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Foothills says highway route wins on cost, timing and risk Study argues separate North Slope and Mackenzie Delta pipelines would be cheaper than an "over-the-top" project Gary Park PNA Canadian Correspondent
An Alaska Highway gas pipeline could be built faster, cheaper and at less risk than going "over-the-top," says a new study by Foothills Pipe Lines that has stirred up heated rebuttals from the Northwest Territories and Arctigas Canada.
Foothills, which has the only firm proposal to build the highway project, said that once all the factors have been combined that route offers significant advantages.
It also said the two separate pipelines, from the North Slope and the Mackenzie Delta, would cost less than a single "over-the-top" line.
Foothills calculated that a 4 billion-cubic-foot-per-day line from the North Slope and a stand-alone line carrying 1.2 billion cubic feet per day from the Delta could be built for a total $12.8 billion, while the price tag on a line from the North Slope under the Beaufort Sea and down the Mackenzie Valley would be $13 billion.
It argued that the Alaska Highway line could be delivering gas in six to seven years, with the Delta project coming on stream in eight to nine years — both ahead of its estimated timeframe of nine to 10 years for an "over-the-top" pipeline.
Unknowns surrounding over-the-top gas pipeline route Foothills northern affairs manager Brian Love said the company's Arctic experience stretching over 20 years convinces it that there are too many unknowns surrounding the "over-the-top" proposal.
The study, released Sept. 18, described the "critical and serious constraints" associated with building and operating a subsea portion across 300 miles of the Beaufort, which it said could cause significant additional cost overruns and long delays.
A pipeline would have to be far enough offshore to avoid the dangers of ice scour and gouging, would pose problems locating compressor stations because of pack-ice conditions, and would have to be twinned to deal with any winter ruptures, Foothills said, adding that a limited open water season would delay construction and restrict access to the line.
Foothills said the offshore portion would need larger diameter pipe and an operating pressure up to 3,000 pounds per square inch to achieve higher flow rates posses added risks by extending the limits of pipe metallurgy and offshore pipeline technology.
It said dual lines under the Beaufort are needed at a design pressure of 2,050 psi.
In other comparisons, Foothills said installing high-pressure line through mountainous terrain would cost $25,00 per diameter-inch per mile, $34,800 through permafrost and $73,200 for offshore "over-the-top."
The capital cost estimates include interest charges during construction and escalation for inflation, both of which would be greater because of the longer construction period for an offshore route, Foothills said. Based on a pipeline carrying 4 billion cubic feet per day at $3 per million British thermal units, each month of delay would add $360 million to the costs, it predicted.
Arctigas rejects study conclusions Arctigas Canada president Harvie Andre rejected those projections, referring to independent studies by Purvin & Gertz and the Canadian Energy Research Institute that suggested he Northern route could be built for less than the highway pipeline.
He said it was impossible to traverse the Rocky Mountains twice in Alaska and Canada and install an extra 400 miles of pipeline without adding to the costs.
Andre said Arctigas intends to test various construction techniques this winter.
Doug Matthews, director of the Northwest Territories government's oil and gas division, insisted other studies show an "over-the-top" route has cost advantages and does not require twinning.
He said it "seems only logical that a pipeline company (Foothills) would argue for two pipes, where a shipper might think one would be better."
Other estimates developed by producers don't agree with Foothills' findings, Matthews said.
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