New life in Alaska Highway pipeline proposal

The Yukon will know by spring whether or not an Alaskan natural gas pipeline will pass through the territory, bringing with it economic benefits for…

The Yukon will know by spring whether or not an Alaskan natural gas pipeline will pass through the territory, bringing with it economic benefits for years to come, says a Yukon government spokesman.

The territory is eagerly watching the progress of the multi-billion dollar project, said Ron Sumanik, acting executive director of oil and gas resources for Energy, Mines and Resources.

More than a quarter of the pipeline could run through the Yukon, possibly increasing natural gas development and exploration.

“One of the key things we’re lacking in the Yukon is petroleum infrastructure,” said Sumanik.

“There’s no question, if you talk to anyone in the industry, you would expect to see additional interest in the Yukon if a pipeline is built.

“Companies see big potential in the Yukon.”

The territory has no official role in Alaska’s application review process.

Applications to the state were due November 30th. All applications submitted will be made public.

“The Yukon has made it very clear what our preference is,” said Sumanik.

A pipeline running down the Alaska Highway would bring employment and business opportunities to the Yukon, he added.

About 760 kilometres, or 27 per cent, of the pipeline could pass through the territory.

Previous estimates pegged the project costs at up to US$30 billion.

“It would be the largest industrial project ever taken on in the North,” said Sumanik.

A pipeline would tap into Alaska’s massive natural gas reserves found in the state’s North Slope — about 35 trillion cubic feet of proven gas reserves, with much more believed to be undiscovered, according to the Alaska governor’s office.

That’s enough to supply the United States for 18 months.

Current Alaskan state legislation, the Alaska Gasline Inducement Act, requires the government to seek applications to build a pipeline.

Five companies submitted proposals that will be reviewed for the next 60 days.

It could be a minimum of four months before a decision is made, said Sumanik.

Submissions include five applications from Calgary-based TransCanada PipeLines Ltd. in partnership with Foothills PipeLine Ltd., Alaska Gasline Port Authority, Alaska Natural Gas Development Authority, California-based AEnergia LLC, and Sinopec ZPEB, a Chinese energy conglomerate.

ConocoPhillips submitted an alternative proposal that would run a pipeline to Alberta or Chicago.

It doesn’t meet the state’s application criteria, but will be reviewed separately by the state government.

“We all know this project has been of interest, on and off, for three decades and it’s been in a bit of a lull,” said Sumanik.

“The new state government has a new vision of how the Alaska natural gas line project could move forward.”

There is new life in the project, and the government is eager to tap its benefits.

Recently, it obtained several concessions from Imperial Oil should the Mackenzie Valley Pipeline project proceed.

Imperial Oil committed to employment and business opportunities for Yukoners after it admitted there might be possible environmental and infrastructure costs related to the project.

Those issues along with inflation, rising housing prices and increased alcohol and drug use are potential impacts of the Alaska Highway pipeline project, said Sumanik.

The Yukon wants the ability to pump its natural gas into such a pipeline, or to secure access for residential or commercial use in the territory.

“We certainly see ourselves as receiving priority for employment and business opportunities for the Yukon,” said Sumanik.

“It’s similar to what the Northwest Territories government is seeking for the Mackenzie project.”

The government could see revenue from property tax on the pipeline or savings from lower cost energy, he added.

Government officials believe there are several advantages to running a pipeline through the territory.

It’s more economical and the certainty of the Yukon’s regulatory process would put Big Oil and Alaska at ease, said Sumanik.

Rather than liquefying the gas and shipping across the ocean, as some companies propose to do, a pipeline would make it easier to distribute to North America instead of overseas markets, he added.

Two large companies, MidAmerican Energy Holdings and BG Group, decided not to submit proposals based on ongoing political corruption investigations and uncertain economics of the project.

Several state officials and oil executives have either pleaded guilty or been convicted of a variety of bribery and corruption charges.

The scandals haven’t shaken the confidence of the territory, said Sumanik.

“It’s always disappointing to see these sorts of events,” he said.

“These things should always be a concern for everybody. We’ve seen what it’s done in Alaska.”