TransCanada supportive of buyout, state official says

JUNEAU — TransCanada Corp. is supportive of the state buying out the company’s position in a proposed gas project in Alaska, a state official told lawmakers.

Deputy Natural Resources Commissioner Marty Rutherford made the comment during a House Finance Committee hearing Sunday, as legislators, meeting in special session, continued delving into Gov. Bill Walker’s proposal to buy out the Canadian company’s interest in the project. Rutherford and a consultant to Walker’s administration testified before the Senate Finance Committee for several hours Monday and were in front of House Finance later in the day.

Shawn Howard, a spokesman for TransCanada, told The Associated Press that terms of an agreement between the state and company allow the state to take on an increased role in the project.

“Gov. Walker has indicated that’s what he wants to do and so we’re respecting that,” he said Monday. “Beyond that, we don’t really have a lot to add at this point.”

A TransCanada official is scheduled to appear at legislative hearings Wednesday and Thursday.

Walker has argued a buyout would give Alaska a greater say in the project, also being pursued with BP, Exxon Mobil Corp., ConocoPhillips and the Alaska Gasline Development Corp., or AGDC. Under the current arrangement, TransCanada would hold the state’s interest in a pipeline and gas treatment plant. The state-sanctioned AGDC would hold Alaska’s interest in liquefaction facilities.

If a buyout occurs, the administration is proposing that AGDC also would hold the state’s equity position in the pipeline and treatment plant, Rutherford told Senate Finance Monday.

Walker is asking lawmakers to approve about $158 million in spending in buyout- and project-related costs. Of that, about $68 million would go toward buying out TransCanada, according to information from Walker’s budget director.

TransCanada’s inclusion in the project was, in part, a way for the state and TransCanada to get out of a failed, prior gas line arrangement without a big fight. It was cast, too, as a way for the state to not have to pay as much in upfront costs as it would without the company.

But the state would be obligated to pay TransCanada for costs it has put into the project on the state’s behalf, plus about 7 percent interest, whether the project succeeds or fails, said Deepa Poduval, with administration consultant Black & Veatch. The development risks are borne by the state, she said. The state Revenue department believes the state could get financing at a lower cost than with TransCanada.

Poduval acknowledged she helped present a case during the prior administration for why bringing TransCanada into this project was a good idea. She said concerns about potential fallout for the state in trying to disentangle from the former gas line arrangement with TransCanada helped shade that argument, as did questions about whether the state could finance its share. But the state has had time to study those questions and become more comfortable with what it can and cannot do, she told Senate Finance.

It’s not clear yet if the pipeline project will be built. The project still is in a stage of preliminary engineering and design.

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