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Oil companies say they’ll have gas pipeline plan next year Energy Department says it has begun discussions with other federal agencies to move permitting along once applications received by The Associated Press
After decades of waiting, the three companies that own 95 percent of Alaska’s known North Slope natural gas reserves said at a Senate hearing in mid-September that next year they should pick a project to move that gas to market. If all goes well, the gas could be sold starting in 2007.
Bob Malone, Western regional president of BP, told the Senate Energy and Natural Resources Committee Sept. 14 that his company hopes to file a pipeline application with the Federal Energy Regulatory Commission next year.
Kevin O. Meyers, president of Phillips Alaska Inc., said the chief unknown is what route to select for the pipeline — an issue that BP, Phillips and ExxonMobil are working to resolve.
“Over the next 12 months we hope to achieve consensus on route and timing,” Meyers said. If U.S. and Canadian political support aligns behind that choice, “we think gas sales by 2007 are achievable.”
The accelerating interest in tapping the North Slope’s natural gas, most of which now is reinjected to spur oil production, is the result of declining North Slope oil yields and skyrocketing demand for gas in the Lower 48 that’s pushed prices up.
Alaska isn’t the only location in North America rich in natural gas, though. There are huge untapped supplies in the Rocky Mountains region and the Gulf of Mexico, experts say.
Development of the North Slope gas will require minimal federal legislation, and some government regulators testified that they will do everything in their power to make that happen with the fewest possible obstacles.
“The Energy Department has begun discussions with other federal agencies to ensure that commercially-viable projects can, if necessary, move expeditiously through any required permitting process,” said T.J. Glauthier, deputy secretary of the Department of Energy. Cost pegged at $10 billion A pipeline into Canada that would link with pipe networks in southern Canada and the Lower 48 would cost at least $10 billion, most of which likely would be spent in Alaska.
“It’s an enormous project,” said K. Terry Koonce, president of Exxon Mobil Production Co., which owns 35 percent of the gas.
Exactly what route the pipeline would take is still a major unanswered question, though it appeared from testimony Sept. 14 that there was a substantial tilt toward a route following the existing trans-Alaska oil pipeline to Fairbanks and then swinging into Canada roughly along to the Alaska Highway.
The companies that own the natural gas are also considering a buried undersea pipeline that would run 325 miles east from Prudhoe Bay, then a line along the Mackenzie River that would tap Canadian gas fields along the way. State favors highway route But the Fairbanks-Alaska Highway route is strongly favored by the state of Alaska because it would open the Interior to a supply of clean-burning natural gas.
“I’m personally sensitive to the needs of Alaska, and BP shares that,” BP’s Malone said. The company owns 30 percent of the North Slope gas supply.
That view was echoed by Meyers of Phillips Alaska, which also owns 30 percent of the reserves.
Meyers said the oil pipeline route “has a compelling advantage, but we are not ready to rule out other options.”
Yukon Pacific Corp. and the Alaska Gasline Port Authority, a consortium of the North Slope, North Star and Valdez boroughs, are vying for an opportunity to build a Valdez gas liquefaction plant that could export gas to Asia.
A pipeline through Canada wouldn’t foreclose that option, the executives said.
“It is worth noting that there is sufficient gas on the North Slope of Alaska for multiple projects if market conditions are supportive,” Exxon Mobil’s Koonce said.
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