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Gasline not dead Duncan believes project will be ‘entirely economic’ once producers, governments complete their work; BP’s Carruthers says start-up unlikely before 2010 Gary Park PNA Canadian Correspondent
Yukon Premier Pat Duncan is unflinching in her belief that North Slope producers and governments can settle on terms that make an Alaska Highway gas pipeline economic, regardless of crumbling hopes for a start-up this decade.
“This project is no more dead in the water than it’s not going to snow next year in Calgary,” she told reporters March 8 after speaking to an Arctic Gas Symposium in Calgary.
Duncan conceded there are factors right now that make the prospects for a pipeline shaky — an uncertain economic outlook, unresolved matters with First Nations and the daunting costs, estimated by some to range from $15 billion to $20 billion.
But she was adamant that a pipeline along the Alaska Highway right of way and through Canada to the Lower 48 was “the right choice for North Slope gas 20 years ago and it’s the right choice today.
“I absolutely have complete faith and belief in the Alaska Highway pipeline project,” she said.’’ Markets will be ready Duncan based her argument largely on forecasts that North American gas markets will be ready to absorb an extra 17 billion cubic feet per day by 2010 — double Canada’s current exports to the U.S. — and 30 billion cubic feet per day by 2020.
Meeting that need will require both a pipeline from the North Slope and the proposed stand-alone line from the Mackenzie Delta.
“Yukon continues to maintain that the market will support more than one northern pipeline project in the long run,” she said.
Duncan said there are “factors beyond our control — clearly,” but once producers and governments have completed their work “I think you’ll find and I think the producers will find that the project is entirely economic.”
For Canada, the gains from a pipeline could be immense according to a study by Ottawa-based Informetrica Ltd. and commissioned by the Yukon government, she said.
Construction alone would generate 108,000 person-years of employment, including 32,000 for northern Canada, 31,000 for British Columbia and 21,000 for central Canada, as well as Gross Domestic Product growth of C$26 billion and real business investment totaling C$10.3 billion.
In response to pressure from the North Slope producers for a clearer, more efficient regulatory process, Duncan said the Yukon hopes to have the authority to control its resource and land management transferred from the Canadian government by April 2003.
In addition, she is aiming to enshrine in legislation a single-window process for environmental and socio-economic approvals.
Lastly, the Canadian government has set a March 31 deadline to end a 30-year land claim process that has resulted in agreement for eight of the Yukon’s 14 First Nations. No North Slope gas before 2010 Duncan’s comment came a day after John Carruthers, BP PLC program manager for Alaska gas development, told the symposium that economic and regulatory obstacles would likely prevent North Slope gas from flowing before 2010.
He emphasized the need for active support from all governments to assist the industry is bringing Alaska gas into production.
In particular, Carruthers said BP would like to see the U.S. and Canadian regulators establish a timeline of 18 months for approvals and appealed to the Alaska government for greater certainty in taxes and royalties.
“None of these areas cost taxpayers any money,” he said. “They all embrace free-market principles. We simply ask for clarity and certainty around government-controlled processes. They play a vital role in any investment decisions.”
Otherwise, Carruthers, echoing earlier comments from BP’s chief executive officer John Browne, said a pipeline project could not proceed with gas prices in the range of $2.50 per thousand cubic feet. Not commercially viable “At this point in time, it’s not commercially viable,” he said, but added: “It doesn’t mean we are giving up. BP remains committed to the prospect of Alaska gas development.”
He said the feasibility study by BP, ExxonMobil Corp. and Phillips Petroleum Co., the results of which could be released this month, “will be consistent with what (BP) has said in the past. To make it commercially viable, we will be looking to address the bigger risk that we saw in terms of the regulatory processes and we will look to reduce costs in terms of technological advancements.”
For now the Alaska producers’ group is scaling back operations as the feasibility study draws closer to completion, with 100 workers from the sponsor companies being reassigned to other tasks and 800 contract workers being released, Carruthers said.
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