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Canada’s tiny NPA has big gas line role Agency official visits Alaska, lays out upcoming work; path is unclear as TransCanada and North Slope gas owners change course Wesley Loy For Petroleum News
A North Slope natural gas pipeline has been a longtime focus not only for Alaska, but for neighboring Canada.
And if plans for a gas line down the Alaska Highway to Alberta ever take off, we’ll be hearing a lot more about an obscure Canadian office called the Northern Pipeline Agency.
The NPA would oversee the planning and building of the Canadian segment of the gas line.
Although chances for construction would appear unlikely at the moment, due to low gas prices and resurgent interest in an all-Alaska line, the NPA has considerable work upcoming.
The agency’s assistant commissioner, Chrystia Chudczak, was in Alaska recently to talk with legislators, industry players and others about the NPA’s outlook. She assured all that Canada stands ready for a pipeline.
Some of her words at a March 29 breakfast meeting of the Resource Development Council for Alaska certainly rang familiar.
“So let’s deal with the elephant in the room,” Chudczak began. “This project will only go ahead if it’s commercially viable, if the markets want it, and if producers are able to secure customers.”
Agency’s deep roots Commercial viability is a detail that sometimes seems forgotten amid the political clatter over how to achieve a gas line, one of the state’s fondest but most frustrated economic development goals. The extreme risk and cost of the 1,700-mile line, now estimated at $32 billion to $41 billion, has thus far precluded construction.
“We don’t speculate on whether the project is going forward,” Chudczak told Petroleum News in an interview following her speech. “We’re obliged to be ready if filings come in.”
Chudczak became the NPA’s assistant commissioner in September 2011, having previously served in quite a variety of government posts.
Her agency would play a commanding role on an Alaska gas line into Canada. And it’s a role that’s been long-anticipated.
Canada’s Northern Pipeline Act of 1978 created the NPA.
The agency, based in the Canadian capital of Ottawa, has responsibility for facilitating efficient planning and construction of the pipeline, for considering regional and aboriginal interests, and for issuing permits.
In effect, the NPA is a fusion of two U.S. agencies — the Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects, which is a facilitator but doesn’t issue permits, and the Federal Energy Regulatory Commission.
Although its responsibilities are broad, the NPA is narrowly focused on a single project — TransCanada’s proposed Alaska Highway gas line. Under the 1978 act, Calgary-based TransCanada and its Foothills subsidiary hold certificates for construction of the Canadian portion of the line.
Competing firms are free to pursue an Alaska gas line through Canada, but the NPA wouldn’t oversee such a project. Rather, that duty would fall to the National Energy Board, Canada’s FERC equivalent.
Likewise, the NPA has no involvement with Canada’s proposed Mackenzie Valley gas pipeline.
A major announcement Since 2008, when the state awarded a special license to the company in exchange for certain commitments, TransCanada has been actively pursuing its gas line project. ExxonMobil, the top North Slope gas owner, is partnering with TransCanada.
The partnership views the old Foothills certificates as “a key advantage” for its project.
Thus far, however, TransCanada has failed to attract sufficient gas shippers for the line.
And other factors have come into play recently that seem to lessen the chances for an Alaska Highway line.
First, the North American price of natural gas has sunk to very low levels.
Second, major North Slope gas owners BP, ConocoPhillips and ExxonMobil, along with TransCanada, on March 30 jointly announced they’ll look at possibly exporting liquefied natural gas, or LNG, from an Alaska port as an alternative to building a gas line through Canada.
This latest development is significant for the NPA. TransCanada, under its state license, faces an October deadline to apply for a FERC certificate to build and operate the gas line. TransCanada has indicated it would like to make concurrent filings with the NPA.
But this schedule could change with the new focus on a possible LNG project.
A TransCanada spokesman did not return a phone call seeking comment.
Upcoming NPA activity Regardless, Chudczak indicated her agency has a number of important chores ahead. One is dealing with the Foothills construction easement through Yukon. The easement is due to expire on Sept. 20, and TransCanada is expected to pursue an extension.
Chudczak also said her agency aims to form advisory councils to sound out First Nations and other people in Yukon and British Columbia on environmental and socioeconomic gaps that might need filling for an Alaska Highway gas line.
At the moment, the NPA is a tiny agency with 14 people, Chudczak said. Most are in the head office in Ottawa, with one in Calgary and one in the Yukon capital of Whitehorse. By law, all of the agency’s costs are recoverable from TransCanada.
There was a time, in the late 1970s and early 1980s, when the NPA had more than 100 staffers. It regulated construction of what’s known as Stage 1, or the “pre-build,” of the gas pipeline in southern Alberta, Saskatchewan and British Columbia. The pre-build now transports western Canada gas to American markets, an NPA fact sheet says.
When the economics of the larger project grew unfavorable in the 1980s, the NPA downsized to a small staff.
The project’s long-awaited Stage 2 would link gas reserves at Alaska’s Prudhoe Bay to existing Alberta infrastructure. This is the segment for which TransCanada might make NPA filings by October.
Visit the NPA’s website at www.npa.gc.ca
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