FOOTHILLS ACQUIRES UNITED'S 22% ANGTS STAKE

Foothills Pipe Lines Ltd., Calgary, has acquired a 22% interest in the Alaskan portion of the proposed $14.6 billion, 2.3 bcfd Alaska Natural Gas Transportation System (Angts) for an undisclosed sum. Foothills acquired all shares of United Alaska Fuels Corp., a unit of United Gas Pipe Line Co. and Angts partner since 1978. Current sponsors of the long shelved project say the acquisition is a significant step forward and should help expedite the proposal.

July 2, 1990

4 min read

Foothills Pipe Lines Ltd., Calgary, has acquired a 22% interest in the Alaskan portion of the proposed $14.6 billion, 2.3 bcfd Alaska Natural Gas Transportation System (Angts) for an undisclosed sum.

Foothills acquired all shares of United Alaska Fuels Corp., a unit of United Gas Pipe Line Co. and Angts partner since 1978.

Current sponsors of the long shelved project say the acquisition is a significant step forward and should help expedite the proposal.

Foothills expects the Alaskan portion of the Angts system to be needed by the end of the decade to deliver North Slope gas reserves pegged at 15% of the U.S. total.

United, owned by LaSalle Energy Corp., Dallas, last year began a broad program of restructuring and asset sales designed to solve severe financial problems (OGJ, Aug. 14, 1989, p. 15).

It sold its interest of 12.25% in Northern Border Pipeline Co. to Enron Corp. last fall (OGJ, Oct. 30, 1989, p. 24).

ANGTS BACKGROUND

Angts was conceived in the late 1970's as a 4,783 mile pipeline through Alaska and Canada to deliver Alaskan North Slope (ANS) gas to the Lower 48.

The portion of the project intended to deliver Alaskan gas to the Lower 48 was shelved for lack of market and the expected high cost of ANS gas vs. other supply sources, notably ample supplies of Lower 48 and Canadian gas.

The Angts line in Alaska involves a 746 mile, 42 in pipeline to be built along the right-of-way for the TransAlaska Pipeline System (TAPS) crude oil line from Prudhoe Bay to a central point in Alaska, where it is to veer east to link with the proposed Foothills Angts project in western Canada.

Angts sponsors in 1988 slashed the capital cost estimate, currently expressed in 1988 U.S. dollars, to a little more than half that originally estimated in 1982 (OGJ, June 13, p. 23). Angts backers currently peg the cost of service at $3.05/MMBTU in 1988 U.S. dollars.

Other partners in Angts are units of Williams Cos. Inc., Pacific Gas & Electric Co., and TransCanada PipeLines Ltd.

BOOST SEEN

Angts Chairman and Williams Pres. Vernon T. Jones said, "Foothills brings substantial new backing to the Alaskan segment project. It is a significant boost to our efforts to complete Angts."

Foothills, a privately held company owned 50-50 by Nova Corp. of Alberta, Calgary, and Westcoast Energy Inc., Vancouver, is the Canadian sponsor of Angts. Its subsidiaries hold the permits for laying the Canadian portion of the project.

The southern "prebuild" portion of Angts, completed in 1981-82 and covering about 1,500 miles, delivers more than 1.3 bcfd of firm Canadian gas supplies to the Lower 48.

Through its partnership interest, Foothills will join in the cooperative agreement for design and engineering of the pipeline and gas conditioning plant at Prudhoe Bay under which major North Slope producers Exxon Co. U.S.A. and BP America participate with Angts in technical and cost studies.

ARCO, the other major North Slope producer, withdrew from the Angts combine in December 1987, declaring the project uneconomic.

Angts' competitor in Alaska is the $11 billion Trans-Alaska Gas System (TAGS), an 800 mile, 36 in., 2.3 bcfd line proposed from Prudhoe Bay to deliver North Slope gas along a route paralleling TAPS to tidewater for liquefaction and export as LNG to Far East markets.

TAGS last year won U.S. government permits to export as much as 660 bcf/year of ANS gas to Japan, South Korea, and Taiwan during 25 years.

Foothills protested that action and said it would seek authority to extend the prebuild portion 400 miles north to link with a proposed $4.4 billion (Canadian), 1.2 bcfd, Mackenzie Valley pipeline (OGJ, Dec. 25,1989, p. 34).