Enbridge president fears “self-interest” could delay gas pipeline to Lower 48

Says Alaska's ban on “over-the-top” route is “too narrow in terms of interest”; also cites aboriginal land claims, prolonged regulatory process and low gas prices as problems

Gary Park

PNA Canadian Correspondent

Enbridge Inc. president Pat Daniel has called for a continental view to overcome “self-interest” that he warns could stall development of a gas pipeline from the Arctic to the Lower 48.

The head of the Calgary-based energy shipper and distributor said unresolved aboriginal land claims, long regulatory processes and jurisdictional bickering, combined with low gas prices, could push construction of a pipeline beyond the hoped-for five- to seven-year timeframe.

In particular, he singled out Alaska legislation banning an over-the-top route as an example of a government response “that's too narrow in terms of interest ... we need to think a little more broadly.”

Daniel said both the state of Alaska and the U.S. House of Representatives are taking very firm positions against one route and “I think that's too local.”

Spurning an over-the-top proposal could cost producers an extra C$2 billion in construction costs, boosting the delivered price by 30 cents per thousand cubic feet, he said, adding: “I don't think we can stand that.”

He said the U.S. led war on terrorism is likely to renew U.S. desires to secure domestic supplies of oil and gas, which bodes well for the 100 trillion cubic feet of untapped gas in the Canadian and U.S. Arctic.

Strengthening of gas markets needed

“Natural gas prices have fallen so dramatically that there's no real clear economic project (to ship Arctic gas) or it would be applied for and built right now,” he said.

“We need to see a strengthening of natural gas markets and we need to see some commitment by downstream users that they are prepared to take the gas at those prices in order to make the project go.”

In the bluntest industry warning yet, Daniel said Native demands, prolonged regulatory processes and legislated roadblocks on pipeline routes could endanger early development of Arctic gas.

Speaking at a Far North Oil & Gas conference in Calgary, he said Sept. 20 that a pipeline is inevitable some time, but “I think it's very important that people keep in mind that (delay) is a definite possibility if we don't all work together to make this happen.”

Enbridge, which operates the world's longest crude oil line across Canada and into the United States and is Canada's largest gas distributor, is the only Canadian pipeline with Arctic experience.

It is the long-time operator of a crude line from Norman Wells in the central Mackenzie Valley, for the last two years has delivered the first Mackenzie Delta gas to Inuvik and is actively involved in discussions with the Delta producers on their pipeline plans.

Mackenzie gas promoted

“It should now be clear to everyone that the only commercially viable Arctic gas reserves are in the Canadian Mackenzie Delta region,” he said.

Ootes said the Delta has 9 trillion cubic feet of proven reserves and another 50 trillion cubic feet is expected to be found.

He emphatically dismissed any notion that the Deh Cho First nations' refusal so far to sign a memorandum of understanding with the Delta producers could unravel development of that area.

Northwest Territories Premier Stephen Kakfwi spokes with the Deh Cho recently and has a second meeting scheduled to assure the community its land claim concerns will be resolved before a pipeline is completed.

Suggesting a pipeline would generate huge economic gains for the poverty-stricken region, Ootes said “there's always concerns on our part that the needs of the Deh Cho are met and we are working towards that.”

He reiterated recent statements by Kakfwi that no single group will hold up applications to build a pipeline.