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Mackenzie, North Slope vital to fill ‘gas gap,’ says ConocoPhillips exec Calgary gas conference: Dan Bailie predicts start ups of 2008 for MacKenzie, 2011 for Alaska; says projects could encourage development along pipeline routes Gary Park PNA Canadian Correspondent
Those who speculate on timetables for bringing Arctic gas on stream got an answer March 3 from a senior official with ConocoPhillips Canada Ltd. — 2008 for the Mackenzie Delta and as early as 2011 for Alaska’s North Slope.
Dan Bailie, vice president of major projects for the Calgary-based company, told a Canadian Energy Research Institute gas conference that ConocoPhillips, which has ownership stakes in the Delta and North Slope, favors both projects to bring northern gas resources into production in a timely manner.
He said the two basins will be needed because current known North American reserves are inadequate to meet future demand and the Mackenzie Delta and North Slope could provide the continent with a “new, secure supply of energy that would encourage further development of resource potential along both pipeline routes.”
“There will be a significant emerging supply gap in the North American gas market to support development in both of these Arctic basins,” he said.
Simultaneous construction unlikely But Bailie said it was unlikely, for reasons of labor and materials, that construction of the Mackenzie Valley and Alaska Highway pipelines could proceed simultaneously, unless Alaska was suddenly advanced by three or four years, or the Delta was stalled by a similar period.
He predicted a construction start by late 2005 would allow the first gas to flow from the Delta by 2008, followed by development of Alaska’s North Slope that could see production start up by 2011 or 2012.
John Carruthers, director of the Alaska-Canada pipeline for BP Canada-Alaska Gas, echoed that forecast, telling a Canadian Institute Arctic gas symposium in Calgary on March 6 that the soonest a pipeline from the North Slope could come on stream is 2011 provided a number of obstacles can be cleared.
He said growing North American demand will be more than enough to support both projects, but the Alaska Highway proposal is stalled for now because “the risks significantly outweigh the rewards at this point.”
Carruthers said legislation that could include loan guarantees or tax credits must be dealt with before North Slope development can proceed. While those negotiations continue, he said U.S. producers support the Mackenzie “going forward.”
On the controversial topic of subsidies to promote development of the North Slope, Bailie said proposed U.S. legislation does not make provision for a floor price.
What is being suggested is “more an insurance scheme or mechanism, or a risk-mitigation mechanism,” he said. Unanimous aboriginal support necessary On the Northwest Territories project, Bailie said the fact that the Deh Cho First Nations have yet to settle all of their land claims along the pipeline route is not a big obstacle, but he was emphatic that unless there is unanimous support from all aboriginal communities along the Mackenzie Valley there will be no pipeline.
Meanwhile, Mike Nadli, Grand Chief of the Deh Cho First Nations, said March 7 that his 11 First Nations and three Metis communities have yet to approve or reject a pipeline deal.
He told a Canadian Institute Arctic gas symposium that issues of ownership, jurisdiction and sovereignty over the Deh Cho “homeland” must be resolved, or there is the risk of legal action.
Less bullish in his scheduling predictions, Dave Collyer, vice president of frontiers with Shell Canada Ltd., told the Canadian Energy Research Institute conference that those pinning their hopes on Mackenzie Delta, offshore British Columbia and deepwater Nova Scotia gas to fill the supply gap will likely have to wait until at least 2010 for help from these frontiers.
Shell Canada, which has interests in all three regions, last month lowered its estimates for the Sable project offshore Nova Scotia to 700 billion cubic feet from 790 bcf at the same time EnCana Corp. called a time out on its nearby Deep Panuke project.
Collyer said EnCana’s decision along with disappointing recent exploration results in the Nova Scotia waters has added to uncertainty regarding the region.
For the short-term he doubts there will be any significant production growth, although a major discovery could accelerate the timetable, he said.
Continental energy security On the broader issue of North American supply, George Anderson, deputy minister of Natural Resources Canada, said governments in the United States and Canada will give all the attention that is required to ensure continental energy security, including a focus on unlocking new and non-conventional sources.
Speaking to the Canadian Energy Research Institute conference, he said he doubted there would be any radical changes in energy policy driven by security considerations.
While conceding that North American reliance on offshore crude oil imports could climb to 50 percent by 2020 from 40 percent today, he suggested the trend did not make a change in the energy security imperative.
“My sense is that this part of the case is not proven,” Anderson said.
He took a similar view of natural gas, in which the continent has been self sufficient, although the International Energy Agency has forecast import dependence will climb to 10 percent in 2010, 20 percent in 2020 and 30 percent in 2030.
Faced with these challenges, he said there is an “active dialogue” taking place between the United States and Canada on energy policy, but not to the extent of establishing a common policy.
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