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Arctic pipeline decisions close — definitely, maybe, you’re dreaming Top Canadian politicians can’t quite agree on what they heard at Dallas meeting, but ExxonMobil executives says neither route is yet economic Gary Park PNA Canadian Correspondent
There was a meeting in Dallas on Nov. 28, involving some of Canada’s top political leaders and many North American energy executives. One of the topics was the timing of natural gas pipelines from the U.S. and Canadian Arctic to the Lower 48.
That much we know for sure. We think.
But let some of the key participants speak for themselves.
Canada’s Prime Minister Jean Chretien: “There are two pipelines that are possible (from the North Slope and Mackenzie Delta) and they are not in competition.”
Canada’s Natural Resources Minister Ralph Goodale: “It is timely now to proceed with those projects. The general comment was that within the first six months of the coming year the producer groups will be in a position to finish their internal analysis and make their own private-sector decision about whether or not to file an application.”
Alberta’s Energy Minister Murray Smith: “The producer groups in Alaska and also the Delta are trying to put forward some decisions for early 2002.”
Alberta’s Premier Ralph Klein: “Maybe I wasn’t at the same meeting (as Goodale and Smith). Much to our disappointment, I would have liked to have heard (the producer groups) were ready to go ahead with one of both of those pipelines. Certainly, they’re saying when the time is right, both lines can come on stream, but what I heard is that the economics today are not there to start construction.”
ExxonMobil: neither route currently economic Terry Koonce, vice-president of Exxon Mobil Corp.: “Current analysis does not show either of the routes is economic at the present time.”
With so much apparent trouble singing from the same song sheet, it’s impossible to arrive at any consensus.
But there was no question that Goodale and Smith were generally upbeat and the usually ebullient Klein was downbeat.
Klein was plainly disappointed that the industry executives show no obvious desire to get on with a pipeline. He estimated the delays could cost Alberta as much as C$6 billion in lost construction jobs and revenues.
Goodale’s interpretation of the discussion gave him confidence that both pipelines could proceed.
“The companies are doing their homework. The work is not yet complete,” he said. “But there’s a fairly strong anticipation that they will be able to finish their analytical work and decide which application or applications to proceed with within the first part of 2002.”
Smith said the feasibility studies involving the Slope and the Delta “are ramping up to decision time. I don’t think there is anybody in Canada or the United States that wants to see the opportunity go by. It is time.”
Koonce said the $100 million study by the Alaska producers is focused on reducing costs, but it is too early to say whether the project is viable.
Regulatory superhighway needed He emphasized that tax and royalty rates in Alaska must be attractive and the regulatory approval process for a pipeline must be streamlined of work is to proceed.
“If we had the fiscal certainty in Alaska and if we had the regulatory superhighway through the U.S. through legislation, all those factors would help. But no one of them guarantees that this project will be economic,” said Koonce.
A spokesman for Imperial Oil Ltd., 69.6 percent owned by ExxonMobil and the lead partner among the Delta producers, said a decision could be made on the Delta project early in 2002.
“The nub of it is that before year end, 2001, we hope to be in a position to begin work on regulatory applications,” he told reporters.
“We have not made that decision yet — that’s still to come — but we’re certainly encouraged by the progress that we’ve been making.
“Our hope is that before year-end, we’ll be in a position to advance to the next stage of work, which will be the regulatory and project definition phase,” the spokesman said.
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