Knowles says Alaska and Canada would benefit from gas line

Posted: Friday, March 09, 2001

ANCHORAGE (AP) -- Both Canada and Alaska will benefit from natural gas development, Alaska Gov. Tony Knowles said in a speech Thursday at the Arctic Gas Symposium in Calgary, Alberta.

Quoting Arctic poet Robert Service, Knowles urged unity, saying: ''We are of the Arctic brotherhood.''

Booming natural gas demand in the Lower 48 will require two pipelines, Knowles predicted. One will carry gas from Alaska's North Slope. A second would tap Canada's own Arctic gas reserves in the Mackenzie River Valley.

If Knowles' vision of two pipelines comes true, it would erase what has become a low-key but hard-fought struggle between Canada's distant territories -- Yukon and Northwest Territories -- to win a gas development project.

Rising demand and high prices have revived interest in getting the large gas reserves on Alaska's North Slope and the Northwest Territories' Mackenzie River Valley to market. Both projects would be huge in both cost and in the amount of gas delivered to market. Some fear that the market will support only one project.

If a pipeline along the Alaska Highway through Yukon is built, Northwest Territories gas may stay in the ground. If the pipeline runs through the Mackenzie Valley, Yukon could be left out in the cold.

Knowles is aggressively pushing the construction of a pipeline along the Alaska Highway to the Lower 48 through Yukon. The North Slope holds a known 35 trillion cubic feet of natural gas. The governor painted a rosy picture of market demand, where gas supplies from both Alaska and Northwest Territories would be needed.

''Alaska is not looking to take market share -- we are looking to share in the market,'' Knowles said.

Also speaking at the conference, Yukon Premier Pat Duncan expressed a similar hope. She backs a pipeline along the Alaska Highway through her territory, but expressed confidence that ''there are enough resources and enough opportunities for more than one project.''

Northwest Territories Premier Stephen Kakfwi has expressed a similar optimism that prices and demand will mean both pipelines will get built. The Mackenzie Delta holds at least 9 trillion cubic feet of gas.

But whether natural gas demand will support both pipelines is subject to debate.

A market analysis presented in Anchorage last week by Cambridge Energy Research Associates predicted gas demand growing 33 percent to 30 trillion cubic feet per year by 2010. But Ed Kelly, Cambridge Energy's director of North American natural gas research, also predicted waves of fresh supply from overseas and eastern Canada coming into the market.

Kelly said there will be demand for Arctic gas -- perhaps 3.5 billion cubic feet per day. Alaska and Canadian natural gas owners have no firm development plans but oil company officials and analysts peg combined flow from the two regions at roughly 4 to 5 billion cubic feet per day. About 800 million cubic feet per day would come from the Mackenzie Delta, said Imperial Oil spokesman Hart Searle in Calgary.

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