Mackenzie pipeline ‘viable’ despite U.S. moves to subsidize Alaska route

Gary Park, PNA Canadian correspondent

Petro-Canada chief executive officer Ron Brenneman says a standalone Mackenzie Valley gas pipeline is viable, with or without Alaska gas, and despite what he views as U.S. Senate moves to subsidize an Alaska Highway route.

He predicted gas will start moving out of the Mackenzie Delta in the next 10 years.

Speaking after the Petro-Canada annual meeting on April 30, Brenneman said he is “very disappointed” that Senate legislation is proposing loan guarantees and tax credits for the highway project.

“That represents a form of subsidy for gas from one particular source in North America,” he said. “We would have gas effectively coming into or through a deregulated market we all compete in that might actually be subsidized by the U.S. government.”

Brenneman was not swayed by the prospect that tax credits would not apply once gas prices moved above US$3.795 per million British thermal units. “This is a cyclical business. We’ve seen prices even recently cycle both up and down,” he said.

Natural Resources Minister Herb Dhaliwal also joined the chorus of opposition from Canada to the Senate bill.

He said “it’s interesting the Americans want to subsidize ExxonMobil for their gas to be delivered to the Lower 48,” he said. “It’s surprising that the American politicians who talk about subsidies in other areas are quick to subsidize their energy producers.”

But he hopes the legislation will be changed in conference with a parallel bill from the House of Representatives before it goes to President George W. Bush.

A spokeswoman for Dhaliwal’s department said the Senate proposal is “not consistent with Canadian thinking on the way energy policy should be run. Our policy is based on markets — open, fair markets. And that isn’t changing.”