Company seeks permits for Over-the Top gas line route

FAIRBANKS (AP) -- A Houston-based company has applied to Canada authorities for approval of its proposal to ship North Slope natural gas to market by a route that would bypass Interior Alaska.

Arctic Resources Co., through its Canadian affiliate, on Wednesday filed a ''preliminary information package'' with the National Energy Board of Canada. It is the first step for the company to receive approval from Canadian energy officials for the ''Over-the-Top'' route proposal, a process that could take two years.

The Over-the-Top proposal calls for North Slope natural gas to be shipped offshore through the Beaufort Sea to the Canadian Arctic, then south through Canada. The pipeline also would pick up Canada gas in the Mackenzie River Delta on its way to the Lower 48.

''This project is the right project, the right way to do it, and now is the right time,'' said Forrest Hoglund, chairman and chief executive of Arctic Resources Co.

The Over-the-Top route faces strong opposition from Alaska members of both Congress and the Legislature, who argue that it would export the state's resources without providing jobs for Alaskans and the opportunity for in-state use of the gas.

Alaska lawmakers passed a measure last year to ban the Over-the-Top route. The energy bill that passed the U.S. House also prohibits the route. The U.S. Senate has not acted on the measure.

Major producers of North Slope natural gas -- Exxon Mobil, BP, and Phillips Petroleum -- are considering whether it is feasible to build a pipeline from the North Slope and what route it would take.

Along with the Over-the-Top route, the companies are considering a pipeline route that would bring North Slope gas through the Fairbanks area and down the Alaska Highway through Canada to the Lower 48. That route has the endorsement of Alaska Gov. Tony Knowles.

The bill that passed the Legislature last spring sought to kill the Over-the-Top route by forbidding the commissioner of the Alaska Department of Natural Resources from providing it with right-of-way leases for the state's submerged lands in the Beaufort Sea.

State Sen. John Torgerson, R-Kasilof, chairman of the Joint Committee on Natural Gas Pipelines, reacted with frustration to Arctic Resources' application for Canadian approval.

''We don't seem to be able to tell people with enough authority that we're serious about banning that route,'' Torgerson said.

Torgerson said he was working on a new piece of legislation in his attempt to ''put the final nail in the coffin'' of the Over-the-Top route.

Arctic Gas officials argue that Alaska is shooting itself in the foot with moves to outlaw the route. They say it is the only economically viable proposal to bring North Slope gas to market.

''This project offers substantial economies of scale and, as a result, higher wellhead prices for the producers,'' Hoglund said.

''The higher wellhead prices would in turn generate more taxes and royalty income for both Alaska and Canada and increase incentives to explore for and produce new reserves,'' he said.

Bill Reynolds, a University of Alaska Fairbanks professor of energy economics whom the Legislature has hired for advice, said he disagrees with the assertions that the Over-the-Top route would be significantly cheaper than the Alaska Highway option.