Saturday, June 13, 2009

Exxon Joins TransCanada in Alaskan Pipeline

I've noted in previous posts that the emergence of giant shale plays in the Lower 48 states has caused some cold feet in Alaska about the proposed $26 billion gas pipeline from the North Slope to the vicinity of Chicago. TransCanada won the bid for the pipeline, which is officially supported by the state of Alaska through a $500 million incentive called the Alaska Gasline Inducement Act (AGIA). The AGIA is a huge part of Gov. Sarah Palin's agenda, so it's being pushed hard. A second proposed pipeline by BP and ConocoPhillips would do the same thing, but without the explicit support of the state government.

News comes Friday that Exxon Mobil has joined the TransCanada project, giving it greater heft and bringing it closer to the finish line (WSJ print page; PDF copy). Exxon's presence does not change the viability of the project - it simply gives it greater financial stability - but since Exxon controls the largest share of natural gas on the North Slope it's a natural fit.

[6/16/09 - Update: Here is a good article from the Fairbanks News Miner about the Exxon/TransCanada deal that suggests that Exxon might not be as committed to the project as implied and offers a glimpse at some intrigue behind the scenes of the gigantic pipeline project.]

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