|
Battle heats up between Arctic gas pipeline players in Canada Gulf Canada wants standalone pipeline from Mackenzie Delta to U.S. markets; Northwest Territories offering Alaska share of economic spin-offs if it backs an NWT route; Yukon asks industry to go with Alaska Highway route Gary Park PNA Canadian Contributing Correspondent
Canadians are playing nationalist cards faster than a high-roller in Las Vegas as the Arctic gas pipeline stakes mount.
Gulf Canada Resources is boosting its case for a standalone pipeline from the Mackenzie Delta to southern Canadian and U.S. markets; the Northwest Territories is offering Alaska a share of the vast economic spin-offs if it backs that route; and the Yukon is begging the industry to ignore both and go with the Alaska Highway route.
Canadians don’t need Alaska gas In a San Francisco speech in mid-October, Gulf Canada chief executive Dick Auchinleck stepped up the lobbying of his three Delta partners — Imperial Oil, Mobil Oil Canada and Shell Canada — to file a regulatory application for the Mackenzie Valley pipeline early next year.
Auchinleck, the first to revive talk of Arctic gas development and the most outspoken proponent of deliveries by 2005, said a pipeline to carry 1 billion cubic feet per day can be built from the Delta without any need to tie in Alaska North Slope gas.
“I think there’s been a lot of misunderstanding in terms of the northern gas,” he said. “I think there’s a project here that can stand alone. We never started this process with the need to have Alaskan gas work with us.” Alliance for developing Mackenzie Delta gas An alliance of Gulf Canada, Imperial, Mobil and Shell Canada, the Delta’s four major discovery license holders, was formed in March to study the feasibility of developing their combined Delta reserves of 6 trillion cubic feet, plus 3.2 trillion cubic feet from the shallow Beaufort Sea area. (The Geological Survey of Canada has estimated the Delta’s gas potential at 53.3 trillion cubic feet).
The study was expected to last one year, although spokesmen for the partners have hinted the conclusions could be released late this year. They will include an assessment of North American market demand and what support can be expected from the Northwest Territories and federal governments, local and aboriginal communities, other producers and pipeline companies.
Imperial, as the largest owner with 5.2 trillion cubic feet of reserves, has consistently been the most cautious in predicting when the Delta could be developed. Exxon unlikely to participate in two projects Along with Mobil, it is a subsidiary of ExxonMobil and some industry sources have told PNA that the corporate parent — which has its own huge North Slope reserves — will be unlikely to participate in a Mackenzie Valley and a North Slope project at the same time, although the ExxonMobil public position has been to let each project stand on its own merit.
But Imperial Senior Vice President Kenneth Williams said in June that a Canadian only pipeline “is a bit smaller than various Alaska proposals and it’s one that could potentially be compatible with a much larger Alaska development one day.”
Ray Woods, senior operating officer at Shell Canada, said the Mackenzie Valley route seems the most sensible option, “but time will tell.”
Terry McCoy, president of Burlington Resources Canada, said his firm views the Mackenzie route as “the most reasonable alternative,” and would be interested in an equity stake in any pipeline. Regulatory process take 30 months Auchinleck told the San Francisco conference the regulatory process, involving government, industry and aboriginal groups, could take 30 months and a C$3 billion pipeline along the Mackenzie Valley could be built in another 30 months, paralleling Imperial’s oil pipeline from Norman Wells, in the central Northwest Territories, to northern Alberta.
“The first step is to start the regulatory application process,” he said. “We’re pushing it very aggressively. I hope early in the New Year we can start that part of the process.
“I can’t speak for the other three companies working on the feasibility study ... but that’s clearly what I would like to see done.” Largely Canadian route way to go During a lobbying swing through Washington in early October, Northwest Territories Premier Stephen Kakfwi promised jobs, contracts and investments to Alaska in a bid to persuade members of the U.S. Congress, regulators and state officials that a pipeline through the Northwest Territories makes economic sense.
“If people are interested in jobs and contracts, there is more than enough for us in the NWT,” he said. “It’s a huge project and a huge portion of it is in Alaska.”
Kakfwi set his Washington visit was designed to “let Americans know that there is more than one proposal.”
Northwest Territories Finance Minister Joseph Handley said some aboriginal-owned businesses in the Northwest Territories might be willing to invest some of their land claims money to help Alaska communities get access to the gas.
But Kakfwi — mindful of strong Alaska resistance to any pipeline link from the North Slope under the Beaufort Sea’s shallow waters to the Mackenzie Delta — acknowledged he is engaged in an uphill battle to convince Americans that a largely Canadian route is the way to go. Federal commitment needed soon On the domestic front, the Northwest Territories is pressing the Canadian government to support the Mackenzie Valley route.
Northwest Territories Oil and Gas Director Doug Matthews told a Calgary pipeline conference in late September that a federal commitment is needed within two months, otherwise the long-established Alaska Natural Gas Transportation System proposal wins by default, leaving Mackenzie Delta/Beaufort Sea gas stranded indefinitely.
But Matthews said the Mackenzie route requires Ottawa to contribute two-thirds of a C$300 million infrastructure and job-training program to prepare the Northwest Territories for a pipeline.
Northwest Territories Premier Kakfwi told the Calgary conference the federal government must move quickly or risk losing thousands of jobs and billions of dollars in royalties, taxes and economic benefits from a Mackenzie pipeline.
He insisted the Arctic gas industry’s “biggest hurdle — aboriginal support for this project in the NWT — has been overcome.
The government must be “challenged to move ... not next year or the year after, but now to take advantage of this excellent opportunity.”
Kakfwi released the findings of an Northwest Territories study estimating the cost of a stand-alone Mackenzie pipeline at C$3.4 billion, with an underwater link from the North Slope raising the price tag to C$6.6 billion. The ANGTS project cost is put at between C$8.1 billion and C$9.2 billion. ANGTS line will be built first Yukon Premier Patricia Duncan, while rejecting claims that the Yukon and Northwest Territories are locked in a do-or-die battle for the pipeline, told hundreds of delegates at the Calgary conference that she needed their support in Washington, Houston, Ottawa and Calgary to argue “why two pipelines are better than one.”
She said they are separated by questions of “timing and economics,” and that her government believes the ANGTS line will be built first because of regulatory approvals dating from 1982, a Canada-U.S. treaty and certificates of public convenience and necessity that have been issued in Canada and the United States.
The Yukon also “vigorously opposes” any attempt to link the North Slope with the Mackenzie Delta, because that produces “zero benefits for the Yukon and contemplates construction of petroleum infrastructure in highly sensitive ecosystems” where a pipeline rupture would be disastrous and could cut off gas deliveries for eight months in winter.
| 