Monthly Archives: July 2010

Is TransCanada required to provide fuller public disclosure …

Under the regulations of the Federal Energy Regulatory Commission (FERC) governing the Alaska Open Season, the Alaska Pipeline Project (TransCanada) is prohibited from selectively disclosing “non-public transmission function information” to any of its “affiliates” engaged or potentially engaged in the marketing of gas.  18 CFR 358.6.  Under the same set of FERC regulations, “non-public transmission function information” includes information about bids submitted in the Open Season not otherwise made public to all potential shippers.

Because the state has the right to take its royalty gas in kind and separately market it to others, the state is potentially engaged in the marketing of gas.  Because of its authority, under AGIA, to “direct the management policies” of the Alaska Pipeline, the state also appears to meet the definition of an “affiliate” of the project.  18 CFR 358.3(a)(3).   As a result, as with any other marketing affiliate of the project, TransCanada is prohibited from selectively disclosing non-public open season information to the state.

Notwithstanding the FERC’s explicit rule, TransCanada may have selectively disclosed its open season results to the state.  According to an article in the July 30 Alaska Dispatch (“TransCanada touts substantial interest in Alaska gas line“), “Marty Rutherford, who heads the state’s gas line team, said the state was notified about an hour after the bids closed about the results. ‘It is extremely good news and it is what we hoped,’ she said.” Continue reading

Alaska’s future: It’s the oil

Let’s start with a basic fact. For various purposes, government agencies, securities analysts and oil and gas producers often measure oil and natural production and reserves on a common basis — barrels of oil equivalent (BOE). Based on energy content, 5.8 Mcf’s (thousand cubic feet) of gas equals one barrel of oil. As it turns out, that is a critical statistic to understanding Alaska’s future.

First, that statistic helps to provide some sense of the relationship between volumes of oil and gas. Currently, Alaska is producing roughly an average of 600,000 barrels/day of North Slope oil subject to state production tax. On a BOE basis, 3.5 Bcf (billion cubic feet)/day of gas equates to about the same amount of oil. Coincidentally, that is roughly the same amount of gas which some suggest would be moved to the Lower 48 through an Alaska pipeline. Thus, if focused only on volume, an observer could argue that Alaska will not be harmed if gas supplanted oil as the primary source of revenue for Alaska.

A second, and more important, application of the statistic proves that conclusion false, however. Continue reading