Just a day after Ottawa pledged $47 million to the Alaska Highway pipeline project, the major corporate players announced they’re putting the project on hold.
In response to a request from Alaskan Governor Sean Parnell, TransCanada, ExxonMobil, ConocoPhillips and BP have agreed to “a work plan” that will keep the proposed natural gas pipeline in that state.
The all-Alaska route has always been considered an alternative to a pipeline following the Alaska Highway through the Yukon.
Instead of nearly 3,000 kilometres of pipeline from Alaska’s North Slope to the web of pipelines in southern Canada, it would only take about 1,300 kilometres of pipeline to transport the gas from Prudhoe Bay and Point Thomson to south-central Alaska, where it would be turned into liquefied natural gas and shipped to global markets.
On March 30 - the day after Ottawa delivered its federal budget, which included $47 million for the pipeline - the four companies issued a news release to say they were turning their attention to the LNG option and putting their Alaska Highway pipeline plans on the back burner.
“The work that’s happened will take a pause while we look at this and focus on this,” said Shawn Howard, of TransCanada.
“There’s a lot of work and there’s a lot of discussion that has to take place,” he said.
If it were put back on the front burner, the Alaska Highway pipeline project would be reviewed by the federal Northern Pipeline Agency and not the Yukon Environmental and Socio-economic Assessment Board.
The $47 million is earmarked for that agency and work it still expects to do on the proposed project over the next two years - a review and consultations with local, regional and aboriginal groups in the Yukon, B.C. and Alberta, said Paul Duchesne, agency spokesman.
The budget document says the entire $47 million should be fully recovered by industry.
In other words, the companies using the pipeline would pay Ottawa back but only if they use the money, said Duchesne.
But if the pipeline never gets built, it will never get used.
However, as far as the agency is concerned, the Alaska Highway pipeline project isn’t dead yet, said Duchesne.
“The agency has no information on whether (the companies’) announcement will have any impact on the current scope or schedule of the Alaska Highway pipeline project through Canada and therefore on the agency’s related responsibilities,” said Duchesne.
“Until such information is forthcoming, the agency remains ready, engaged and prepared to lead the review of the Alaska Highway pipeline project through Canada.”
Howard also said the companies’ agreement to focus on the LNG option does not mean they’ve pulled the Alaska Highway option completely off the table.
“We’re responding to a request from Governor Parnell that the parties get together to look at a potential LNG option,” he said.
“We’ll be studying that. But we all have to understand what this looks like from a commercial perspective. This is a huge undertaking and there’s got to be a business foundation. This is one step of many, many steps that have to be taken with certainty if there is a project.”
After meetings with Parnell in January, both BP and ConocoPhillips - which constitute two of the three main natural gas lease holders on the North Slope - threw their support behind the LNG option.
The Asian market is a better option for Alaska’s natural gas than a pipeline to the lower 48, ConocoPhillips spokesperson Natalie Lowman said in January.
“Bob Dudley, who is our CEO, said that we support Governor Parnell’s vision for Alaska oil and gas development,” said BP spokesman Steve Rinehart in January. “We believe that an LNG option to deliver natural gas to global markets could be competitive.
“‘Could be’ doesn’t mean that we’re convinced it will work, but it means that we think that this could be a real opportunity and it’s worth taking a very close look at and that’s what we’re going to do.
“We haven’t completely put (the Alaska Highway option) aside, but we think that looking overseas with the current market is likely to be a better opportunity.”
In January, TransCanada emphasized the final decision is up to the companies that will use the pipeline.
The companies have not been given a deadline as to when they need to make a final decision, Howard said Tuesday.
Contact Roxanne Stasyszyn at
roxannes@yukon-news.com