Shell Canada exec not proposing over-the-top line for Alaska gas

Kay Cashman

A recent news story out of Canada said Shell Canada’s new chief executive was in favor of shipping Alaska natural gas east, offshore “over-the-top” of the North Slope to Canada’s Mackenzie River delta and then south through the proposed Mackenzie gas pipeline vs. building a separate Alaska line to take North Slope gas south and then southeast along the Alaska Highway to Canada and Lower 48 markets.

But Shell Canada spokeswoman Jan Rowley told Petroleum News Nov. 22 that Clive Mather, chief executive of Calgary-based Shell since August, was not proposing Alaska’s stranded gas be shipped through the Mackenzie line; rather he was saying the Mackenzie pipeline would be the foundation for development of the natural gas resources in the Far North. And, in itself, prompt interest in exploiting other gas deposits to the west in Alaska, and north, south and east in northwestern Canada.

“Shell Canada is not involved in Alaska gas,” Rowley said. A U.S. subsidiary of Royal Dutch/Shell handles the company’s growing interest in Alaska oil and gas properties. “But once the Mackenzie pipeline is in place then clearly you’re up north looking in all direction for natural gas opportunities. … Once you have the Mackenzie line in place there will be renewed interest in exploring in the North.”

Shell Canada is a partner in the Mackenzie Gas Project, the consortium planning to build a $7 billion natural gas pipeline from Inuvik along the east side of the Mackenzie River valley to Norman Wells. The pipeline will continue south to connect to an extension of the NOVA Gas Transmission system just south of the Northwest Territories-Alberta boundary.

Other partners in the Mackenzie project include Imperial Oil and its parent company ExxonMobil, ConocoPhillips, and affected aboriginal groups. Subject to regulatory approval “with satisfactory conditions being received by mid-2006, construction of the required facilities is expected to be completed in time to enable gas to be delivered to Alberta through the pipeline in 2009,” the Mackenzie Gas Project said in its regulatory application to the National Energy Board.

Estimates for delivery of Alaska gas through a separate line from the North Slope are later — 2012 to 2017.

Alaska has legally banned the construction of any northern “over-the-top” gas pipeline routes and recent U.S. federal legislation did the same.

Alaskans generally oppose the northern route because of the loss of construction jobs from building less pipe in Alaska and the loss of potential gas delivery to Fairbanks and other Alaska communities. Of the three North Slope gas owners looking to build an Alaska Highway gasline — BP, ConocoPhillips and ExxonMobil — only ExxonMobil has insisted a northern route still be considered an option.