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OTC: NWT minister pushes joint Mackenzie-Alaska pipeline

Paula Dittrick
Senior Staff Writer

HOUSTON, May 3 -- The proposed Mackenzie River Delta natural gas pipeline could be considered the first phase of the proposed Alaska gas pipeline, the Northwest Territories minister of industry, tourism, and investment said May 3.

Speaking at an Offshore Technology Conference breakfast about Arctic Canada, Minister Brendan R. Bell suggested that proponents of the two pipeline proposals might consider first building a line to Mackenzie River Delta reserves and adding a line west to Alaska.

His idea renews earlier suggestions that a single line transport natural gas from both Alaska's North Slope and northern Canada to the Lower 48.

"I think it might be time to ask whether this is a down payment to get Alaska reserves to market," Bell said of the Mackenzie line, now projected to cost $16 billion (Can.) compared with a 2004 estimate of $7-8 billion.

The idea of adding Alaska gas to the Mackenzie line improves the pipeline economics, Bell said, noting urgency exists to start pipeline construction given rising steel costs and rising US gas demand.

"We've got to get this gas to market," Bell said, adding that oil and gas companies await some certainty from government before making huge infrastructure investments.

The opposition from Alaska to a single line stems from Alaska's desire to protect jobs and promote Alaska economic development. But Bell believes Alaska will benefit from the Mackenzie project.

"If this is about Alaska jobs, it's my belief there's enough to go around," he said, adding there are more pipeline construction job opportunities than can be fulfilled by residents within the Northwest Territories.

Mackenzie pipeline
The proposed Mackenzie pipeline would extend more than 750 miles to transport Mackenzie River Delta gas to Alberta and beyond. Plans call for initial capacity of 1.2 bcfd, expandable to 1.8 bcfd. The project has moved into regulatory reviews.

Numerous issues remain unresolved, including land access arrangements. The Deh Cho First Nations (DFN) aboriginal group in the southern part of the proposed route remains outside the Mackenzie Valley Aboriginal Pipeline Group, which owns 33% interest in the project. The other three aboriginal groups have joined the project.

In addition to the Aboriginal Pipeline Group, other pipeline partners are Imperial Oil Ltd., ConocoPhillips Canada, Shell Canada, and ExxonMobil Canada.

Alaska pipeline
The proposed Alaska Highway gas pipeline would move North Slope gas to the Lower 48.

All three North Slope producers—subsidiaries of BP PLC, ExxonMobil Corp., and ConocoPhillips—had agreed on a proposed pipeline contract negotiated by former Gov. Frank H. Murkowski. But Murkowski lost a re-election bid, and the Alaska legislature never approved the proposed contract.

Alaska Gov. Sarah Palin has introduced legislation intended to induce construction of a multibillion-dollar pipeline that would deliver North Slope gas to the Lower 48 states.

On Mar. 2, Palin outlined elements of a proposed Alaska Gasline Inducement Act, or AGIA. The legislation sets aside efforts by Murkowski (OGJ, Mar. 12, 2007, Newsletter).

Contact Paula Dittrick at paulad@ogjonline.com



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