July 02, 2001 --- Vol. 7, No. 74July 2001

North Slope gas producers consider Alberta pipeline hub

North Slope gas could be delivered to an Alberta hub, where Canada's petrochemical operators would have access to some of the liquids, said a top executive with Foothills Pipe Lines, the leading contender to build the Alaska Highway system.

U.S. gas producers are "starting to understand the need" for Canadian access to some gas and liquids from the pipeline, rather than simply building a bullet line to the Lower 48, Mike Stewart, Foothills' co-chief executive officer told a Calgary conference.

Stewart and Dennis McConaghy, Foothills' other co-CEO, said North Slope producers now appear to be looking at a plan to establish a hub in Alberta, then direct gas south through existing and expanded pipeline networks.

They said that would enable Canada to extract liquids as feedstock for its petrochemical plants.

"That could include Alberta in a big way on the liquids side," said Stewart.

Last month, Alberta Premier Ralph Klein insisted he would not agree to a right-of-way through Alberta for a North Slope line unless the province had access to some of the liquids.

Stewart also said Canadian pipeline contractors, buyers and service providers would "enjoy a substantial benefit" from an Alaska highway pipeline which he estimated would cost from $8 billion to $10 billion.

Foothills, jointly owned by TransCanada PipeLines and Westcoast Energy, holds the critical U.S. and Canadian permits to construct the line.

But the same two companies are also involved in studying a possible line from the Mackenzie Delta, along the Mackenzie Valley, to the Lower 48.

McConaghy insisted that North Slope and Delta gas is required for the North American market, disagreeing with "the depiction of Alaska versus the Mackenzie Valley.

"It's really just awaiting recognition that a two-pipeline configuration gets that job done the fastest," he said.

State issues Interior shallow natural gas leases

The state has issued 65 non-competitive shallow natural gas leases in Interior Alaska.

Jim Haynes of the Department of Natural Resources Division of Oil and Gas told PNA July 2 that title work for the applications was completed and award notices were mailed May 7. Applicants then had 30 days to pay the first year's rent.

Applications were accepted beginning in early 2000, and the state initially received 263 lease applications. As of early May this year, the state had received additional applications, bringing the total to more than 300.

Four leases northwest of Red Dog only four tracts received applications in that part of the state were issued to Cominco Alaska Inc. last year.

In Interior Alaska the state received 100 applications, four in areas found to contain no state land.

Of the 96 award notices mailed in early May, Haynes said 27 of the leases were forfeited because the applicants did not submit the first year's rent within 30 days as required. Sixty-five leases were issued, he said, and four are pending as a result of a problem with forwarding of mail.

Cook Inlet applications are still being adjudicated. The majority are in the Matanuska-Susitna area, with a few on the Kenai Peninsula. Those areas have the most complicated land status, and Haynes said the division hopes to have those done by September.

Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
[email protected] ---