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Northern resource push Alaska, Canadian governments probe of options to get stranded oil, gas to market Gary Park For Petroleum News
The governments of Alaska, Alberta, Northwest Territories and Yukon are making an all-out effort to get some of their prodigious oil and natural gas resources to market.
Energy leaders of the four jurisdictions agreed in Anchorage July 16 to explore every means possible to free the stranded resources of the North Slope, Beaufort Sea, Mackenzie Delta and Central Mackenzie Valley.
Having watched the evaporation of their grand plans to ship Arctic natural gas to southern Canada and the Lower 48, they are working on a regional strategy that could see Canadian production shipped to Asia through Valdez, or from Tuktoyaktuk in the NWT.
“These are early days, but we have many options on the table,” NWT Industry Minister David Ramsay told Petroleum News. “We will continue our discussions to find the best fit.”
He said the participants hope to “meet again sometime soon.”
Alberta Energy Minister Ken Hughes said the governments are “pursuing all options ... south, west, east and north.”
Ramsay said they include a possible pipeline originating in the Alberta oil sands, picking up crude from the NWT’s Central Mackenzie Valley and Beaufort Sea, then swinging across the northern Yukon to connect with the Trans Alaska Pipeline System to Valdez, opening tanker routes to Asia.
Also being studied are possible LNG exports out of Alaska, drawing on 6 trillion cubic feet of gas reserves in the NWT’s Mackenzie Delta and more than 30 tcf on Alaska’s North Slope, both losing out on plans to build pipelines to southern markets after being overwhelmed by the development of shale gas.
As well, Ramsay said the NWT and Alberta are studying the feasibility of a pipeline along the Mackenzie River Valley to Tuktoyaktuk on the Beaufort, with shipments reaching Asia through the Bering Strait.
He said the NWT favors a northern pipeline over a rail link from Alberta to Alaska because it would provide an outlet for the NWT’s prospective oil fields.
Hughes said a study of the Tuktoyaktuk plan is nearly complete and an assessment of a pipeline to Alaska is due to be finished by 2014.
Exploration success key To augment the NWT case for pipelines, the government is counting on early oil and natural gas exploration success in two key areas — the Devonian Canol and the Beaufort, Ramsay said.
Those two plays have a combined work commitments of more than C$2 billion through federal exploration licenses.
Husky Energy, Shell Canada, ConocoPhillips Canada and MGM Energy are in advanced exploration stages in the Devonian Canol and Ramsay said he believes a partnership of Imperial Oil, ExxonMobil and BP is “ready to answer the call. ... We’ve got a big spend coming there.”
He said the companies “don’t want to say specifically at this point when they have in mind,” but he anticipates announcements within a year.
Ramsay said his meetings in recent weeks with industry leaders in Calgary and Houston “have been positive.”
Changed ‘mindset’ He said the NWT government’s optimism is further strengthened by a changed “mindset” among northern aboriginal leaders.
They are “tired of seeing unemployment rates of 30 percent to 40 percent in their communities” and are open to negotiating equity stakes in major projects along the lines of a deal they have in place for a possible one-third ownership position in the Mackenzie Gas Project pipeline, Ramsay said.
He said a significant step forward is scheduled for April 2014 when control over resource development is transferred from the Canadian government to the NWT, meaning the petroleum industry will have to deal with only one government.
Although sensitivities over crude-by-rail plans are high, Hughes did not rule out a proposal by Vancouver-based G Seven Generations, which has strong ties with Canadian First Nations, to build a rail line from the oil sands to connect with the trans-Alaska oil pipeline.
He did not believe the disaster at Lac-Megantic in Quebec would stop the increasing use of rail to carry crude, although safety precautions should be ramped up.
“The Quebec tragedy reminds us that if we’re able to handle the immense amounts of oil we see being developed we’ll have to up our game in all aspects,” Hughes said.
Alaska officials were not available to comment on the rail idea, but State Rep. Bob Herron, Democrat of Bethel, told Platts Oilgram News the rail option “will get a chilly reception here after the Quebec disaster.”
Representatives of G Seven Generations have made contacts in Alaska in recent months and have spoken of a system capable of hauling 1 million barrels per day, but industry sources have argued that number is unrealistic.
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