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Open Season

On July 30, 2010, the Alaska Pipeline Project closed its initial open season and received multiple bids from potential shippers. The next step is for the project to assess and negotiate the issues and conditions that are incorporated within the bids.

Understanding the Alaska Pipeline Project Open Season

With the Alaska Pipeline Project natural gas open season close on July 30, it is understandable that many people are interested in knowing what was accomplished and what will happen next.  In order to address these two questions, some information about how the open season process works may be helpful.

The principal purpose of an open season is to determine market interest in a pipeline project. When the Alaska Pipeline Project launched its open season on April 30 under the rules of the U.S. Federal Energy Regulatory Commission (FERC), it provided potential shippers the opportunity to assess the project’s detailed technical and commercial terms. This offering represents nearly one-half million hours of engineering and analysis by project teams. It also reflects the combined expertise of TransCanada and ExxonMobil, which have joined together with the State of Alaska to advance this historic project.

During the open season, potential gas shippers had to decide whether to make bids of 20 years or more in duration to reserve capacity on the proposed pipeline. These commitments of billions of dollars are needed to secure the financing for a project that could cost as much as $32-$41 billion to build.

The Alaska Pipeline Project will now begin assessing the details of the bids, including issues such as gas volumes, route preferences and the conditions attached to the bids by the shippers.  Conditioned bids are typical in all major open seasons and unavoidable in a project this large and complex.  The project will need time to evaluate the bids carefully and to negotiate solutions with the shippers.  It is likely that some conditions can only be resolved between shippers and governments. 

Resolving complex issues and conditions on a project of this magnitude can only be done through confidential negotiations between the parties.  This is an expected result for any major open season and is consistent with the rules established by FERC and the terms of the Alaska Gas Inducement Act (AGIA). It also complies with confidentiality agreements signed by both the project and potential shippers.

Maintaining confidentiality during negotiations is essential for two reasons: first, the need to protect proprietary information; and second, the competitive concerns of both APP and the shippers. Many of the shippers compete with each other in Alaska and around the world, and APP is facing competition from the Denali project, which is currently conducting its own open season. 

If the Alaska Pipeline Project is successful in resolving these issues and in securing Precedent Agreements with potential shippers, the project will publicly release the names of shippers, the volumes bid, and the duration of the contracts within 10 days of their being signed, as stipulated by FERC regulations.

The Alaska Pipeline Project launched its open season with the goal of it leading to the development of Alaska’s North Slope gas– a goal Alaskans and others share. To that end, the project believes taking the time and steps needed to maximize the likelihood of achieving success in the marketplace is in everyone’s best interest.

Open Season Process

The Alaska Pipeline Project is following the open season process required by FERC Order 2005. Order 2005 applies to the federal regulatory review of an Alaska natural gas pipeline project and establishes a number of unique open season rules, including exceptional public access to open season documents.

One of the FERC Order 2005 requirements is for pipeline proponents to submit their open season plans in advance for FERC review.   On January 29, 2010, the Alaska Pipeline Project submitted its plan to FERC.  The project’s plan then underwent a 60-day review process, which included a public comment period, during the months of February and March.   FERC approved the project’s open season plan on March 31, 2010.  Having secured FERC approval, the Alaska Pipeline Project commenced its initial open season on April 30, 2010, which ran for  90 days and concluded on July 30.

As outlined in its FERC open season plan, the Alaska Pipeline Project will next begin the process of assessing and negotiating the conditioned bids submitted by potential shippers. 

Open Season Information

The project is fully committed to meet the public information requirements of FERC Order 2005 and is providing several points of access to project information.

The project's open season plans and communications with FERC can be found on this website, as well as on FERC's website.

Canadian Open Season

A separate but coordinated open season for the Canadian portion of the project was conducted concurrently in Canada. There are no requirements to file an Open Season Plan with Canadian regulators for the Canadian segment of the project.

Reporting of Open Season Results

It is important to keep in mind that major pipeline builders rarely report open season results immediately because the shippers’ bids to reserve pipeline capacity almost always include conditions, not unlike the contingencies written into a contract for sale of a home.

