Something’s starting to smell like month-old blubber (all emphasis added).

Gov. Sarah Palin’s signature accomplishment - a contract to build a 2,760-kilometre pipeline to bring natural gas from Alaska to the lower 48 states - emerged from a flawed bidding process that narrowed the field to a Canadian company with ties to her administration, an Associated Press investigation says.

Beginning at the Republican National Convention in August, the McCain-Palin ticket has touted the pipeline as an example of how it would help the United States achieve energy independence.

Despite Palin’s boast of a smart and fair bidding process, the AP investigation found her team crafted terms that favoured only a few independent pipeline companies and ultimately benefitted the winner, TransCanada Corp.

And contrary to the ballyhoo, there’s no guarantee the pipeline will ever be built; at a minimum, any project is years away, as TransCanada must first overcome major financial and regulatory hurdles.

In interviews and a review of records, the AP found:

-Instead of creating a process that would attract many potential builders, Palin slanted the terms away from an important group - the global energy giants that own the rights to the gas.

-Despite promises and legal guidance not to talk directly with potential bidders, Palin had meetings or phone calls with nearly every major candidate, including TransCanada.

-The leader of Palin’s pipeline team had been a partner at a lobbying firm where she worked on behalf of a TransCanada subsidiary. Also, that woman’s former business partner at the lobbying firm was TransCanada’s leading private lobbyist on the pipeline deal. Plus, a former TransCanada executive served as an outside consultant to Palin’s pipeline team.

-Under a different set of rules four years earlier, TransCanada had offered to build the pipeline without a state subsidy; under Palin, the company could receive a maximum $500 million. Source

A tad more:

TransCanada Corp. has been awarded a state license, but still needs approval from the Federal Energy Regulatory Commission, which is years away. Canadian regulators must sign off on their portion. First Nation tribes in Canada are objecting to the proposed route. And even if it sails through financial and regulatory hurdles, TransCanada still has no obligation to build the pipeline.

If the company doesn’t complete the project, it could still receive up to $500 million in state subsidies, with startup costs split evenly until the company tries to secure contracts to ship gas through the supply channel. Between the time TransCanada locks in shipping commitments and files for a federal permit, the state will pick up 90 percent of the tab even before ground is broken.
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According to a new report by the Congressional Research Service, TransCanada and state officials may be underestimating how long the project will take; the target finish date is 2018.

Should TransCanada win federal permission to start digging, U.S. taxpayers could be on the hook, big time. Included in the company’s bid is a proposal for the federal government to absorb up to $75 billion in liability over a 25-year period if the major natural gas suppliers refuse to ship their gas through the line, the CRS report said. Such a measure would require congressional approval. Source