August 24, 2001 --- Vol. 7, No. 104August 2001

ANS gas line spokesman clarifies producers’ position on routes

A Channel 2 news report that aired last night had Petroleum News · Alaska’s phone ringing this morning with questions on whether or not the North Slope producers have backed out of building an ANS gas line because Alaskans didn’t want the northern route.

Curtis Thayer, the man interviewed by Channel 2 and spokesman for the North American Natural Gas Pipeline Group, told PNA this morning that “nothing has changed” since the producers announced in July that preliminary numbers showed “neither route is economical now” but the northern route was more economical to build than an Alaska Highway route.

“The northern route means 300 miles less pipe and that means a smaller environmental footprint and a higher net back to the state of Alaska,” Thayer said, explaining that the northern route would appear to require fewer tax breaks from the state and therefore generate more revenue to state coffers. It also has more synergies with Canada.

But neither route is economical yet, he cautioned. “The purpose of our $100 million study was not to select a pipeline route but to see if a gas pipeline from the North Slope to the Lower 48 was economically feasible. We’re in the middle of that study now. We are still on track with making a decision at the end of the year on whether or not to build a gas line. Right now neither route is feasible.”

The three components needed to make a gas pipeline an economic proposition, he said, are construction costs of the line from the producers, which includes route consideration; legislation from Washington, D.C., that would give the pipeline owners an efficient permitting avenue, including one lead agency to deal with, expedited dispute resolution and an 18 month window for permitting; and, a guaranteed tax structure from the state of Alaska.

“The state changed the taxation regime on TAPS something like 11 times from the time they decided to build TAPS until it was completed. We need fiscal certainty. We need to know up front that the rules are not going to change,” Thayer said. Instead, he said, they are getting a “cloudy” picture from Washington, D.C., and Juneau.

“They have decided on which line we’re going to build. Where are their facts and figures? … We’re spending $100 million — divided fairly between the two routes — to decide if we can build this line and, if so, which route is feasible. It’s very frustrating. …

“If our answer at the end of the year is that the northern route is the only economic route, then we won’t build a gas line because the state of Alaska doesn’t want a line built along that route,” he said.

But between then and now, Thayer said the group still has a lot of work to do, a lot of facts to gather: “There are 10,000 landowners between Alberta and Chicago, for example. We have to talk to them all.”

And, he reiterated, “we have to get regulatory assurance from D.C. and fiscal clarity from the state.”

What prompted Thayer’s comments yesterday, he said, was “the governor saying again that it’s our way or the highway.”

The gas group is a consortium of the three major North Slope gas owners — BP Exploration (Alaska) Inc., Phillips Alaska Inc. and ExxonMobil.

Northwest Territories spurns Alaska energy study

The Alaska Legislature's joint committee on gas pipelines is getting a divided, sometimes chilly response as it tries to woo Canadian governments to participate in a joint study of northern energy development.

The Yukon is in; the Northwest Territories are out; Alberta and British Columbia are weighing their decisions.

"One of the major points that I came over here (to Canada) to do is talk to our colleagues and friends in all the provinces and territories to join Alaska in a joint committee where we could talk over a lot of these questions and problems before they get to be a big media event," Alaska Senator John Torgerson told reporters in Edmonton.

Torgerson also said Alaska's position on the pipeline routing is not negotiable.

"There'll be no pipeline unless it comes down through the state."

Yukon has joined, Torgerson said. But Northwest Territories Energy Minister Joe Handley rejected the invitation, saying the Alaskans refused to let the committee discuss all routing options for shipping North Slope gas to the Lower 48.

"We don't want to be part of the committee because the Alaskans have done things on their own and now they're coming to the table after the fact," he said.

Alberta Energy Minister Murray Smith said the province may join the study after sending a delegation to a special meeting in Anchorage next month. "We're going through the process and looking at joining the committee," Smith said.

Although the Alberta government has avoided choosing a preferred route for Arctic gas, Premier Ralph Klein said earlier this year he wants Mackenzie Delta gas moving before a line is constructed through Canada from Alaska.

"We're supportive in Alberta of both pipelines coming down, although if one is to have priority we would give it to the Canadian line," Klein said. "It would be an economic boost to Alberta companies because most of the supply of pipeline materials, engineering and all of the things associated with transporting that gas, the exploration, the recovery would involve Alberta companies."

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