TransCanada wants bigger loan guarantees for Alaska gas pipeline
Fri, 23 January 2009
CALGARY-BASED TransCanada which the State of Alaska has authorized to construct a $26-billion pipeline to transport the State’s gas southwards, wants the US government to increase the loan guarantees offered for the project, its chief executive said earlier this month. Hal Kvisle said inflation has cut the value of the $18 billion in loan guarantees authorized in 2004 by the US Congress, which was then looking to speed construction of the project. The company says it would like to see the guarantees augmented to compensate for inflation as it works towards holding a 2010 open season for the project, where it will look for producers to sign binding contracts to ship gas on the line.
"The question for us is: can we get the US government to ideally increase (the guarantees) in step with inflation, recognizing that inflation has taken a big bite out of them," Kvisle said in an interview. "We need to encourage the US government to perhaps increase the size of the loan guarantees." Mr Kvisle went on to say that TransCanada would also like to have more flexibility on how the loan guarantees are used by the company.
His suggestions include using the guarantee to pay off the pipeline's debt should the company fail, or perhaps to cover some of the interest charges due if the tolls producers pay to ship their gas aren't enough to cover off the cost of financing the line. "Or the loan guarantee, in the extreme, could be used to guarantee the tolls, to guarantee to the producers that the toll won't be above a certain level," Mr Kvisle said.
The new pipeline is planned to run for around 2700km from Prudhoe Bay on Alaska's northern coast to a pipeline hub in Alberta. However, Alaska's gas producers have yet to agree to ship gas via the TransCanada line and two, BP and ConocoPhillips, are proposing a rival line called the Denali project.