Study says Mackenzie Valley corridor route for arctic gas line almost certain

By the OGJ Online Staff

HOUSTON, Dec. 19 -- The Mackenzie Valley corridor in Canada will almost certainly be the choice route for the proposed Arctic gas pipeline, not through Alaska, said two University of Houston professors.

Ronald Oligney and James Longbottom, in their recently released study The Imperatives of Arctic Natural Gas Development, also say the capacity of the line should be 12 bcfd, double or triple other proposals, because "America needs the gas!"

The authors suggested a system that would carry both Alaskan and Canadian gas and that would be developed in four phases.

The first phase would be a "bite-size" Canada-only line from the Mackenzie Delta to Alberta. The proposal for a 1.6 bcfd line would allow the first step to be taken with minimal risk, as no international agreement would be required.

The second phase would include a 2.5 bcfd northern Alaska tie-in and a Mackenzie loop; the third, a full-length line loop, carrying 2.5 bcfd of Alaskan gas and 1.5 bcfd of Canadian gas; and the fourth, another full length loop carrying 2.5 bcfd of Alaskan gas and 1.5 bcfd of Canadian gas.

They said the over-the-top approach, extending offshore from Prudhoe Bay into the Beaufort Sea and 370 miles to the Mackenzie Delta then linking with an onshore pipeline running along the Mackenzie Valley into northern Alberta would be a factor in the proposed staged development in the Mackenzie corridor.

The authors said that market imperatives will force the Mackenzie Valley route. They predict the southern line will be uneconomic even at $3/Mcf.

Oligney and Longbottom cited studies by the Cambridge Energy Research Institute, Purvin & Gertz Inc. in Houston, and the Interstate Natural Gas Association of America that the northern route would be cheaper than the southern route, and indicated that phased development of the line through the Mackenzie Valley corridor "can provide common ground" for all interested companies.

Oligney and Longbottom warned Alaskans that a short-term interest in employment caused by developing an ultimately uneconomic pipeline will in the long run hurt their employment and the natural gas market.

Since any pipeline route from the North Slope will be 60% or more in Canada, they said, routing decisions based on Alaska construction jobs do not serve the state's long-term financial interests. Instead, the northern route would create more permanent jobs, they claimed.

The report urged Alaska to turn instead to the Kenai Peninsula gas development and gas-to-liquids project for its own gas needs and as an industrial stronghold.

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