Jim Stott
Special Correspondent-Calgary
CALGARY, Nov. 5 -- Getting quick passage of the energy legislation now before the US Senate is critical to the planned timeline for an Alaska-Alberta natural gas pipeline.
Kevin Meyers, president of ConocoPhillips Alaska, told a Ziff Energy conference in Calgary Tuesday that the timeline for the project will slide unless there is quick passage of the energy bill. The current target for first gas to flow is 2013.
Meyers said there is a need for federal legislation to streamline the permitting process. And in Canada, the owners of 35 tcf of Alaska North Slope gas say a predictable and integrated regulatory process is essential to project timing. The proposed line would run from the ANS via the Alaska Highway route and through the Yukon Territory in Canada to pipeline connections in Alberta. The ConocoPhillips executive said there also is a need for clarity on how Alaska would take its share of gas revenues.
Meyers said a $125 million US study by ANS gas owners indicates the southern Alaska Highway route is the preferred one for the project, with lower risk and more constituent support by people in the region. He said his company also supports the Mackenzie Valley gas pipeline project, which he said would likely proceed before the Alaska line. Meyers said the ballpark figure of $19 billion for the project is for a line from Alaska to Chicago, but he said there is no reason to build a mainline to Chicago if capacity is available in Alberta with reasonable tolls and tariffs.
Meyers noted that Alaska could make a significant contribution to US gas demand, with ANS proven gas reserves of 35 tcf and 150 tcf of potential gas reserves.
Demand, price driving development
Dave Collyer, vice-president, frontier, for Shell Canada, said the gas market outlook for both demand and price are driving development plans for the Mackenzie Delta. He said aboriginal support for the Mackenzie Pipeline is key to the project and so are advances in technology. He said the initial capacity of the Mackenzie line would be 1.2 bcfd, but that could be increased by 50%.
The Shell executive said the owners of proven Delta reserves are moving aggressively towards a target of 2009 for gas to flow. Plans are to make a regulatory filing in 2004, with a 2-year regulatory process and 3 years of construction. Collyer said the regulatory process is highly complex and there is potential for hitches to slow the process down.
Michel Scott, vice-president, frontiers, for Devon Canada, said exploration in the Delta to date has tapped only a fraction of the potential and estimates of potential do not include what may be found in the Yukon and other areas of the Mackenzie Valley. Scott said producers and regulators are spending real dollars to advance the project and "the stars are aligned in its favor."
A major dilemma for exploration companies, Scott said, is whether to spend money now on exploration or drill closer to when the certainty of a pipeline is greater. He said Devon is taking a cautious approach and exploration companies at this time don't know such factors as timing of the project and terms of access to the pipeline. Scott said companies want the pipeline to have as many access ramps as possible with flexibility for expansion and a shipper-friendly environment.
"You can't expect explorers to do all the drilling up front and take all the risks," Scott said.
Hal Kvisle, president and CEO of TransCanada PipeLines LP, said, Alberta pipeline systems have more than 4 bcfd of spare gas pipeline capacity and this is important for both Alaska and Mackenzie Delta producers to consider. He said there is great value in having spare capacity and both Alaska and Delta gas could be moved in Alberta with only minor debottlenecking.
"I don't think anybody would like to build a line from Alaska to Chicago if there is spare capacity in Alberta pipelines," Kvisle said.
Contact Jim Stott at [email protected].