November 06, 2001 --- Vol. 7, No. 139November 2001

Alaska gas could be in pipeline by 2008, says BP official

North Slope gas could be flowing to the Lower 48 within seven years, if issues of economics and route selection can be sorted out, said Jim Farnsworth, BP's vice-president of North American exploration.

He told a Ziff Energy Group gas strategies conference Nov. 5 that it is "technically feasible" for a pipeline to be in service by the fourth quarter of 2008. But it is up to the market to determine the timing and a "number of players" to help settle on the route.

Without declaring a preference for either the Alaska Highway or "over-the-top" options, Farnsworth noted that a line from the North Slope, under the Beaufort Sea and along the Mackenzie Valley would allow Alaska to share about 1,100 miles of right-of-way with the Mackenzie Delta gas.

He said that route would "obviously have the benefit" of savings, but conceded that the Alaska government sees a highway pipeline as its best hope of opening other gas fields in the state and increasing royalty revenues.

"Clearly, the people of Alaska and the government of Alaska have a huge interest in this, both for revenue reasons but also for providing a gas resource for Alaskans," said Farnsworth.

BP, ExxonMobil and Phillips Petroleum, the North Slope partners, have put pipeline construction costs at $15.1 billion for an "over-the-top" system and $17.2 billion for a highway pipeline, with either project capable of delivering up to 5 billion cubic feet per day.

Speaking to the same conference, Vicky Bailey, assistant secretary of policy and international affairs at the U.S. Department of Energy, said Washington views Alaska gas as vital to its plans for reducing dependence on imported oil from the Middle East.

She said the government does not consider any pipeline proposals to be dead.

Chretien drags energy into U.S. lumber feud

Canadian Prime Minister Jean Chretien took a swing at the United States yesterday over its softwood lumber policies, then almost as quickly pulled his punches.

He told The House of Commons that if the Americans wanted free trade in oil and natural gas "they should have free trade in lumber, too, because if they were not to have oil and gas from Canada they will need a lot of wood to heat their homes."

It reignited similar comments Chretien made in August when the softwood lumber dispute first erupted and he claimed to have told President George W. Bush: "You want gas, you want oil and you don't want wood. It's too bad, but if you have free trade, you have free trade."

Following Chretien's latest outburst, Rick Borotsik, an Opposition Member of Parliament, accused the prime minister of "raising the ante with respect to trade with the United States."

Chretien deflected that charge, saying it was a "stretch" to reach that conclusion. "I just say we want good trade relations with the Americans on every aspect of trade."

The issue has boiled over since the U.S. Commerce Department imposed a 19.3 percent duty on Canadian softwood in August, claiming unfair subsidies in Canada, and last week raised the penalties to 32 percent.

Faced with C$10 billion a year in new duties, the forestry industry in British Columbia has laid off about 18,000 workers and expects the total to reach 30,000 by Christmas unless Canada and the United States can negotiate a new agreement.

Marc Racicot, Bush's special lumber envoy, is meeting Canada's Trade Minister Pierre Pettigrew today and Chretien is expected to talk by phone with Bush this week.

Talk of using Canada's C$30 billion a year in oil and gas exports to the United States as bargaining leverage in the softwood negotiations troubles the industry, which currently meets about 15 percent of U.S. oil and gas needs, and the Alberta government. A spokesman for Alberta Premier Ralph Klein said Chretien shouldn't mix two trade files.

The flare-up coincides with a visit this week to Chicago, Washington and New York by a delegation of the Canadian Association of Petroleum Producers to assure industry and political leaders that Canada can be counted on as a secure and expanding source of energy.

Permitting under way for Kenai-Kachemak pipeline route work

Michael Baker Jr. has applied to the state to do advance geotechnical borings for the proposed Kenai-Kachemak gas pipeline on the Kenai Peninsula to determine the subsurface geology adjacent to 12 Kenai Peninsula streams.

The company presented options for proposed boring locations for: Coal Creek, Crooked Creek, Deep Creek, Stariski Creek, Anchor River, Two Moose Creek, Kasilof River, Ninilchik River, Silver Salmon Creek, North Fork Anchor Creek and two unnamed creeks.

The geotechnical boring program will be done with a CME-75 soil boring rig mounted onto a 10-foot wide track rig. Michael Baker Jr. said that two to four borings will be drilled at various distances from the river or creek banks; depths will vary from 60 to 150 feet below ground surface. Borings will be between 20 feet and 500 feet from the ordinary high water mark. Soil will be backfilled into the hole upon completion of each boring.

The proposed timeline for the borings is December-March 2002. Drilling is estimated to take approximately three weeks; additional drilling will be required during the winter when there is sufficient frost depth to allow mobilization of the 10-foot wide track rig across wetlands.

The Kenai-Kachemak Pipeline group formed in December 2000 to study the feasibility of constructing a 75-mile natural gas pipeline from potential gas fields near Ninilchik. Ultimately the pipeline is intended to reach consumers as far south as Homer.

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