Thus, with the close of the open season on July 30, follow-up negotiations between the Alaska Pipeline Project and shippers will commence to resolve those contingencies.

Options to be Assessed During the Open Season

During the open season, the Alaska Pipeline Project presented two alternative project options for assessment by potential shippers.

It is economically feasible for only one of the two project options to advance and the results of the open season will determine the preferred development choice. 

One option would transport an estimated 4.5 billion cubic feet per day of North Slope natural gas approximately 1,700 miles (2,736 kilometers) across Alaska to Alberta, Canada, (the Alberta option), where it could be sent on existing pipelines to North American gas markets. 

Another option is to transport an estimated 3 billion cubic feet of natural gas per day approximately 800 miles (1,287 kilometers) to Valdez, Alaska, (the Valdez option), where shippers could liquefy the gas in a plant constructed by others and ship it on tankers to U.S. and international markets. 

It is important to emphasize that both options would provide opportunities for Alaska communities to acquire natural gas from the pipeline from a minimum of five strategically located off-takes.  The Alberta option would also provide opportunities for local gas deliveries in Canada as well. 

A world-class natural gas treatment plant, to be located adjacent to the North Slope’s Prudhoe Bay facilities, and an approximately 58-mile (93-kilometer) transmission pipeline connecting the natural gas supplies of the Point Thomson field to the plant are components of both development options.

In-State Gas

The Alaska Pipeline project has set a high priority on providing access opportunities for in-state natural gas to heat and power local homes, business and industry. Both of the project options provide for local natural gas off-takes in Alaska, and the Alberta option also provides off-takes in Canada.

The U.S. Alaska Natural Gas Pipeline Act of 2004 (ANGPA) requires that all proposed projects to transport North Slope gas, including the Alaska Pipeline Project, assess Alaska's in-state gas needs and provide off-takes to the pipeline that would allow local energy providers the opportunity to obtain gas to meet community needs.

At least five of these local natural gas off-takes will be provided in Alaska under both the Alberta and Valdez options, with the locations to be based on interests expressed through bidding during the open season.

FERC regulations also require that there be no undue discrimination or preference in awarding capacity on the pipeline. Congress designed this so that all shippers, including in-state natural gas providers, have an equal opportunity to use the pipeline. The Alaska Pipeline Project open season is open to all in-state Alaska shippers.

In-State Gas Study Findings

The In-State Gas Demand Study was independently prepared for the project by Northern Economics, the Institute of Social and Economic Research at the University of Alaska (ISER) and Science Applications International Corporation (SAIC), with the input of local businesses and industry. The Study projects the future potential demand from Alaskan residents and industries for natural gas and natural gas liquids (e.g., propane) that would be available with construction of a natural gas pipeline from the North Slope.

The purpose of the study is to meet the requirements of the FERC open season regulation of Alaska natural gas transportation projects. The study is also intended to facilitate the identification of at least five off-take or delivery points and potential delivery volumes at various locations along the pipeline, and to allow the initial design of in-state delivery rates. View the project's In-State Gas Demand Study

Project Alignment

TransCanada and ExxonMobil share a common goal--an Alaska natural gas pipeline that is constructed with the full support of the State of Alaska, the U.S. and Canadian governments, and the major North Slope producers.

Experts agree that all interested parties will eventually need to be aligned in one project in order to complete such an enormous and complex undertaking. We believe the Alaska Pipeline project and its alignment with the State of Alaska under the AGIA process offers the best path forward for success.

We have worked with North Slope producers for many years in Alaska and have respect for their capabilities. We look forward to meaningful discussions to align on the Alaska Pipeline Project.

Related Links

Want to know more?

The Alaska Pipeline Project's application documents and comments for the Alaska segment of the project are on file with the FERC and open to public inspection. The filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's website using the "eLibrary" link. In the general search option, enter the docket number (PF09-11) in the docket number field to access the document. For assistance, please contact FERC Online Support or toll free at (866) 208-3676.

Canadian regulators do not require the public availability of project open season documentation. A copy of the Canadian open season notice is posted on this website and can be viewed here.