NEWS BULLETIN

May 25, 2001 --- Vol. 7, No. 62May 2001

Alberta wants access to liquids in Arctic gas pipeline

Alberta will get its "pound of flesh" from any pipeline delivering natural gas from Alaska or the Mackenzie Delta to the Lower 48, vowed Alberta Premier Ralph Klein.

He startled the gas industry by telling reporters on Thursday that no pipeline will be allowed to cross Alberta unless the province has access to liquids such as ethane as feedstock for its multi-billion dollar petrochemical industry.

Klein insisted that no matter whether producers favor the Alaska Highway or Mackenzie Valley route the "most expedient and most cost-efficient route" is through Alberta.

It doesn't matter that it would not be Alberta resources in the pipeline, he said, adding "the land is our resource."

Klein said he hopes to visit Washington next month to discuss the pipeline with U.S. government officials, but admitted he has so far been unable to arrange any meetings.

Asked if his tough line was an attempt to get high-level attention, he replied: "Well, I don't know."

University of Alberta energy economist Andre Plourde said he was "quite taken aback" by Klein's tough talk.

"I find it very strange that (Alberta) would somehow have the right to interfere with someone else's trade. This is a rough game to be playing." He suggested Klein might be engaging in bluster merely to win a place at the table when Canada and the United States enter negotiations over a continental energy policy.

But he said it was hard to see how Klein was serving the interests of Albertans by making threats.

Hugh MacDonald, energy spokesman for the opposition Liberal party, said Klein is "dreaming" if he thinks the Americans would tolerate any attempt to strip liquids from Alaska gas.

"Good luck. It's not going to happen. The Americans are not fools," he said.

Spokesman for the Mackenzie Delta consortium Imperial Oil, ExxonMobil Canada, Shell Canada and Gulf Canada Resources declined to comment, indicating they did not want to get drawn into a controversy.

Traditionally, liquids such as ethane are stripped from more than half of the natural gas being shipped from Alberta to the United States or Eastern Canada.

But the petrochemical sector was infuriated when the Alliance pipeline, which delivers 1.5 billion cubic feet per day of gas from northern British Columbia and Alberta, was allowed to ship raw gas to Chicago without providing facilities to remove ethane.

Ethane is used to produce ethylene, which in turn is the building block for plastics.

Jeff Lipton, president and chief executive officer of Nova Chemicals, said last week that Alberta must lower its royalty rates for liquids stripped in Alberta to ensure sufficient long-term supply of feedstocks.

He said companies are not prepared to go ahead with major expansion plans unless they have the confidence to "put in new investment."

VECO named state's exporter of the year for 2000

VECO was named the Governor's Exporter of the Year May 24. The company employs 4,500 people, more than 2,000 of them in foreign countries.

"We congratulate VECO on their success in selling Alaska services and know-how into markets like Russia, China, Kuwait, India, Central Africa and Egypt," said Gov. Tony Knowles. The governor said that VECO, Alaska-founded and Alaska-owned, exports project engineering, construction and operations expertise around the world.


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