Proposed Alaska Highway pipeline project hitting the wall

Support is fading for the proposed Alaska Highway gas pipeline project. The Alaska government, along with British Petroleum and ConocoPhillips...

Support is fading for the proposed Alaska Highway gas pipeline project.

The Alaska government, along with British Petroleum and ConocoPhillips – two of the three main natural gas lease holders on the North Slope – have all publicly thrown their support behind an all-state line to southern Alaska, where it could be liquefied and shipped to markets, mostly in Asia.

TransCanada, which would build the pipeline, refers to this plan as the Valdez LNG case because the pipeline would run from Prudhoe Bay and Point Thomson to either Valdez or Anchorage.

The other option, which it calls the Alberta case, would run the pipeline through the Yukon and down to TransCanada’s oil and gas grid in Alberta and on to the North American markets.

Last week, Alaskan Governor Sean Parnell called a meeting with all three major gas leaseholders, including ExxonMobil, to rally support for the Valdez LNG option.

In the end, Alaska simply wants to get its gas out there, said Mark Morones, program outreach co-ordinator for the state’s Gas Pipeline Project office.

“We’ve been trying to market our northern slope gas for 30 years,” he said. Both the Valdez LNG and Alberta options have always been on the table.

“We’ve been waiting a long time,” he said.

But for TransCanada, it’s the big oil companies that will ultimately make the decision.

“At the end of the day, the key thing here is we need customers in order to do either project,” said TransCanada spokesman Terry Cunha. “We haven’t signed up anyone for either project. Without it, you don’t have a project.

“We need contracts in place with the producers and we’re still negotiating those options right now. All I can highlight is, those discussions are ongoing, things are

going smoothly, but I couldn’t put a time frame on when we expect a decision to be made.”

But for BP and ConocoPhillips, the decision seems clear.

“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 an interview Thursday, confirming statements made by company CEO Jim Mulva after he met with Parnell.

“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. “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 Alberta option) aside but we think that looking overseas with the current market is likely to be a better opportunity.”

The difference between the two options is about 1,457 kilometres of pipeline. The proposed Alberta route would cut through the Yukon, generally following the Alaska Highway from Beaver Creek to Watson Lake. It is proposed to run completely underground, though a 240-metre-wide path would need to be cleared for construction.

The plan was for construction to start in 2014, if it went ahead.

Building the Valdez LNG option wouldn’t start any sooner but it would mean the possible jobs and roughly $70 million to $100 million in tax revenue for the Yukon and First Nation governments would not materialize.

The Yukon’s Department of Energy, Mines and Resources doesn’t really have a strong opinion on which route the project ends up taking, said spokesman Jesse Devost.

“If it comes through Yukon, we’ll be prepared to manage that project as it comes to us and if it doesn’t come to Yukon, than we won’t really have anything to do with it,” he said.

“The choice is up to the suppliers and pipeline company itself. We just kind of happen to be on the path. We’re closely watching it. And we just want to make sure that if it does come through the Yukon that it’s going to be regulated correctly and that we see benefits from it,” Devost said.

The regulatory regime currently being established for environmental assessment of the Alberta route is still pushing ahead, all parties confirmed.

While a decision to go with the Valdez LNG would end the need for such work, it hasn’t happened just yet.

Contact Roxanne Stasyszyn at

roxannes@yukon-news.com

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