Canadian or foreign run, the Alaska gas pipeline should be flowing by 2018

It’s clear that by 2018,  Alaska’s North Slope natural gas will be making its way to the continental United States by way of a…

It’s clear that by 2018,  Alaska’s North Slope natural gas will be making its way to the continental United States by way of a 3,000-kilometre pipeline stretching through BC, the Yukon and Alberta.

Who builds it still remains to be seen.

Two companies are vying for the project.

Both have experience.

“This is a huge capital project, I don’t want to pretend that it’s not, but in terms of scale, miles, difficulty — it’s not unprecedented for Transcanada,” said Tony Palmer, the vice-president of Alaska development for Transcanada Pipelines, the Canadian-based contender for the project.

“In the 1990s, Transcanada constructed 7,000 miles of pipeline. Let’s leave that with you for a second; four times the distance of this project is what we constructed in the 1990s,” said Palmer.

“This is a major project … but we do things like this on a regular basis,” said Kris Fuhr, vice-president and Mainline Project general manager for Denali, a pipeline-focused company owned jointly by oil giants BP and ConocoPhillips.

“Between ConocoPhillips and BP, we do eight to $10 billion a week in capital projects,” he said.

Both company representatives were presenting at the second day of the Opportunities North conference at the High Country Inn.

In the pipeline business for more than 50 years, Transcanada has been pushing for the Alaska pipeline for almost two thirds of its existence, investing $100 million so far.

Decades of regulatory paperwork has given Transcanada a significant leg up over Denali, said Palmer.

“We do hold regulatory advantages in Canada — there’s no question about that,” said Palmer.

“We have a certificate from the National Energy Board, so we don’t have an extensive period to go through on that front,” said Palmer.

“We also have a treaty between Canada and the United States — do we think that will enable us to do it better, faster and cheaper? Yes, we do,” he said.

“I wouldn’t put much value in that statement, because at the end of the day you have to get through Alaska,” said Fuhr.

“I think the bar is set the same for both of us,” he said.

The true winner will arise at the end of an open season scheduled for around 2010, when gas suppliers will establish contracts with the most efficient and cost-effective pipeline proposal.

Backed by BP and ConocoPhillips, who control 60 per cent of the North Slope’s natural gas resources, it would seem that the pipeline race is already game over for Transcanada.

“If Transcanada provides better economic benefit than Denali does, (the owners of Denali) will nominate to use Transcanada,” said Fuhr.

Since 1983, Transcanada has held a certified right-of-way through the Yukon, allowing them to proceed with construction without significant additional land agreements.

“And British Columbia is traditional pipelining territory — as is Alberta,” said Palmer.

Whatever happens, both companies agreed that there would not be enough gas volume to support two side-by-side pipeline projects.

With only slight differences between either company’s proposal, the pipeline would be buried. When passing through wooded areas, it would be placed under a 40-metre-wide deforested cut line, allowing easy observation and access of the line.

“You’ll have peaceful enjoyment of that right-of-way,” said Palmer.

Compressor stations, each twice the size of a 144-square-metre bungalow, would be few and far between.

“This is not like constructing a nuclear plant along every kilometre of the highway,” he said.

The pipeline could be equipped with inflow and outflow points that could provide Yukon communities with natural gas, or could act as a conduit for locally based natural gas development, said Brian Love, executive director of Oil and Gas resources for the Yukon government.

“Once you have infrastructure, it encourages more development,” said Love.

However, the proposed pipeline route would still be located hundreds of miles from the Yukon’s largest natural gas deposits, requiring extensive secondary pipeline linkages.

It’s better to be hundreds of miles from a major pipeline, than to be thousands of miles from a major pipeline, said Love.

Presenters touched on the social and environmental impacts of an Alaska pipeline.

“When the economy’s booming, unfortunately there’s other issues that happen in terms of increased crime or substance abuse or whatever,” said Love.

However, revenue from the pipeline’s construction can be used to mitigate its social impacts, said Love.

“On the one hand it creates issues, on the other it creates revenue that can be used for those programs,” he said.

“Is there any consideration of offering equity positions to other entities or governments?” asked Ruth Massie, chief of the Ta’an Kwach’an.

“It will be decided in terms of ‘what do other parties bring to the table’ … I won’t exclude other parties, I will look to what value they bring to the project to make it a success,” said Palmer.

“We have interest in partners if they provide value to the project, and they help reduce risk and they’re very open-minded,” said Fuhr.

“First Nation governments would, of course, like to see discussions around equity,” said Andy Carvill, grand chief of the Council of Yukon First Nations.

Carvill noted it would be advantageous to locate the compressor stations on First Nation land, in order to play a major hand in their construction.