JUNEAU, Alaska - TransCanada, the firm entrusted by the State of Alaska with $500 million to build a natural gas pipeline from the North Slope to the Lower 48, says a bill in the Legislature appears to violate an agreement between the company and the state.
Under Alaska House bill 142, TransCanada would have until July to provide the Parnell administration with proof that state payments under the Alaska Gasline Inducement Act are making progress toward the goal of building a gas pipeline.
If TransCanada cannot show firm commitments from energy companies that they'll use a proposed line, the project could be deemed uneconomic, and the state could begin the process of abandoning AGIA.
In prepared testimony introduced during the bill's first hearing on April 4, TransCanada wrote that the bill changes key provisions in the contract and "raises uncertainty of the state’s support for AGIA at a critical time."
Company officials also stated that HB 142 undercuts efforts to advance what they call a successful project, and that there are already provisions in AGIA which allow the state to determine whether the project is economic.
"I can assure you that in the event that the state did change the rules, and it's determined that you changed the rules, that will affect any future gasline project that the state of Alaska seeks to do with a third party," said Tony Palmer, TransCanada vice-president.
Donald Bullock, an attorney for the Legislature, testified that the bill does not breach the contract.
"This bill is just raising the questions: 'Is this project still a good project?'" Bullock said.