One of the proposed projects is looking to become a main receiving terminal for Alaska LNG.
Fear of terrorist attacks and environmental damages from the offshore terminals and the tankers that would move through the area motivated the council vote, said Malibu City Manager Katie Lichtig. “There’s a possibility and a risk that our community could be impacted.”
She acknowledged that any worry of damage to marine resources primarily involves recreational opportunities for the town of 13,000 residents. Malibu is about 25 miles south of where the gas would come ashore in buried pipe near Oxnard. The terminals would be about 15 to 20 miles from Malibu. The city of Oxnard, which would have to approve the pipelines coming on shore, has questioned both projects in letters to state and federal officials but has not taken such a strong step as Malibu’s city council resolution.
“In a day and age when they can fly planes into the Twin Towers, I see no reason they couldn’t do the same thing with liquid gas and obliterate a couple of coastal communities,” Malibu Mayor Sharon Barovsky told the Los Angeles Times May 25, the day after the city council vote.
Developers say risk is overstated
The projects’ developers — and supporters of LNG terminals to meet the nation’s growing demand for natural gas — say the super-chilled gas is not nearly as volatile as critics allege, and that double-hull tankers, other safety features and port security would minimize the risk to residents.Developers of the two proposed terminals are Crystal Energy LLC, a Houston company that wants to break into the LNG terminal business, and Australian mining and energy giant BHP Billiton. Both have started the application process for permits, and both hope to get online in three or four years. Crystal Energy has a memorandum of understanding with the Alaska Gasline Port Authority to work toward converting a 25-year-old former Chevron oil production platform in the Santa Barbara Channel into an LNG receiving terminal.
The port authority, a joint venture of the city of Valdez and Fairbanks North Star Borough, wants to build a municipally owned pipeline to move North Slope gas to Valdez for liquefaction and shipment to West Coast and Far East markets.
And in a bid to assist BHP to gain entry to the California natural gas market, Australian Prime Minister John Howard visited Los Angeles and met with California Gov. Arnold Schwarzenegger while on a U.S. tour the last week of May. The prime minister was looking to help build support for bringing LNG to West Coast consumers.
Energy, joint owners of Foothills Pipe Lines, the front runner to build an Alaska Highway gas pipeline, are both emerging as strong advocates of tapping Mackenzie Delta gas at an early date.
Westcoast chairman and chief executive officer Michael Phelps said Alaska gas will be the first connected to market, but the Delta will be close behind once drilling establishes the reserve base in the Northwest Territories.
TransCanada’s retiring president and chief executive office Doug Baldwin said a gas pipeline in the Mackenzie Valley would not suffer a drastic setback if a highway pipeline proceeded first.
Phelps told shareholders at Westcoast’s annual meeting he expects Foothills to be a key player in any Arctic gas development because it offers the quickest, most efficient link down the Alaska Highway to get badly needed Alaska gas to U.S. customers.
“I anticipate that we will be involved in providing transportation services for these two new sources,” he said. “I expect that Alaska will be connected first, the reserves are there. Soon thereafter, as drilling proves up the required reserves, the Mackenzie Delta will be connected.”
He said there have been no assurances yet from the North Slope’s big three producers — ExxonMobil, BP and Phillips — but Foothills has been in regular contact with the producers who have said they like the Alaska Highway proposal.
“If you have a balanced look at all of the options, the Alaska Highway route is going to win hands down,” Phelps said.
The project , which was approved by Canadian and U.S. regulators in the 1970s, could be quickly constructed and in production as early as 2007, he said.
Timing on lines could be close
Baldwin told TransCanada’s annual meeting that “both lines are potential outcomes and I think they will go very close together in terms of timing,” given the forecast supply-demand balance in North America.“Our ownership in Foothills and in Alaska Northwest Natural Gas Transmission Co. provides us with a lead position in moving Alaska North Slope gas to market. We are also taking steps to utilize our strategic position in northern Alberta to participate in the transport of gas via the Mackenzie Valley,” he said.
Baldwin said TransCanada — which already dominates the shipment of Western Canadian gas to the U.S. — is strategically and operationally “well-positioned to link (North Slope and Mackenzie Delta) supplies of gas to the growing North American marketplace. TransCanada will be there when the northern gas flows.”
However, Phelps is plainly skeptical about the “over-the-top” option.
“I see little prospect of connecting Alaska and the Mackenzie Delta gas to markets by one pipeline,” he said. “The technical and environmental hurdles are simply too great and Alaska is adamantly opposed to using this option.”
FirstEnergy Capital analyst John Mawdsley agrees that an “over-the-top” pipeline is a long shot, pointing out that there is only a small window of opportunity to actually install pipelines under the Beaufort — ranging from 70 to 30 days a year, depending on the number of ice-free days.
In addition, whether real or imagined, he said there are environmental hurdles to clear, meaning that regulatory hearings for a proposal to connect the North Slope and Mackenzie Delta reserves would take far longer than the Alaska Highway route or a stand-alone line from the Delta down the Mackenzie Valley.
Mawdsley said there is one scenario that could see an Alaska Highway line come on-stream by 2006, although most observers think 2007 or 2009 is more likely, with the Mackenzie Valley system starting up as late as 2011.
cial assistant to the commissioner of the Department of Revenue from 1997-99, and then a deputy commissioner from 1999-2003.
On August 4 he came to work for Petroleum News as a Juneau cor
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