TransCanada Wins Alaskan Pipeline Contract

Aug. 29 (Bloomberg) -- TransCanada Corp., the nation's largest pipeline company, won approval from Alaska Governor Sarah Palin to build a $27 billion pipeline to carry natural gas from the Arctic to U.S. markets.

Palin on Aug. 27 signed a bill authorizing the state to award Calgary-based TransCanada a license to build the 1,715- mile (2,744-kilometer) link from Prudhoe Bay to the Alberta Hub in Canada, according to a statement. The license will be granted in 90 days.

``Our company has started field work on the project in order to meet our target date for completing the initial open season within two years,'' TransCanada Vice President Tony Palmer said in the statement.

Alaskan authorities plan to develop gas deposits on Alaska's North Slope that were discovered decades ago and left untouched by the inability to get the fuel to users. Palin solicited pipeline proposals last year and chose TransCanada's proposal after rival plans by BP Plc and ConocoPhillips didn't meet the state's requirements.

Tapping the North Slope fields, which Alaska estimates to hold 35 trillion cubic feet of gas, would help make up for lower state revenue arising from declining oil production. Alaskan crude output has dropped by more than half since 1998.

Alaska owns the gas; BP, ConocoPhillips and Exxon Mobil Corp. hold most of the leases to develop it. The two partners have invited Exxon to join their pipeline venture known as Denali to compete with TransCanada.

State Subsidy

Under its license agreement with the state, TransCanada will get a $500 million subsidy in return for seeking federal regulatory approval for the project and finding customers for the pipeline. The license doesn't guarantee construction of the project.

The link will ship 4.5 billion cubic feet of gas a day through Canada to U.S. markets. TransCanada expects to hold an auction for capacity to help determine the size of the line in July 2010, the company said Aug. 1. The project could be operating by September 2018.

London-based BP is Europe's second-largest oil company behind Royal Dutch Shell Plc. ConocoPhillips, based in Houston, is the third-largest U.S. oil company, ranking behind Exxon and Chevron Corp.