas and whose critically needed customers have now become their primary competitors. A company that has already said in legislative testimony that even thought the state will give it $500 million, AGIA doesn't require them to build the pipeline.
A company that wouldn't even be at the table if not for the $500 million in cash that Palin is going to hand out. A company that has consistently said they cannot build the project without the producers. A company whose AGIA application clearly stated the state needed to negotiate fiscal certainty with the producers. A company whose balance sheet is so thin they actually have spent time in Washington D.C. trying to get Congress to underwrite their risk.
But this administration has never been fond of reality or details. In fact, the details they do embrace seem to change depending on the audience and the situation.
In their press conference on Thursday, the governor stated one of the reason they chose TransCanada was that they had agreed to enforceable timelines and benchmarks.
Enforceable timelines and benchmarks; for what?
This is a company whose President Tony Palmer said in legislative testimony last February when asked about construction timelines, "We're not obliged to build the pipeline, it is not what AGIA requires."
During today's press conference when one reporter asked about the timelines for TransCanada's completion of the pipeline, Deputy Commissioner Marty Rutherford replied that there were no absolute timelines. Somewhere between 2017 and 2020, Rutherford said.
The governor also stated one of the reason why the TC proposal was better for the state than others was the presence of a fair tariff. But when asked about the cost of the project (which will determine the tariff), Rutherford again said they had no absolute cost.
This comment also flies in the face of the repeated statements made by Palin and her gas line team during the press conference that this project was so wildly profitable. If it so wildly profitable, why is TransCanada going to make the state pick up 85% of the cost of the AGIA process. And again, why does TransCanada need twenty five to thirty year fiscal certainty from the producers in order to finance the line?
Palin also stated another reason why TransCanada was the best choice is because the producers project didn't allow open access for other gas explorers. This is false. FERC will in fact govern access on the Alaska project, not the builder of the pipeline.
In fact the Alaska Natural Gas Pipeline Act passed by Congress in 2004 gives FERC great authority to protect independent producers.
During the debate in Congress, independent companies got every single protection they asked for.
But the biggest flip flop in order to justify signing away the state's economic future to a Canadian company that can't build the line, had to do with Pt. Thomson. During the question and answer session, a reporter asked about the impact of gas line progress with Pt. Thomson being in litigation.
For years it has been a widely held belief (even by the Palin administration) that the gas from Pt. Thomson was critical to a successful open season no matter who was going to build the line. In fact the revenues from Pt. Thomson were factored into the economic modeling Palin's team used to sell lawmakers on how wildly profitable the project was last year during legislative hearings.
But Thursday they changed their tune.
Stating that Pt. Thomson gas wouldn't available for another ten or fifteen years anyway, the Palin team now wants to rewrite history and say the field isn't that critical after all.
Excuse me?
DNR Commissioner Tom Irwin just recently rejected Exxon's latest development plan for Pt. Thomson because of the urgency needed in developing the resources for the gas pipeline and he didn't trust they'd do it in a timely matter. In addition, Palin's gas line team has consistently argued that gas from PT would be available by 2017 if they took back the leases and even argued as much on my radio show back in February.
Apparently they no longer believe their own stories.
The most interesting twist was when the question about Point Thomson was asked to Commissioner Irwin and he didn't answer. Instead Deputy Commissioner Rutherford stepped in and stated that Irwin couldn't answer the question because of recent developments with the Point Thomson appeal.
The producers, given the guidelines by the state, appealed Irwin's decision to reject their latest plan of development (POD).
During today's press conference, Rutherford stated that Irwin wasn't able to answer because he was granting the producers a review.
This is where the politics of this crowd become very transparent.
By agreeing to review his decision of Exxon's Pt. Thomson appeal, Irwin has once again established himself as the adjudicator. In that role, Irwin cannot discuss or explain anything relating to the Pt. Thomson situation.
This means that during the next sixty days while the legislature is reviewing the TransCanada application and would have lots of questions about Irwin's decision on Pt. Thomson, he is off limits to questions while he reviews the decision.
As Dana Carvey's church lady character from Satuday Night Live would say, "How convenient".
There is so much more to comment on. More inconsistencies with the truth in today's press conference. Additional questions about TransCanada's ability and just how much risk this puts the state in by getting married to a company that will end in a messy and expensive divorce.
In addition, where do the All Alaskan Line supporters go now that their former super supporter has thrown them under the bus?
Do Wally Hickel and the Backbone group go quietly into the night?
And what about Denali? They have already stated that they are moving forward regardless and have begun spending money to do field work. How long does TransCanada's Board throw good money after bad when the gas they need is headed in the opposite direction?
Look for a complete review Monday morning.
Archived blogs of interest:
http://www.andrewhalcro.com/feb_7_transcanada_were_not_obliged_to_build_the_pipeline
http://www.andrewhalcro.com/feb_12_agia_odds_ends_that_seem_odd
http://www.andrewhalcro.com/feb_6_agia_dnr_commish_tom_irwin_asks_whose_side_are_you_on
http://www.andrewhalcro.com/june_8_agia_-_signed_sealed_and_delivered