Anchorage (Platts)--3Jun2008

The Alaska Legislature is convening in special session Tuesday to
consider a proposed state license for TransCanada to develop a $30
billion-plus Alaska natural gas pipeline.

Governor Sarah Palin has recommended that lawmakers approve the license,
which would entitle TransCanada to a $500 million state grant and certain
other incentives. Concessions by the state would be be granted under the
state's Alaska Gasline Inducement Act (AGIA).

The special session can take as long as 30 days, but legislators could
vote on the license before then. Hearings are planned in Juneau, Anchorage and
Fairbanks on TransCanada's proposal for a 1,700-mile, 48-inch-diameter
pipeline from northern Alaska into Alberta.

North Slope producers BP and ConocoPhillips are meanwhile proceeding with
their own Denali pipeline proposal, which is being done outside the state's
AGIA law and would receive no state grants, although the companies say they
would eventually need to negotiate a set of fiscal terms with the state.

Palin and TransCanada have said fiscal terms will be needed for any
project, but the governor says she will only support special terms for gas
transported through the TransCanada project.

Palin said she supports TransCanada's proposal over the producers' Denali
project because the Canadian company has agreed to a set of conditions on
pipeline expansion, access and tariff structure.

BP and ConocoPhillips have field work under way in preparation for an
initial open season in 2010. The companies will spent $600 million on
environmental and engineering work to develop estimates for the open season.
TransCanada said it can have an initial open season at about the same time.
Tony Palmer, the company's vice president for Alaska gas development, said
TransCanada would spend less in preparation for an open season because it has
substantial in-house data on construction in Canada that it will use in
initial design work.

--Tim Bradner, newsdesk@platts.com