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Saturday, June 13, 2009

TransCanada-ExxonMobil Agreement Moves Alaska Gas Pipeline Project Forward

"TransCanada Corporation and ExxonMobil announced in Dallas, TX [on June 11, 2009] that they...have agreed to work together to progress the Alaska Gasline Inducement Act (AGIA) Gas Pipeline Project" (AGIA, 2009, ¶1).

Alaska Governor Sarah Palin celebrates a landmark agreement between TransCanada and ExxonMobil to partner together in building Alaska’s natural gas pipeline – the largest and most complex construction project in North America. Governor Palin, center, is joined by (left to right) Marty Massey, Joint interest Manager for Exxon Mobil; Alaska Department of Natural Resources Deputy Commissioner Marty Rutherford; Rich Krueger, President of Exxon Mobil Production Company; Hal Kvisle, President and CEO of TransCanada Corporation; and Dennis McConaghy, Executive Vice-President of Pipeline Strategy and Development.

Following is the remainder of Governor Palin's release in its entirety, followed by commentary.

AGIA was created as a commercial vehicle for advancing the Alaska gas pipeline project through the first stages of development of what will be the largest private energy project in the world. "In a volatile world with growing energy needs, the time is now to develop Alaska's valuable resource for the environment, economy and national security,” Governor Palin said. She further described this historic announcement as “very encouraging and exciting, but certainly no surprise, because AGIA was crafted to allow just this type of commercial alignment to take place” (AGIA, 2009, ¶2).

For the State of Alaska and Alaskans, the owners of the North Slope’s world-class hydrocarbon resources, this event represents progress on this long lead-time project. Once construction begins, Alaska will experience economic growth not seen in over a generation, including potentially thousands of jobs created through construction of an open-access pipeline, as well as significant revenues generated from the production and sale of the gas (AGIA, 2009, ¶3).

Governor Palin said, “The Legislature voted in support of AGIA and subsequently supported issuing TransCanada the AGIA License because the legislators recognized the importance of this investment to our state’s economic future. AGIA and its ‘must haves’ protect the value of the resources that belong to all Alaskans. Of course, we recognize that this step is not the end of the AGIA process, but it is the natural evolution for a project of this magnitude.” Wednesday in Dallas, Governor Palin met with Hal Kvisle, TransCanada president, and Rich Kruger, president of ExxonMobil Production Company, to discuss the proposed alignment. Governor Palin said, “The meeting not only confirmed TransCanada’s commitment to the AGIA License, but also ExxonMobil’s commitment to continue to advance the Alaska Gasline project with TransCanada, including as additional alignments are reached with other stakeholders.” For TransCanada and ExxonMobil, the alignment provides a mutual benefit by bringing together the key skills of two world-class companies to effectively advance a project of maximum value and mutual benefit. For other producer and explorer companies, this project ensures their discovered resources can be transported to market, and at the lowest reasonable transportation cost. For America, this announcement means an affordable and clean source of energy is on its way and that, as a nation, we are much closer to domestic energy independence. “ExxonMobil recognizes that the State of Alaska has set a course for commercializing the North Slope’s trillions of cubic feet of known natural gas reserves,” the governor said. “By recognizing the value of Alaska’s relationship with TransCanada, ExxonMobil has made a strategic decision that I believe makes good sense. Alaskans will also be pleased to know that TransCanada’s obligations to the state as the AGIA licensee are 100 percent intact and unaltered by this alignment with ExxonMobil,” a fact that was echoed by Kvisle. AGIA involved an open and competitive bidding process and resulted in granting a license to TransCanada to move the project forward through one or more Open Seasons and eventual FERC certification. By providing matching funds during the risky development phase of this project, the state has secured commitments from TransCanada to conduct an Open Season by 2010 (AGIA, 2009, ¶4).

The mandated commercial provisions of the AGIA License also protect the long-term interests of the state by ensuring that pipeline transportation tariffs will remain low. This will protect the “net back” value of the state’s natural gas, which will provide Alaska’s economic base for future generations. These same provisions guarantee that new gas discoveries will be provided access to the pipeline and that any expansions of the pipeline will not result in tariffs that unduly burden new explorers for gas. The next major milestone in the AGIA process is the 2010 Open Season, slated to begin sometime in the second quarter of 2010. The regulatory, design, engineering and cost work leading up to this, and the feedback received in the form of commitments made, will play an important role in continuing the progress made to date (AGIA, 2009, ¶5).

