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Alaska gas could flow by 2010 FERC Chairman Patrick Wood believes approvals can be expedited for pipeline, but floor price tax credit not likely Gary Park Petroleum News Calgary Correspondent
Against a backdrop of stepped-up industry pressure for quick action on an Alaska natural gas pipeline, the head of the U.S. Federal Energy Regulatory Commission said the gas could be flowing as early as 2010.
Patrick Wood III, FERC’s chairman, told reporters in Banff, Alberta, that he expects regulatory hearings for the pipeline to last only 18 months to two years, given that work done in the 1970s has probably cut two to three years off the process.
He said “there is not a lot that has changed” in the last two decades, meaning that the initial efforts are still valid.
“A pipe is a pipe and it’s either going to go through somebody’s land or it’s not,” Wood said.
He made his comments outside the Global Business Forum on Sept. 26, one day after the National Petroleum Council urged Congress to pass enabling legislation for an Alaska pipeline before lawmakers adjourn in October, although the council did not say how the possible $20 billion project should be funded or whether incentives should be offered.
“We have got to have the (Alaska) gas,” Wood said. “We’ve got to get the gas out of Alaska into our markets, so we’ve got to take the steps now to make that happen.”
He said the Bush administration is “really trying to work a proposal ... that will provide the necessary support to make the economics work on the pipeline but not ruin the market long-term” for the industry in Canada. Wood: floor price not likely Wood suggested the comprehensive energy bill now before U.S. legislators may include some incentives in its final form, but not likely a subsidized floor price.
Washington has heard “loud and clear” Canada’s opposition to a floor price, which it fears would distort the North American gas market and jeopardize plans for a pipeline from the Mackenzie Delta.
Wood said other proposals such as accelerated depreciation that would offer bigger tax writedowns to the companies would not be out of line with the tax breaks and credits available to gas producers in the Gulf of Mexico and U.S. Rocky Mountain region.
He estimated that 60 percent of U.S. gas production “has some sort of tax credit involved, either state or federal or both.”
If Alaska’s producers decide to proceed, Wood said FERC will recommend joint hearings with Canada’s National Energy Board on environmental, land-owner and aboriginal issues to facilitate construction of the line.
Hal Kvisle, chief executive officer of TransCanada — which has major interests in both pipelines — said pipelines from both the U.S. and Canadian Arctic appear to be almost certain to feed North America’s growing appetite for gas.
He told the forum he expects the Mackenzie project to move first because the Alaska line covers "four times the distance, has four times the gas volume and, I would say, 10 times the social and political complexity. ...
"We believe the Alaska pipeline is urgently needed, but we see many challenging issues that are going to be difficult to get that built," Kvisle said.
He noted that advances in pipeline construction technology, especially in colder climates, make the Mackenzie system a “relatively doable project.”
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