15-06-09 ExxonMobil, the world's largest petroleum company and TransCanada, a leader in the field of energy infrastructure in North America have reached an agreement to jointly build the Alaska gas pipeline costing $ 26 bn in order to commercialise Alaska's North Slope natural gas resource.
The 2,760-km pipeline would transport natural gas from Alaska's rich gas fields to consumers in Canada and 48 US states. The pipeline is designed to meet the future needs of clean energy in the whole region apart from generating huge revenues, employment and business opportunities.

The 4.5 bn cfpd, 48-inch gas pipeline from Prudhoe Bay on the North Slope to Alberta, Canada is expected to become operational by 2018.
Defending the huge project, Alaska governor Sarah Palin said the energy resource is needed and will contribute to the US economy, environment and national security. She said anyone who think that US doesn't need this pipeline is ''absolutely short sighted'' because demand for natural gas is on the rise and probably by 2030, we'll see a 40 % increase in demand for gas and it is an alternative for America to not to rely on foreign sources of energy.

Calgary-based TransCanada owns and operates a huge network of more than 59,000 km of pipelines connecting virtually all major gas fields of North America, holding a storage capacity of around 370 bn cf. The company also has interest in 19 power plants producing over 10,900 MW in Canada and the US encompassing a diversified portfolio of nuclear, gas, coal, hydro and wind power based generation facilities.
TransCanada president and CEO Hal Kvisle said: ''Alaska pipeline project will connect Alaska's natural gas resource to new markets. We are pleased that TransCanada and ExxonMobil have reached agreement on initial project terms to progress this exciting initiative.''

''TransCanada envisions that our combined activities with ExxonMobil, along with the support of the State of Alaska, the US and Canadian governments, and other interested parties, will result in the timely completion of the project. Today's announcement is an important step toward that goal,'' Kvisle added.
ExxonMobil will invest $ 150 mm in TransCanada, and become an equity partner. The project is expected to be financially backed by the state of Alaska and lenders from Washington.

Irving-based ExxonMobil is the world's largest publicly traded oil and gas company with presence in several countries spread over six continents with proven mega-project management experience and substantial financial strength. The company is the largest holder of discovered Arctic North Slope natural gas resources.
ExxonMobil president Rich Kruger said that the company has on-the-ground knowledge of Alaska and Canada with experience in working in the Arctic as well as proven ability to build and operate projects of enormous scale in the most challenging environments.

TransCanada obtained the exclusive AGIA (Alaska Gasline Inducement Act) license in last December. The AGIA was passed in 2007 for the purpose of expediting the construction of a pipeline to transport Alaskan natural gas to market, based on certain incentives -- up to $ 500 mm -- to gas producers and transporters as well as specific commitments from those companies. However, the producers are on the look out for some long-term guarantees on taxes.
Both TransCanada and ExxonMobil are partners to another major gas pipeline, the Mackenzie project in Northern Canada. The project envisages a capacity of 1.9 bn cf of gas per day at a cost of $ 14.5 bn.

The project has been struggling to move past delays and rising costs. In 2007, Imperial Oil, the leading company on the Mackenzie, had kept a target of 2014 for completion of the pipeline. Other promoters of the project include ConocoPhillips, Royal Dutch Shell and the Aboriginal Pipeline Group (APG) representing the interests of the aboriginal people of the Northwest Territories.
ExxonMobil is the majority owner, holding close to 70 % stake in Imperial Oil, the leading company on theMackenzie project. TransCanada has invested $ 500 mm in the APG that would own a third of the Mackenzie pipeline.

ExxonMobil said that its involvement in Alaska project does not stop its backing in Mackenzie. Imperial Oil spokesman said that the announcement regarding Alaska pipeline doesn't change their approach to advancing the project, though progress of the two projects would obviously put greater economic strain on Mackenzie.
The ExxonMobil-TransCanada project is a competitor to the Denali gas pipeline project to be developed jointly by UK's BP and Houston-based ConocoPhillips to transport 4 bn cfpd of processed natural gas from Alaska's North Slope to North American consumers. The $ 30 bn project includes a gas treatment plant in North Slope, 3,200-km pipeline to Alberta, Canada and if required, a further 2,400-km long additional pipeline from Alberta to Chicago.