AGIA Facts:

  • Governor Palin introduced Alaskans to AGIA in January 2007, promising swift movement to get Alaska's gas to market.

  • Alaska legislators passed AGIA 58 to 1 in May 2007.

  • Five entities expressed interest in applying for the AGIA license to proceed with specific commitments from the State of Alaska.

  • Private-sector competition created by AGIA encouraged another pipeline project, Denali, to begin down another path to bring Alaska's gas to market.

  • Alaska legislators awarded the AGIA license to TC Alaska in August 2008.

  • TransCanada pre-filed with the Federal Energy Regulatory Commission (FERC) in May 2009.

  • When built, the natural gas pipeline is expected to carry roughly 4 bcf/day, supplying up to 8 percent of the United States' annual consumption.

  • TransCanada is a leader in developing and operating energy infrastructure in North America.

  • ExxonMobil is the largest publicly traded international oil and gas company.


Governor Palin through her AGIA is turning a 30-year-old pipe dream into not one but two gas pipelines. The AGIA project as documented above will bring natural gas from Alaska's North Slope to the continental United States via a connection in Alberta, Canada. The Denali project will be a smaller intra-state pipeline.

Governor Palin is doing what should be done -- exploring, developing, and using domestic energy sources. By so doing she is reducing our dependence on foreign sources -- many of which come from nations hostile to our interests. Domestic energy is also cheaper. We need more pipelines, more refineries, more power plants. Governor Palin is the right person to get the job done. She does not just talk about domestic energy development. She develops it.

Few elected officials have Governor Palin's subject matter expertise on energy exploration, production, generation, transmission, and distribution.

She chaired "the Interstate Oil and Gas Compact Commission (IOGCC), a multi-state government agency that promotes the conservation and efficient recovery of domestic oil and natural gas resources while protecting health, safety and the environment. She was recently named chair of the National Governors Association (NGA) Natural Resources Committee, which is charged with pursuing legislation to ensure state needs are considered as federal policy is formulated in the areas of agriculture, energy, environmental protection and natural resource management. Prior to being named to this position, she served as co-chair of this committee" (Governor's Biography, ¶7).

This pipeline will be North America's largest infrastructure project. A project of this size and scope requires a proven track record in project management and executive skill. Governor Palin built and honed this skill over 17 years from her early days on the Wasilla City Council, and Mayor of her hometown, as chair of the IOGCC, and as Governor. Even her time spent on a commercial fishing boat as her husband's employee, sportscasting and waiting tables -- all these experiences involving running a successful business, handling and administering money, and performing hard physical labor -- adds up to the Sarah Palin we know today.

She has every reason to hold her head high and proud; she has every reason to strut in her Franco Sarto red high heels with a little more swagger. Governor Palin through AGIA provided us with a real stimulus package!


Dobson, C. (2009, June 11). TransCanada and ExxonMobil work together on Alaska pipeline project. TransCanada Corporation. Retrieved June 11, 2009 from: http://www.gov.state.ak.us/pdf/AK-TC-EM_ProgressPipelineProject_June11-2009.pdf

Governor Palin's Biography. (n.d). State of Alaska, Governor. Retrieved June 11, 2009 from: http://www.gov.state.ak.us/bio.php

Historic agreement moves AGIA forward. Governor applauds private-sector alignment. (2009, June 11). State of Alaska, Governor. Retrieved June 11, 2009 from: http://www.gov.state.ak.us/news.php?id=1901

The Alaska Gasline Inducement Act. (n.d.). State of Alaska, Governor. Retrieved June 11, 2009 from: http://www.gov.state.ak.us/agia/

TransCanada and ExxonMobil Partnership Materials. (n.d.). State of Alaska, Governor. Retrieved June 11, 2009 from: http://www.gov.state.ak.us/agia/agia_tc-em.php

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