September 8, 2008

About that pipeline

Today's Washington Post contains an editorial dealing with the proposed 1700-mile natural gas pipeline between Prudhoe Bay, AK and Calgary, Alberta, and concludes:
It is also a sign that Ms. Palin's outflanking of the oil companies injected some competition and urgency into a process that was previously stalled.
That may be, but on the question of competition, it's worth noting that not only was TransCanada the one successful bidder for the license to begin surveying* the proposed route — and receive $500 million in government money — it was the only bidder, period.

The Alaska legislature came up with the Alaska Gasline Inducement Act (AGIA), which is essentially a set of commercial and technical specifications, and TransCanada was the only company whose proposal was seriously considered, as TransCanada's proposal was the only one deemed initially in compliance with the AGIA.

So there weren't any commensurate bids with which to compare to TransCanada's, at least according to the terms of the AGIA.

Meanwhile, BP/ConocoPhillips is moving ahead with its own similar plans, because it isn't bound by the terms of the AGIA, and figures it can get by without the government investment. In fact it prefers to get by without the construction subsidies, from the sound of things.

So maybe the referenced competition is between the good old free market and government economic interference, with BP/ConocoPhillips representing the invisible hand while Gov. Palin's Alaska financially supports the foreign corporation.

* With help from Aero-Metric, a Sheboygan, WI firm.