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Alaska, Mackenzie pipelines are vital to supply Without the Alaska line, gas prices would be 8% higher Allen Baker Petroleum News Contributing Writer
The contribution of natural gas from Alaska’s North Slope is vital to a stable North American supply situation, the National Petroleum Council says.
By 2015, gas from Alaska and the Mackenzie Delta could supply 8 percent of North America’s needs, with 4 billion cubic feet daily from the Alaska line and 1.5 bcf from the Mackenzie Delta.
The Alaska line is particularly important to keeping supply in sync with demand. The study group ran a market projection which assumed the Alaska line wouldn’t be built.
“This increased gas price projections by roughly 8 percent over the period from 2015 to 2025, putting further stress on the economy and illustrating the importance of this project in the overall outlook,” the National Petroleum Council concludes.
The report provided some good news on the pipeline cost. It says the projected $20 billion for a pipeline all the way to from the North Slope to the Lower 48 could be reduced significantly because there will be room in the western Canadian pipeline system, which has a current capacity of about 15 bcf per day.
Existing Canadian lines from Alberta to U.S. markets could carry as much as 88 percent of the 4 bcf expected to come from the North Slope, the report says.
“The NPC analysis suggests that an additional 0.5 to 2 bcf/d of new or expansion capacity will be required, with the remainder moving on existing infrastructure.” Tight time line Still, getting Alaska gas to market by 2013, as the study suggests, will require quick action on the legislative front.
“The timetable for Alaska gas is very aggressive, and can only be met with prompt government action,” the report says.
But the National Petroleum Council panel isn’t endorsing financial incentives such as the controversial price floor opposed by Canadian officials and supported by Alaska’s political leaders.
“Two strongly held views of fiscal incentives emerged during the study team discussions,” the report said, with some members arguing that incentives would mean added production, and others contending that market forces are sufficient to stimulate investment.
Incentives for marginal projects “and an Alaska pipeline fiscal package were discussed, but the NPC makes no recommendation in this regard,” the report says. Swift legislative action needed The council does support congressional legislation “that provides regulatory certainty” for an Alaska pipeline project, however. Congress has been debating various approaches for encouraging the line, and action is expected this fall as part of a comprehensive energy measure.
The council also says the Alaska Legislature must act in its next session to support a project startup in 2013.
“The state of Alaska should provide fiscal certainty to project sponsors in a manner that is simple, clear, not subject to change, and that can improve project competitiveness,” the council suggests.
The report also calls on Canadian agencies to work cooperatively on regulations and permits for both Arctic lines.
“An efficient process must be in place in early 2004 to support a 2009 Mackenzie gas project start-up and a 2013 Alaska gas pipeline project start-up,” says the report.
Infrastructure improvements should be expedited by both Canadian and U.S. government agencies, the council suggests, and those agencies should “avoid imposing mandates or additional restrictions that could increase costs and make it more difficult for a project to become commercially viable.”
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