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2 into 1 — a nonstarter; Kvisle scuttles idea of combined line
It’s a bit like the unwelcome party guest who just won’t go home, no matter how direct the hints.
Whenever the daunting costs of getting gas from the Arctic to southern markets surface, it doesn’t take long before someone raises the question.
Why not simply build an overland pipeline from the North Slope to Inuvik, in the Northwest Territories, and feed the gas into a common pipeline from the Mackenzie Delta?
Surely that would take a chunk out of the current costs estimates, which nudge $30 billion for an overland line from Alaska across Canada to the Lower 48, or an C$18 billion link along the Mackenzie Valley to northern Alberta?
TransCanada Chief Executive Officer Hal Kvisle had the option dumped in his lap during a conference call on July 30 and, once more, he surgically shredded the idea on four separate counts.
Down on four First, he said combining gas from the two sources in one pipeline did not make sense “hydraulically … because the line from Alaska will completely fill a 48-inch line of the highest design pressure that is practical. So, if you put in 1 billion cubic feet per day of Mackenzie gas in that line you back out 1 billion cubic feet per day of Alaska gas and that isn’t what the Alaska shippers would want.”
Secondly, Kvisle said, there is a regulatory barrier that would make an overland pipeline “virtually impossible.” It involves the Arctic National Wildlife Refuge and a national park on the Canadian side of the border.
Thirdly, there is the timeworn “over-the-top” idea — a pipeline across the Beaufort Sea covering 180 miles. “That becomes prohibitively expensive, given movements of pack ice that can blow in or blow out at relatively short intervals,” he said. “We’ve looked thoroughly at that.”
Finally, there is a compelling political reason. “The gas at Prudhoe Bay is owned by the State of Alaska, which would like to see infrastructure built through the state,” Kvisle said.
He said TransCanada has examined all of the alternatives and concluded that both projects “have reached their full economy of scale.”
Window in 2015-18 On the more immediate issue of whether the Alaska pipeline will, or won’t proceed, he said the Prudhoe Bay producers have pointed out that “the most sensible time to stop re-injecting all that gas and starting some of it to market is the 2015-2018 window.”
Kvisle said that has been “the consistent position of ExxonMobil for quite a few years. We’ve always looked at that as the determining factor, in addition to market demand for the gas.”
“There’s a point in the depletion plan for Prudhoe Bay when it makes sense to bring that gas to market,” he said.
Currently, Kvisle said “things are lining up the way we would like them to.”
He said a “good discussion” with Gov. Sean Parnell left him with the impression that “the state’s direction remains unchanged,” with Parnell “very supportive” of where the state’s Department of Natural Resources is headed, while the recent “strong alignment” of TransCanada and ExxonMobil keeps the project moving ahead.
Kvisle said he now looks “forward to the day when (BP and ConocoPhillips) join the project.”
On another matter, he said significant volumes of gas have been discovered below Norman Wells in the central Northwest Territories, but said the whole Mackenzie Gas Project can only proceed with northern volumes, even though the proposed pipeline has expansion capacity to accommodate gas from Colville Hills or Husky Energy’s fields to the south.
—Gary Park
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