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Foothills Pipe Lines chairman says time right for Alaska Highway pipeline It’s the natural gas pipeline wars of the 1970s all over again, Robert Pierce tells House Special Committee on Oil and Gas Kristen Nelson PNA News Editor
Economics, the environment and politics all play a role in natural gas pipeline projects, Robert Pierce, chairman and chief executive officer of Foothills Pipe Lines Ltd. told the Alaska House Special Committee on Oil and Gas.
When the route issue was last fought, in the 1970s, the Alaska Natural Gas Transportation System — also called the Alaska Highway pipeline — won out and it will win again today, Pierce said in remarks prepared for a March 7 presentation.
The time is right, he said, to move Alaska North Slope gas to the Lower 48 — and, as in the ‘70s, there is more than one route in contention.
In the 1970s there were three proposals: a pipeline to a liquefied natural gas facility in Valdez with the gas going to the Lower 48 as LNG; an Arctic proposal which would have taken gas across the North Slope to the Mackenzie Valley and down through Canada to the Lower 48; and the Alaska Highway route — the one Foothills proposed then and is proposing now.
The Foothills route down the Alaska Highway won approval from both Canada and the United States, Pierce said, and “certificates were issued, international agreements were signed … and … ratified by Congress in the U.S. and by Parliament in Canada.” Those agreements, he said, “have the force and effect of a treaty between our two countries.”
Again today, he said, a proposal to take gas across the North Slope to Canada is being proposed — although instead of going through the Arctic National Wildlife Refuge, this route goes under the Beaufort Sea.
U.S. gas demand, prices both up The reason there is a renewed interest in moving Alaska North Slope gas to the Lower 48, Pierce said, is that both “U.S. demand and price for natural gas continue to escalate, driven primarily by the demand for new gas-fired electrical generation.” Most analysts, he said, predict that by the second half of this decade, the U.S. market for gas will be 30 trillion cubic feet and the price will be $3 a thousand cubic feet.
The Lower 48 demand for natural has gas been supplemented from Canada, but the chairman of Canada’s National Energy Board has warned of a possible shortfall of Canadian natural gas by the winter of 2001.
Alberta, Pierce said, had stranded gas at one time, but government and industry combined to look for ways to get the gas to Lower 48 markets and for ways to use or further process the gas within Alberta. Both have happened — Alberta has a petrochemical industry with a capital investment approaching $7 billion and natural gas exports to the United States have increased dramatically.
Distance, price factors The economic questions, Pierce said, are can the distance factor be overcome and will the Chicago gas price allow Alaska gas to be moved south profitably?
The current Foothills pipeline proposal is about $6 billion in U.S. dollars and would use high-pressure pipe so that gas liquids could be moved; throughput volumes are estimated at 2.5-3 billion cubic feet per day. The distance is about 1,700 miles with roughly one-half of the new pipeline in Alaska and one-half in Canada.
The target date, Pierce said, is early 2006.
One reason that the pipeline is economic now when it wasn’t in the 1970s is that a sizeable section of the 1970s proposal has already been built in Canada, he said. Also, higher strength steel and higher operating pressures allow the use of smaller diameter pipe to move the same volume of gas and new welding techniques result in higher productivity in pipeline construction.
Both Lower 48 and in-state use While overbuilding the pipeline could defeat the purpose of the exercise, Pierce said that the pipeline can be sized to serve both the Lower 48 and the in-state need for gas. “This should be a win-win for Alaska economic development and the Alaska Highway pipeline, not to mention the consumer advantage for Alaskans that will result from the opportunity to use natural gas for home heating.”
Pierce said Foothills believes that several hundred million dollars could be saved by combining the Foothills pipeline with an Alaska LNG project.
Another cost savings for the Alaska Highway route, he said, is that it will be built along an existing transportation corridor, the Dalton and Alaska highways, allowing easy access to the right-of-way.
The Alaska Highway route also has many of the necessary permits in hand and most rights-of-way have been secured.
In addition to costs, he said, environmental factors played an important role in the original decision in favor of the Alaska Highway route. Pierce noted that a recent sampling of North American attitudes about energy issues found that effects on the environment, not cost, was the most important energy/energy industry issue.
And on the political side, a pipeline running through Alaska provides a catalyst for development, jobs and maximum tax revenues, he said.
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