Friday, April 29, 2011

TransCanada selling interest in GTN, Bison Pipelines to TC PipeLines, LP

CALGARY, Alta. - TransCanada Corp. (NYSE: TRP) on April 26 announced it has entered into agreements to sell a 25 percent interest in each of Gas Transmission Northwest LLC (GTN) and Bison Pipeline LLC to TC PipeLines, LP (NASDAQ: TCLP) for US$605 million, which includes US$81 million or 25 per ent of GTN's debt. The sale is expected to close in May 2011 and is subject to normal closing conditions.

"The proceeds from the sale of a 25 percent interest in both GTN and Bison will be used to help fund TransCanada's capital program," said Russ Girling, president and chief executive officer of TransCanada. "Once the transaction is complete, TransCanada will hold a 75 percent ownership interest in both pipelines and will continue to manage and operate these high quality assets as part of its integrated North American natural gas transmission network.”

The GTN pipeline system is a 1,353-mile natural gas transmission system that transports Western Canada Sedimentary Basin and Rocky Mountain-sourced natural gas to third party natural gas pipelines and markets in Washington, Oregon and California, and connects with the Partnership's Tuscarora pipeline system.

Bison is a new 303-mile natural gas pipeline connecting Rocky Mountain gas supply to downstream markets via the Northern Border pipeline system. The pipeline was constructed in 2010 and placed in service in January 2011. Shippers have contracts for 0.4 billion cubic feet per day on both Bison and Northern Border that expire in 2021. The Partnership has a 50 percent ownership interest in Northern Border.

TransCanada currently holds a 38.2 percent interest in TC PipeLines, LP, a U.S. master limited partnership.

Thursday, April 28, 2011

PG&E admits it can't fill California PUC order for pipeline records

SAN FRANCISCO, Calif. - Pacific Gas and Electric Co. told California regulators on April 21 that it will never find documents for some of its older gas pipelines, and that if the state doesn't accept "assumptions" about some pipes, the company will have to spend five years shutting them down and hydrostatically testing them.

In a filing with the California Public Utilities Commission, PG&E said it cannot satisfy a state order to come up with "traceable, verifiable and complete" records on all 1,800-plus miles of its pipeline in and around urban areas.

The commission issued the order after it was revealed that PG&E's records incorrectly described as seamless the San Bruno pipeline that exploded Sept. 9, killing eight people and destroying 38 homes. Federal metallurgists have concluded that the pipe failed at a seam weld, but PG&E never conducted inspections that might have detected the problem weld.

PG&E couldn't come up with records for more than 600 miles of gas transmission line by the state's March 15 deadline and has proposed that it pay a $3 million fine while it produces additional documentation by August. The utilities commission is still considering the deal.

In its April 21 filing, PG&E called the order for complete records "unprecedented" and said that full documentation would be a "very difficult, if not infeasible, threshold to achieve."

Before the March 15 deadline, the company enlisted hundreds of employees to search through more than a million boxed documents, looking for records to back up PG&E's stated safety levels on pipelines.

Instead of complete records, PG&E said, it wants the commission to accept what amount to educated guesses about some pipelines.

Wednesday, April 27, 2011

Nobody’s saying how much of Alaska's AGIA money is going to Exxon Mobil

ANCHORAGE, Alaska - Exxon Mobil Corp. is receiving state reimbursement for its role in the proposed natural gas pipeline project through its partnership with TransCanada Corp. But no one will say how much money Exxon has received or for what, citing confidentiality agreements.

The Alaska Gasline Inducement Act (AGIA), passed by the Legislature in 2007, put in place a licensing agreement with TransCanada that envisioned construction of a large-diameter gas pipeline from the North Slope to Canada or Valdez, or perhaps both, depending on what markets potential gas shippers might be focusing on.

AGIA includes a provision that the state reimburse TransCanada for up to $500 million that it spends on pre-construction work and to prepare an application with the Federal Energy Regulatory Commission, due in 2012.

Much of the political debate at the time was over Exxon's role in the project, primarily because Exxon is the major natural gas producer on the North Slope. Concerns were raised over whether it was fair that the state pay Exxon to do what it would do anyway - produce and sell natural gas into a pipeline.

Exxon has never signed on to the license agreement between TransCanada and the state, but within days after the agreement was finalized TransCanada officials made it clear that Exxon was a vital partner in the project.

According to testimony before the Alaska Legislature earlier this month, as of the end of June, the state will either have paid or will owe TransCanada about $125 million. Gov. Sean Parnell has asked for another $160 million for fiscal year 2012, which begins July 1.

TransCanada spokesman Shawn Howard said that TransCanada, as the AGIA licensee, seeks the reimbursement and then receives it from the state. The company then "shares the reimbursement with Exxon Mobil," he said.

Howard said TransCanada won’t reveal how much state money it has passed on to Exxon, citing confidentiality agreements.

Tuesday, April 26, 2011

Montana landowners upset with TransCanada's Bison Pipeline restoration work

BILLINGS, Mont. - TransCanada's recently installed Bison natural gas pipeline has big problems along parts of its 97-mile route through southeastern Montana.

How serious depends on who's talking - the landowners or TransCanada.

A spokesman for the Calgary-based company maintains that collapses of the pipeline trench are isolated and fixable.

Landowners interviewed last week said trenches are falling in around them because of hurried construction and flawed attempts to backfill the pipeline trench. Past experience, they say, has them worried about promises of repairs.

Wide fissures, some three feet deep, have opened directly above the 30-inch, high-pressure pipeline that began delivering natural gas from Wyoming's Powder River Basin to the Northern Border Pipeline in North Dakota on Jan. 14.

"If you got down there and scraped away a few inches, you'd see green pipe," said Wade Klauzer, who ranches on 3,500 acres in Carter County.

He saw exposed pipeline earlier this spring, he said. But continued sloughing of soil from the walls of the collapsing trench covered the pipe by the time he looked again a few days later.

He estimated one of the gaping holes through his pasture at 480 feet long.

"Basically it's a land mine," said the 54-year-old cowman. "The public needs to know about TransCanada."

David Dodson, spokesman for TransCanada, said the company is aware of the problems and they will be fixed as soon as weather, ground conditions and environmental restrictions permit.

In general, there were few issues with the 301-mile-long pipeline, and TransCanada was not hearing a lot of complaints except in the area where the pipeline enters Montana, he said. Subsidences are expected on projects constructed in winter, Dodson said.

PG&E could be vulnerable for $400 million fine in new California PUC probe

SAN JOSE, Calif. – Pacific Gas & Electric on April 18 faced its first key deadline in a punitive state probe examining whether its record-keeping practices contributed to the San Bruno natural gas disaster and other pipeline hazards.

This broader record-keeping inquiry will consider whether the utility's missing or otherwise hard-to-locate records violated the law and hurt the safety of its vast network of gas pipelines.

If PG&E is found guilty, it could potentially be fined $400 million or more, according to a report on April 15 by Bernstein Research, which does detailed financial analysis of utilities.

"The fact that they knew so little about their gas transmission lines strikes many of us as a risk," said Paul Clanon, executive director of the California Public Utilities Commission, which launched the record-keeping investigation in February. Noting that the probe will likely take months to conclude, he added, "it will be a very litigated process. The potential fines could be very significant. PG&E will certainly put up a fight."