Why did Alaska say no to Sinopec, others?

3188419dm040_valdez
Sinopec’s goal: a pipeline to Valdez. An oil tanker in Prince William Sound near Valdez. AP Photo.

Alaskan officials only gave one of the five groups to apply to build a natural gas pipeline off the North Slope the OK to move on to a 60-day public review and comment period — pipeline giant TransCanada.
“We have long stated that it only takes one good application,” Gov. Sarah Palin said in a press conference Friday.
The TransCanada proposal calls for a 1,700 mile project through Canada that could cost between $26 billion and $35 billion and begin shipping gas as soon as late 2017.
The state posted the letters it sent to the other four applicants detailing why they didn’t move on to the next stage. The letter to Sinopec, the Chinese company that put in a bid, is interesting. (We wrote a bit more about reaction to their bid a couple of weeks ago).
Sinopec, which called its project the “Alaskans First” Pipeline Services Co., called for a pipeline to the Port of Valdez, an LNG plant and leasing a fleet of as many as 20 LNG tankers to take the gas to markets worldwide — including China.

natural_gas_pipeline_akag105
Department of Natural Resources Deputy Commissioner Marty Rutherford, left, and Gov. Sarah Palin, announcing only TransCanada’s pipeline plan would move to public comment. (AP Photo/Al Grillo)

There were many reasons the state gives for rejecting the application, including a failure to provide details of the rates and tariffs for the project, a lack of documentation that showed clearly Sinopec was committed financially beyond the application, and a clause that “says the government of the People’s Republic of China” has “final approval” of the contract. Sinopec also required the state to renegotiate a new contract after the state awarded it and made a number of requests for additional tax incentives, including no taxes on the LNG tankers that would call at the planned Valdez facility.
Alaska’s congressional delegation warned previously that a Sinopec-owned project would undermine U.S. energy security if Alaskan gas went to China instead of U.S. consumers, but Palin said Friday the backlash against Sinopec did not weigh into its rejection.
“We took the politics out of the process,” she said.
AEnergia, a California-based group that made an application was denied for reasons ranging from failing to detail how the pipeline would run through Canada to relying on North Slope producers as the main source of cash.
The state is expected to post its qualms with a proposal put forth by ConocoPhillips for a pipeline, which was made outside this process.

Comments

comments

SHOW MORE