ANCHORAGE, Alaska - Alaska Gov. Sarah Palin has signed a bill authorizing the state to award a licence to TransCanada Corp. (TSX:TRP)to start developing a natural gas pipeline.
Palin signed the bill on Wednesday in Anchorage, and expects the licence to be issued within three months. The licence allows TransCanada to move forward with plans to develop the 2,760-kilometre pipeline from a treatment plant at Prudhoe Bay to the Alberta hub.
It ends a decades-long battle to open up North Slope natural gas for use in North American markets, with 4.5 billion cubic feet of natural gas to be shipped daily.
The licence does not guarantee construction, but it means TransCanada can move forward on costly federal permit applications. The project is estimated to cost between $26 billion and $30 billion.
TransCanada hopes to have the pipeline in service by September 2018.
The state says TransCanada already has authorized specific aerial photography, engineering work and environmental gap analysis.
The state approval comes with up to $500 million in state seed money. It also sets up a race with a competing pipeline venture established by oil giants BP PLC and ConocoPhillips.
TransCanada's plan would see a 48-inch natural gas pipeline running from a new natural gas treatment plant at Prudhoe Bay, Alaska, to Alberta. The application also included provisions for expansions up to 5.9 billion cubic feet per day.
The proposed pipeline would parallel the route of the existing trans-Alaska oil pipeline to a point south of Fairbanks, Alaska.
It would then follow the Alaska Highway, continuing through northern British Columbia to link with the Alberta Hub on TransCanada's pipeline grid in northwestern Alberta.
BP PLC (NYSE:BP) and ConocoPhillips (NYSE:COP), two of the three major Alaska natural gas producers, have proposed a competing pipeline, called Denali, which has not been endorsed by the Alaska government.
TransCanada is also involved in another major Arctic pipeline project, the Mackenzie Gas Project.
The most recent cost estimate of that project from March of last year was $16.2 billion, though analysts have said it could now be as high as $20 billion.
Its expected startup date is 2014.
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