Providing coverage of Alaska and northern Canada's oil and gas industry
April 2007

Vol. 12, No. 16 Week of April 22, 2007

Russia-Alaska link: Tunnel or pipe dream not yet apparent

Petroleum News

Russian officials have introduced a plan to build a tunnel between Siberia and Alaska under the Bering Strait, saying the $65 billion project could be used to export Russian oil, natural gas, electricity, gold and coal to the United States. Viktor Razbegin, deputy head of industrial research at Russia’s Ministry of Economic Development and Trade, told reporters in Moscow April 18 that a partnership between private companies and the governments of Russia, the United States and Canada would build and control the route, which he referred to as TKM-World Link.

The 64-mile tunnel, which Russian officials said could also be a bridge, would take up to 15 years to construct and link the Russian towns of Provideniya and Chukotsky with Nome, Alaska. (The combined population of all three communities is less than 14,000.) A rail line would extend from Nome to Fort Nelson, B.C.

The tunnel would run from Cape Dezhnev, Siberia to Cape Prince of Wales, Alaska, which is the westernmost point on North America and the terminus of the Continental Divide.

Russian officials said the Bering tunnel would surface twice — on the two small Diomede Islands in the middle of the strait — and would include a railway, highway, oil and gas pipelines and fiber optic wire. The 103-kilometer tunnel would be about twice as long as the tunnel connecting Great Britain and continental Europe, and would cost between $10 billion and $12 billion.

The most expensive part of the project would be the 6,000 kilometers (3,728 miles) of rail that would connect it to the nearest railheads on both sides of the Bering Strait and carries an estimated price tag of $55 billion.

According to a GlobeandMail.com report, Joseph Henri, an Anchorage attorney who has been involved with the project for 20 years, said the plan would be to extend the track from Prince George, B.C., through Alaska, through Russia’s Far East, down to China.

“It would link the world in commerce, on a land route,” he told the publication. “Alaska has always needed a hook-up from the end of rail in Canada to here, and now this idea takes it quite a few steps further in tunnels under the Bering Strait.”

Russia has not signed off

The International Herald Tribune reported April 18 that while Razbegin and another official at Russia’s Ministry of Economy had endorsed TKM-World Link, both officials made it clear that the Russian government had not signed off on the Bering tunnel, other than to agree to a study of the project. The development, they said, was going to be presented the following week to Canadian and U.S. governments.

The same publication said Russia’s national electric company and state railroad endorsed the $65 billion plan, “adding a patina of credibility to an idea typically dismissed as a colossal waste of money.”

Originally promoted in 1905 by a Russian czar, this time the tunnel project is being promoted as an economic, not a political, project, said Razbegin, a longtime proponent of a bridge or tunnel for the Bering Strait.

Henri is a board member of the Interhemispheric Bering Strait Tunnel and Railroad Group, a group that has little to show for its effort on this side of the strait. Mr. Razbegin, he said, has had more success drumming up support, the Globe and Mail reported.

“The Russians are a lot more active and interested in this than the American side or the Canadians,” he told the publication.

Hickel to attend conference in Moscow

According to the Tribune the ministry officials are organizing an April 24 conference in Moscow on the tunnel, called Megaprojects of the Russian East.

Andrey Podderegin, a conference organizer, told the Tribune that the tunnel would tap “huge unused” resource potential in the Russian Arctic and “bring about the sociopolitical and economic unity of the Russian state and reinforce its geopolitical influence” while also encouraging investment in Siberia.

The highest-ranking Russian government official scheduled to attend the conference, the Tribune said, is Kiril Androsov, a deputy minister of trade and economic development.

Several Alaskans are also scheduled to attend the conference, including Henri and 88-year-old former governor Walter Hickel, who has been a long-time proponent for such a link.

Reuters News Agency quoted an anonymous Russian official April 18 who said he doubted the tunnel project would get full governmental support.

“To be honest, anyone who looks at a map will realize that the project is too hard to implement,” the unnamed official said.

Henri said the group invited B.C. Transport Minister Kevin Falcon and Yukon MP Larry Bagnell to the meeting, but they declined, according to the Globe and Mail.

One observer calls project absurd

One European energy-market observer called the proposed project “absurd” and suggested the Russian government was playing political games to try to threaten its European customers to sign energy deals, per an April 19 report from CanWest News Service.

The news service said Derek Brower, who covers the industry for the London-based Petroleum Economist newsmagazine, said the bulk of Russia’s oil and gas reserves are thousands of kilometers from the Bering Strait, and that Moscow has been threatening to expand exports to China in order to intimidate European countries looking to reduce their dependence on Russian gas supplies.

“Russia has been saying to Europe, ‘listen, if you don’t like us, we’ve always got China to sell our gas to.’ To a large extent, Europe has been scared about this,” Brower said.

The threats have resulted in many European customers scrambling to sign long-term contracts with the Russian government-owned Gazprom, CanWest reported.

“It’s even difficult for Russia to supply China, the fastest-growing energy market in the world, let alone to talk about what sounds like the most absurdly expensive and technologically difficult project to deliver,” Brower said in the CanWest report. “It just sounds completely outrageous to me.”

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