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May 22, 2003 --- Vol. 9, No. 54May 2003

Canada urges joint pipeline strategy

The United States and Canada should establish a joint panel and common regulatory structure to speed development of North Slope and Mackenzie Delta gas, says Canada’s Indian Affairs and Northern Development Minister Robert Nault.

Building on his case earlier this month for the United States to name a pipeline coordinator, he said May 21 that both countries should appoint commissioners to explore ways to streamline the regulatory process.

Nault said the commissioners would formulate recommendations on the “most effective way to proceed” that could include new legislation.

“I very much believe that cooperation (between the two governments) is necessary in order to see the (Alaska Highway) pipeline built,” he said May 1 in a teleconference from Washington, D.C., after meeting with U.S. industry and government leaders.

Nault said a joint approach would help speed up the Alaska pipeline and bolster North American energy security. But he remains uneasy at the prospect of U.S. legislation giving North Slope producers a federal tax credit of up to 52 cents per thousand cubic feet of gas shipped if the wellhead price dropped below $1.35 per thousand cubic feet.

Under a proposal being debated by U.S. legislators, if pipeline tariffs came out at the predicted level of about $2.38 per thousand cubic feet, the credit would take effect when the wholesale market price reached about $3.73.

Loan guarantees or quicker depreciation of capital are fine, guaranteed floor prices are not, Nault said.

In fact, he said, the Canadian government would not only endorse loan guarantees for Alaska, it might offer guarantees to the Aboriginal Pipeline Group which is seeking financial help from TransCanada to gain a one-third stake in a Mackenzie Valley pipeline.

However, he emphasized that subsidies — such as a floor price — would be a “serious impediment to moving forward,” because of the potential distortion of the marketplace.

Natural Resources Minister Herb Dhaliwal has already threatened to block right of way permits across Canada for an Alaska Highway project if price supports are offered.

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