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Slope producers, pipeline companies tightlipped on gasline negotiations
Kay Cashman PNA Publisher
The North Slope producers met the second week in January with the pipeline companies interested in building a natural gas pipeline from the North Slope to Canada and the Lower 48 via the Alaska Highway.
Neither side is saying much about the results of that meeting, having decided not to negotiate the deal under the spotlight of the media.
No scaled down version “We have initiated discussions with the North Slope producers. We have put a commercial proposal in front of them,” Cavan Carlton, Arctic project director of gas pipeline business development for Williams, told PNA Jan. 15. “We will have further discussions with them.” Williams spearheaded the original 1,700 mile Alaska Highway natural gas pipeline project in the mid-1970s and is interested in resuming its leadership role and operating the Alaska portion of that pipeline. It is set to have the largest ownership position — 21 percent — in the consortium of major U.S. and Canadian pipeline companies that signed a memorandum of understanding in mid-November to proceed with the development of the Alaska Natural Gas Transportation System.
The pipeline companies did not present the North Slope producers with a scaled-down version for the gasline. Although Carlton would not reveal the price tag on the pipeline proposal presented to the producers, he said it was in the range of what has been “quoted all along in the press.” (Costs have ranged from $9.7 billion, quoted Nov. 15 by Foothills Pipe Lines Ltd. spokesman Rocco Ciancio for a 42-inch, 4 billion cubic feet per day line that would connect with existing pipelines in Alberta, to $17.2 billion, quoted last summer by the North Slope producers gas study team for a 52-inch, 4 to 6 billion cubic feet per day line which includes new pipe from Alberta to Chicago.)
Project not commercial yet Dave MacDowell, external affairs manager for the Alaska Gas Producers Pipeline Team, told PNA the pipeline companies had presented the producers with more of “a framework for discussion,” versus a formal proposal.
“Neither of the groups (producers or pipeline companies) has identified a commercially viable project,” MacDowell said. “But this was one in a series of meetings. We’re in the early stages. There will be more meetings in the future.” (See related news item on page 9 about Sen. Frank Murkowski’s invitation to the producers and pipeline companies.)
When asked about the commercial viability of ANGTS, Carlton said, “the assessment if it is affordable and doable will be made by the producers. All we can do is put our best foot forward. But we believe we can build this project more economically and more efficiently than anyone else. The companies in our group have developed about 95 percent of all the natural gas pipelines in North America today. … We bring more to the table — more experience — than anyone else could.”
Still, Carlton said, it will not be up to the pipeline companies to decide whether or not a North Slope gasline project will be built.
“I think the big issue for the producers in Prudhoe Bay is whether or not a pipeline will be built. It’s a lesser issue to them whether or not they build it,” Carlton said.
He does not see ANGTS as a slam dunk.”
“There are a lot of challenges, but our highest chance of success will come from involving the producers and the pipeline companies whose expertise is building and operating pipelines. That combination represents our best chance of getting the project built,” Carlton said.
Producers evaluating study results MacDowell said his team is winding down its work on the $100 million gas commercialization study for the North Slope producers.
“As of mid-January we had just 66 out of 100 company employees on board. The rest had returned to their sponsor companies,” he said. “It is likely to continue to ramp down to essentially zero as planned in April as work is completed. …
“We have submitted the results of most of our work to the producers. Each of the three companies will conduct an internal analysis and review of the data separately,” MacDowell said. The result of the individual company reviews “will determine potential next steps, whatever they may be.”
By the end of the first quarter the gas team hopes to be able to release a report of its findings to the public. MacDowell said it would be similar to the mid-year report the team released this past summer.
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