SOMBA K'E/YELLOWKNIFE - In the eyes of some, the Alaska Pipeline Project has stood as a rival project to our territory's own proposed natural gas pipeline, the Mackenzie Gas Project.

The project, which is being developed by TransCanada and ExxonMobil, will connect Alaska's North Slope natural gas resource to new markets.

But as our recent discussion with Tony Palmer, vice president of Alaska development for TransCanada, shows, the Alaska Pipeline Project is by no means a slam dunk, either.

While the project will not be assessed by a federally-appointed quasi-judicial independent panel akin to the Joint Review Panel, it is, like the Mackenzie Gas Project, dependent on deadlines being met by other parties, including potential customers and U.S. federal regulators.

Here, Palmer speaks with News/North about the progress the project is making and the process it has yet to go through - a process similar in many ways to that of the Mackenzie Gas Project.

News/North: The Alaska Pipeline Project reached a significant milestone this year. What was that?

Palmer: Every pipeline project goes through a number of commercial and regulatory phases, and an important commercial stage for a pipeline is to try and attract customers, and we do through a process called an open season.

We provide commercial, economic, capital cost estimates to our customers as well as terms and conditions of service. They get to review (those) and make a decision as to whether or not they choose to bid for volumes in that open season.

That concluded for us on July 31 of this year.

News/North: Once you get the bids, what follows?

Palmer: Post open-season, it is the norm, in large projects, to have conditioned bids and we have to try and turn those conditioned bids into actual precedent agreements - contracts, in effect.

We will be negotiating with those potential customers over a course of several months to try to reach that agreement stage.

News/North: How long will that take?

Palmer: We've said that we're targeting to achieve that by the year-end of this year.

News/North: Some might assess the commercial viability of a project based on the amount of bids it has received. Can you characterize the amount of bids your project received?

Palmer: I can tell you the statement that I made on July 31 and nothing more, and that is that we got multiple bids from major players and others for significant volumes. But I'm not in a position to quantify it, and the reason for that is we're in a very competitive business. The gas business is highly competitive. Alaska gas will have to compete in the marketplace, either internationally or domestically, with gas from other supply sources.

News/North: Where is the project at on the permitting side of things?

Palmer: The Federal Energy Regulatory Commission (FERC) is the counterpart in the United States to the National Energy Board.

One our obligations is, regardless of the outcome of this open season, is to make a FERC filing, and we've committed to do so by the fall of 2012.

So we will do that. The counterpart in Canada to approve the Canadian portion of our project is actually an entity called the Northern Pipeline Agency. It's a single window regulatory agency that will approve the construction of the project. The tolls and tariffs in Canada will still be approved by the National Energy Board.

News/North: Will you go through two different assessments - one for the portions of the project falling on the United States, and another for the portions falling on Canadian land?

Palmer: We're in a unique situation in that we have an NEB certificate that was granted for the Canadian portion of the project some 30 years ago, and we've used that certificate to construct the southern portions of it, from Alberta south. We've been flowing Alberta gas since 1981 on that system. But the Canadian portions from the Alaska-Yukon border into the middle of Alberta still need to be constructed. We would use that certificate, and of course we have to move from having that certificate to actually get what's called "leave to construct."

News/North: When do you see construction of the Alaska Pipeline Project commencing?

Palmer: Once we get to 2012 and we make our application, we no longer control the timing. The regulator will give us approval. We've targeted that they would give an approval by 2014 and that's our estimation ... Our target, if everyone hits their dates, would be to commence construction in ... 2015-2016 and actually be in service by the fall of 2020.

News/North: Regardless of what fence you sit on, there's no denying that the Joint Review Panel process for the Mackenzie Gas Project has delayed that project's regulatory process. Will the Alaska Pipeline Project be reviewed by such a panel?

Palmer: In the United States, FERC will do a review of the environmental assessment. In fact ... there's specific legislation for this project in the United States - and there is a schedule. If we file a complete application on the date that I described, and if it's deemed to be complete by FERC, as I recall, and I'm going from memory here, they have 18 months to review and grant a certificate and there's a six month appeal time.

On the Canadian side, we actually had a huge and comprehensive environmental review back in the 1970s for this project before we were granted the certificate. But I do want to assure (people) that, subsequently, as we've built the pre-build - which is the sections in Alberta, Saskatchewan and southern B.C. - those sections were built commencing in 81, 82, and we've had expansions throughout the 80s and 90s - we always meet the environmental conditions of the day.

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