March 10, 2004 --- Vol. 10, No. 26March 2004

BP Canada exec says Alaska gas line filing unlikely before 2007

North Slope gas owners must move a mountain of economic and political obstacles before they can file regulatory applications, an Arctic Gas Symposium was told in Calgary March 8.

An application is likely at least three years away because of the engineering and environmental studies that have yet to be completed and the challenge of developing a plan that is commercially viable, said Ken MacDonald, vice president with BP Canada Energy’s Alaska-Canada pipeline group.

In suggesting that 2007 is the earliest date for a filing, he cautioned: “That’s just a guesstimate.”

But because “risks still outweigh rewards ... we don’t have a (commercially viable) project yet,” MacDonald said.

“We’re waiting on energy legislation in the U.S. (where the passage of an energy bill has been stalled), fiscal certainty (in Alaska) and then the producers have to come together and decide what structure to move forward, assuming everything is in place,” he said.

At that point the proponents have to complete engineering and environmental studies to prepare an application.

Allowing for all those matters “it would take us, probably, until 2007 to file an application,” MacDonald said.

Against that background, he conceded the Mackenzie Valley pipeline proposal “has at least a three-year advantage on us.”

Yukon-NWT still at odds over Arctic pipeline timing

A thaw in once-chilly relations between the Yukon and Northwest Territories has stopped short of a love-in.

The premiers of the two northern Canada territories left no doubt at an Arctic Gas Symposium in Calgary March 8 and 9 that they sit at polar opposites when it comes to whether the Mackenzie Valley or Alaska Highway gas pipeline should be built first.

Northwest Territories Premier Joe Handley was emphatic that the Mackenzie project should be built first, fearing that opening up the North Slope for deliveries of 4-5 billion cubic feet per day could swamp the market, drive down prices and undermine the Canadian pipeline.

Yukon leader Dennis Fentie objected to giving priority to one pipeline over the other, arguing that the challenge is to “make sure they both get built.”

Handley also expressed concern about delays in the regulatory phase that could delay the Mackenzie pipeline beyond 2009.

He said the “market is there, the demand is there, the supply is there,” but slowing the environmental review process could see the Mackenzie Delta producers scrap the project.

Randy Ottenbreit, Imperial Oil’s development executive with the Mackenzie Gas Project, said the review was taking longer than anticipated and could extend the regulatory filings by a few months.

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