Warren R. True
Chief Technology Editor�Pipelines/Gas Processing
Oil & Gas Journal
Competing proposals like the Alaska Highway and Mackenzie Delta pipeline projects to move arctic gas to southern markets are not mutually exclusive, said Pat Duncan, premier and minister of economic development for Canada's Yukon Territory.
Duncan, who spoke at the International Pipeline Conference in Calgary on Oct. 2, said the pipeline projects are complementary means to unlock natural gas reserves in Alaska and the Canadian north.
In an interview with the Oil & Gas Journal, Duncan said market projections for North American and world gas use by 2010 make liquefied natural gas a viable export option too.
She said the Alaskan Highway project could get Prudhoe Bay gas to market sooner than a pipeline moving gas from Prudhoe Bay to the Mackenzie Delta and then south, and it would cost less than government and industry officials have suggested.
Real costs
Duncan said that, although covering less distance, the $2.5 billion for the proposed Mackenzie Delta pipeline doesn�t include the cost of connecting the 30-32 tcf of estimated gas reserves at Prudhoe Bay.
The current proposal contemplates either a smaller capacity, high-pressure gas line from the Delta or a slightly larger line. The latter option is estimated at $4.2 billion, she said, but still doesn�t factor in the cost of connecting Prudhoe Bay.
Such a connection, capable of delivering 3 bcfd into Mackenzie Delta and picking up another 1 bcfd there �would be a massive project.� It would require a very large high-pressure pipe, much larger than any of the current proposals.
And it would require an undersea section from Prudhoe Bay to Mackenzie Delta, then up the Mackenzie Valley: �The cost would be staggering,� said Duncan.
Mackenzie Delta gas may require as much as $1.5 billion in production infrastructure: wells, gathering lines, and processing. The total cost, she said, �would be at least $10 billion.�
Earlier start
Duncan said North American markets can easily absorb staged introduction of gas from both Alaska and the Canadian north.
With North American natural gas consumption expected to hit 31.7 tcf/year by 2010, supplies in Prudhoe Bay and Mackenzie Delta are strategically poised to meet that demand.
Duncan said that for the Alaska Highway pipeline project, the �regulatory approvals are already in place, environmental reviews have been completed, and North Slope gas is pipeline-ready.�
She was referring to the fact that plans for the pipeline received all necessary governmental approvals and US and Canadian certificates of public convenience and necessity�in 1982.
She said although those approvals may have to be updated, the project is still ahead of any �over-the-top� greenfield pipeline project from Mackenzie Delta.
In addition, project sponsor Foothills Pipe Lines Ltd. also maintains an easement for the line through Yukon and parts of Alaska.
�The Alaska Highway is an existing transportation corridor. Thousands of visitors use it every year and the easement is right beside that highway. In 1982, we as Canadians said there was a set of standards and that this route met them,� she told OGJ.
Duncan said in her speech that the suggestion that the Alaska Highway Pipeline project is about Canadian gas vs. American gas fails to recognize the competitiveness of a deregulated North American market.
Or that �this project will pave the way for exploration and development of Yukon�s eight sedimentary basins, whose resources are every bit as Canadian as those in the Mackenzie Delta.