Foothills breaks silence to dismiss Arctic Resources’ plan

Ellwood says “over-the-top” route would never get political backing; insists 1977 U.S.-Canada treaty gives Foothills sole right to carry Alaska gas

Gary Park

PNA Canadian Correspondent

An undeclared pact among Canadian-based pipelines to avoid brawling in the public arena over Arctic gas projects is starting to break down as crucial decision-making draws closer.

Foothills Pipe Lines Ltd. Executive Vice President and Chief Operating Officer John Ellwood raised the tension levels in early August by declaring the “over-the-top” plan by Houston-based Arctic Resources would never be acceptable on political or environment grounds.

He said any attempt to run a pipeline under the Beaufort Sea is doomed, partly because of the 1977 Canada-U.S. treaty giving Foothills the sole authority to carry Alaska gas to the Lower 48 using the Alaska Highway right of way.

“There’s just no reason to venture into the Beaufort,” he said.

The “correct answer,” Ellwood said, is to stick with the existing legislation and treaty.

But he said Foothills endorses the idea of a standalone Mackenzie Valley pipeline as the best way to avoid environmental and political controversies.

In the end, the two pipelines could cost about the same as the “over-the-top” system linking both the North Slope and Mackenzie Delta in a single system, said Ellwood.

He said the 1977 treaty, in Foothills’ view, gives “us a priority right to move Alaska gas to market. We’ve invested a great amount of time and effort in developing (the highway route) and it would require an act of Congress and an act of Parliament and a renegotiation of that treaty to do anything different.

“That would take away from us the rights we have and we would vigorously oppose that.”

But Alaska and Mackenzie Delta gas producers are studying all options, despite opposition from the Alaska legislature and the Yukon government.

A spokesman for the Delta consortium said the 24-year-old Canada-U.S. treaty may no longer be adequate to meet the current situation, especially since technological advances could now make an undersea pipeline in the Arctic possible from an engineering standpoint without threatening the environment.

Foothills is a privately held Canadian company, which is owned equally by Westcoast Energy Inc. and TransCanada Pipelines Ltd.