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Vol. 10, No. 4 Week of January 23, 2005
Providing coverage of Alaska and northern Canada's oil and gas industry

Can you spell lawsuit?

Canada to choose between Alaska gas line routes; fast approval a priority

Gary Park

Petroleum News Calgary Correspondent

The Canadian government has started reviewing 1978 legislation governing the Canadian portion of an Alaska natural gas pipeline, hinting for the first time that it does not feel bound by that 27-year-old act.

Natural Resources Minister John Efford said he will take a proposal to the federal cabinet within two weeks and “make that public very, very soon.”

He told a news conference in Calgary Jan. 17 that two options are on the table: The 1978 Northern Pipeline Act, which stemmed from 1977 Canada-U.S. treaties and gives TransCanada exclusive rights to build and operate the pipeline within Canadian territory, or a move to treat the pipeline as a greenfield project.

The act also spells out a regulatory process to handle a pipeline application.

Unless there is a compromise deal by governments on both sides of the border, the North Slope gas owners and Canadian pipeline rivals TransCanada and Enbridge, it is widely expected that a Canadian government decision favoring either option would lead to court challenges.

Efford says clarity the priority

Efford, although saying he personally leans towards the Northern Pipeline Act because of previous government commitments, indicated his priority is to “provide clarity” that will result in the fastest approval possible for a pipeline.

“The United States is looking for clarity and we must provide clarity,” he said, noting that billions of dollars of investment in Canada are at stake.

Efford said the Canadian government will look at whatever means are needed to move the file forward.

“The last thing I want to do and the government of Canada wants to do … is anything to slow down the Alaska pipeline,” he said. The North Slope gas owners, with BP taking a lead role in Canada; the Alaska and U.S. governments; and the Canadian pipeline industry have all made various appeals for a clear and efficient environmental assessment and regulatory approval process.

But TransCanada has yet to signal that it is ready to budge from the terms of the Northern Pipeline Act, arguing it has spent hundreds of millions of dollars on advance legs of the Alaska pipeline to protect its rights within Canada and across state lands in Alaska.

TransCanada Chief Executive Officer Hal Kvisle has repeatedly said his company is not interested in surrendering rights it has earned over a quarter-century.

At the top of that list are the Alaska pre-build legs from central Alberta to the U.S. Pacific Northwest and the U.S. Midwest, which were completed in the 1980s on the understanding that they would eventually be the final leg to carry Alaska gas to the Lower 48. They currently export 3.3 billion cubic feet per day of Western Canada gas.

But Enbridge has called for a greenfield project, to take advantage of technological advances and lower transportation tolls, project risks and the construction timetable.

It has warned that unless the Canadian government spearheads new terms early this year the development of Alaska gas could be stalled.



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