Alberta premier pitches highway pipeline to Vice President Dick Cheney

Klein says “over-the-top” would cause too many problems; TransCanada PipeLines confident Alberta grid can handle gas from two lines

Gary Park

PNA Canadian Correspondent

Alberta Premier Ralph Klein emerged as a solid backer of an Alaska Highway pipeline in a 30-minute meeting with Vice President Dick Cheney — the first time in 16 years a provincial premier from Canada has visited the White House without accompanying federal cabinet ministers.

Following the session, Klein told reporters that Cheney seemed to support his view that the best way to ship North Slope gas to the Lower 48 would be through the highway pipeline across Alaska and the southern Yukon, connecting with existing export lines from Alberta.

“The across-the-top route would cause a tremendous amount of problems,” Klein said. “It seems to be that he (Cheney) favors the southern route.”

But a senior Canadian official was less certain about Cheney’s view, saying the vice president did not endorse either the highway or the Mackenzie Valley route. Cheney was unavailable to reporters.

In two days of meetings with Cheney, Senate Energy Committee chairman Sen. Jeff Bingaman, Sen. Frank Murkowski and other U.S. legislators, Klein tip-toed around his earlier threat to block North Slope gas shipments across Alberta unless the province gained access to gas liquids as feedstock for its petrochemical industry.

Sources close to Klein said he had taken the stand partly to draw the attention of the United States to Alberta’s constitutional role as owner of its natural resources at a time he felt Alberta was being frozen out of U.S.-Canada continental energy policy talks.

“I just want to make sure the owners of the resources are consulted,” he said in Washington, but he conceded Cheney and the others he met were not interested in being drawn into Canada’s jurisdictional issues.

No bottlenecks in Alberta

Bob Reid, executive director of the company’s Mackenzie Valley initiative, said TCPL’s pipeline network within the province can accommodate gas from both the North Slope and the Northwest Territories.

Now that the Alliance pipeline from northern British Columbia to Chicago is operating is averaging 1.5 billion cubic feet per day and the Northern Border pipeline from Western Canada to Chicago is delivering about 2.35 billion cubic feet per day, TCPL’s massive Alberta system is running at less than capacity, Reid told a Canadian International Petroleum Conference.

He said there is also spare capacity on the liquids-rich Alliance line for producers who want to send natural gas liquids to chemical plants in the Chicago area.

In addition, he said, declining production from Western Canadian wells and the need for about 1 billion cubic feet per day of gas to power an influx of oil sands and heavy oil projects in northern Alberta means the TCPL grid can carry as much gas as flows south with only minor expansions.

“We are well positioned to take gas into our system from both the Mackenzie Valley and the Alaska Highway lines,” he said. “All we have to do is re-jig the system to accommodate incremental volumes in a very efficient manner.”

Reid said that using existing pipelines bound for the United States would cut capital costs for producers who face combined price tags of at least C$10 billion if the two pipelines proceed, shipping an anticipated 3.3 billion cubic feet per day of Arctic gas within a decade.

Reid said TCPL believes markets will dictate that both lines are built, although he said the “over-the-top” proposal, while technically possible, is unlikely given the risks associated with the environment.

TCPL is a joint partner with Westcoast Energy in Foothills Pipe Lines, the leading contender to operate an Alaska Highway pipeline. Both companies along with Calgary-based Enbridge are also front-runners to participate in a Mackenzie Valley line.