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Gasline debate over Two Arctic gaslines best bet, says Kvisle, debunking over-the-top option Gary Park Petroleum News Calgary Correspondent
It would be no cheaper to move natural gas from both the North Slope and Mackenzie Delta in a single pipeline than in two separate systems, said TransCanada Chief Executive Officer Hal Kvisle, in debunking proponents of an “over-the-top” option.
Endorsing Alaska’s desire to have its own overland route, he said the debate over one pipeline or two is “pretty well concluded by now.”
Taking issue with those who argue the economic merits of linking Alaska gas into a pipeline down the Mackenzie Valley, Kvisle noted there are many economic factors to be weighed.
Speaking July 14 to the annual summit of the Pacific Northwest Economic Region in Calgary, he said all pipelines have to be carefully sized to “move only the amount of gas that’s available to be moved.”
Both the proposed Mackenzie Valley and Alaska Highway systems are “sized and designed” to operate at “maximum efficiency,” he said. Thus it would be “no cheaper to move the gas through a single pipeline.”
However, Kvisle said the original work done by engineers suggests that an onshore connection from Prudhoe Bay to Inuvik in the Northwest Territories “would be the cheapest” option. Kvisle dismisses Beaufort Sea route Failing an onshore tie-in, he dismissed the Arctic Resources bid for a pipeline under the Beaufort Sea, insisting that the short open-water season of 15 to 85 days poses a “high degree of uncertainty and volatility.”
TransCanada has a stake in the two Arctic schemes — with an initial option of 5 percent ownership of the Mackenzie Valley pipeline and, by the third quarter, sole ownership of Foothills Pipe Lines, which holds the certificates to build the Canadian portion of the Alaska Highway project.
Kvisle cautioned the summit that there is no quick answer to the question of who will take the risk of building the $20 billion Alaska line.
If the North Slope gas owners — ExxonMobil, BP and ConocoPhillips — decide to build their own pipeline there should be careful consideration of the consequences, he said. (see related Enbridge article on page 4).
Regardless of who builds, financing and regulatory reforms are essential to get Arctic gas to southern markets, given the huge investments and long life-cycles of the projects, Kvisle said.
He said TransCanada estimates it needs 35 years to recover its capital costs whenever it adds to its mainline system, adding that so far the company has recovered only two-thirds of the C$16 billion it has so far invested.
The Pacific Northwest Economic Region is a public-private partnership that includes business leaders along with legislators from Alberta, British Columbia, the Yukon, Alaska, Washington, Idaho, Montana and Oregon. Its objective is to promote sustainable economic development throughout the region.
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