Improving the Odds

State-of-the-art pipeline engineering technology will significantly reduce the construction cost and increase the economic viability of the proposed trans-Alaska gas pipeline, says Yukon Pacific President Jeff Lowenfels

Kay Cashman

PNA Editor-in-Chief/Land & Leasing Reporter

Yukon Pacific Corp. President Jeff Lowenfels told PNA July 20 that the $6 billion price tag for the pipeline portion of the North Slope gas export project could probably be reduced by US$1-2 billion if the latest pipeline engineering technology was incorporated in the line's construction cost estimates.

This savings, he said, would increase the economic viability of the export project — an assumption supported by oil and gas consultant Dr. Pedro van Meurs’ 1997 study on the economics of a North Slope gas export project for the state of Alaska. van Meurs concluded that exporting North Slope gas could be economically viable if construction costs for a trans-Alaska gas pipeline and related North Slope and Valdez facilities were lowered from the current estimate of $15 billion to around $12 billion and the structure of government taxes and royalties were modified.

“People have taken the original cost of the pipeline ... from several years ago .... and inflated it. In reality,” Lowenfels said, “that is not what has happened. Pipeline construction costs in the state of Alaska and worldwide have been going down, not up ... due to technological advances.”

Lowenfels cited as an example the proposed state-of-the-art Alliance pipeline that will transport liquefied natural gas 1,800 miles from northeastern British Columbia to Chicago. That line — more than twice the length of a trans-Alaska gas pipeline — will cost less than half to build at C$3.7 billion.

“A good portion of it is 42-inch pipe and a good portion of it uses 36-inch pipe — two sizes that we have talked about for our project,” said Lowenfels. ...

The rest of this story is available from Petroleum News • Alaska by calling the circulation manager Dan Wilcox at 522-9469 for back issue copies. (July 1998)