Consultant suggests multiple Alaska gas pipelines through Canada

Posted: Thursday, January 17, 2002

ANCHORAGE (AP) -- An energy consultant who grew up in Alaska believes the least risky way to tap the North Slope's huge natural gas reserves is to do so in stages, running multiple pipelines across the Canadian Arctic during the next 16 years.

Ron Oligney, director of engineering research development at the University of Houston, said Tuesday that smaller pipelines built every few years would reduce the huge costs and risks that would come with a single, larger pipeline to the Lower 48.

He and colleague Jim Longbottom of the University of Houston recently completed a study on Alaska and northwest Canada gas development. The university and private clients paid for the study, he said.

Oligney presented the findings to the Society of Petroleum Engineers and the International Association of Energy Economics in Anchorage.

Oligney graduated from the University of Alaska Fairbanks and his father worked on the 800-mile trans-Alaska oil pipeline.

But Oligney's view on how the next pipeline boom should happen runs counter to that of some state leaders.

He said Alaskans should consider a phased approach, one that would first run a pipeline from Canada's gas-rich Mackenzie Delta to Alberta. That would clear a corridor for Alaska gas producers to run a series of separate Slope pipelines under the Beaufort Sea and south parallel to the Mackenzie line.

It is an idea that has had little traction so far in the contentious debate over how and when to develop the Slope's 37 trillion cubic feet of known gas reserves -- the largest untapped reserves in North America.

The two most serious proposals are either a single pipeline along the Arctic coast then up the Mackenzie, or a single pipeline through Alaska and along the Alaska Highway. Both lines would go to the Lower 48, with each estimated to cost $15 billion to $20 billion.

Three Alaska gas producers, Exxon, BP and Phillips, have completed a $100 million study on the two routes. Preliminary analysis showed the routes might not return enough profit. Final findings are expected to be announced in the next few months.

Gov. Tony Knowles has strongly backed the Alaska Highway route, which would deliver natural gas to Fairbanks and other populated areas and offer more jobs to Alaskans.

Knowles spokesman Bob King said Oligney's idea of running multiple undersea lines raises environmental concerns. Also, Alaska communities would not be able to tap the lines for power and heating because the pipes would not pass through the state.

Oligney believes the key to bringing Alaska gas to market is to first develop the Mackenzie gas reserves, which are closer to the Lower 48.

A Mackenzie gas line got a boost last week when Canadian gas producers said they will spend up to $250 million over the next few years to get permits for the proposed $3 billion project.

Oligney believes Alaska could piggyback on a Mackenzie project because the line would create a pipeline corridor to Alberta, where existing lines move gas to the Lower 48. He predicts a demand for Mackenzie gas by 2007.

A few years later, Oligney envisions, a separate $6.1 billion pipeline would be built to carry Alaska gas to Alberta. The line would run under the Beaufort Sea and south along the Mackenzie pipeline. Between 2015 and 2018, two Alaska lines would be added with connections to Mackenzie gas, he said.

The three lines would cost $23 billion, at least a few billion dollars more than estimates for a single Alaska pipeline to the Lower 48. Gas producers would have to spend another $9.5 billion beefing up infrastructure south of Alberta so those pipes could handle the extra capacity, he said.

While multiple lines cost more than estimates for a single pipe to the Lower 48, there are advantages, he said.

Gas companies wouldn't risk $20 billion all at once.

Also, multiple lines would allow the companies to bring gas on line as it is needed, rather than depending on one huge line that could potentially flood the market and drive down gas prices, he said.

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