ANCHORAGE (AP) -- A Texas company hoping to build a natural gas pipeline from the Arctic has laid out its vision for a $5 billion project to move Canadian and Alaska gas to markets in the Lower 48.
''Building the first pipeline north to Alaska is the same as building a railroad across the United States,'' said Forrest Hoglund, chief executive of newly formed Arctic Resources Company Ltd. of Houston.
The group has no permits, no contracts with gas owners like BP Amoco, Phillips Petroleum or Exxon Mobil and no agreements with Native land owners in Canada or Alaska.
What the group does have is a set of engineering plans, some good timing and the courage to take on what would be the largest arctic pipeline project since construction of the trans-Alaska oil pipeline in the 1970s.
Alaska's North Slope and the MacKenzie River Delta hold an estimated 40 trillion cubic feet of natural gas.
The North Slope gas comes up from the ground with the oil, but with no way to bring that gas to market, Prudhoe Bay producers are now pumping 8 billion cubic feet of gas a day back into the ground.
About 32 trillion cubic feet sits in Prudhoe Bay. The proposed pipeline would carry about 4 billion cubic feet a day -- 2.5 billion from Alaska, 1.5 billion from Canadian fields.
Arctic Resources hopes to build a pipeline that would run along the Arctic Coast offshore, and then south through the MacKenzie Valley.
The group believes the pipeline could be ready in five years.
The 1,200-mile line would cost $5.3 billion, Arctic Resources partner Bob Murphy said in a teleconference with other company officials Tuesday.
Arctic Resources has driven its costs so low that it can charge producers a tariff, or freighting fee, as low as $1.20 to deliver 1 million cubic feet of gas in Chicago, Hoglund said.
That's a handsome profit while gas is selling at roughly $4 per million cubic feet. Better, it makes the project feasible even at $2 or $1.50 -- something no other project can claim.
The low tariff also will encourage an activity the North Slope has never seen -- the earnest search for natural gas, said Arctic Resources President Bob Murphy. ''That's where the big bucks are. The big bucks are going to come from gas exploration.''
The gas comes up from the ground with the oil, but with no way to bring that gas to market, Prudhoe Bay producers are now pumping 8 billion cubic feet of gas a day back into the ground.
About 32 trillion cubic feet sits in Prudhoe Bay. The proposed pipeline would carry about 4 billion cubic feet a day -- 2.5 from Alaska, 1.5 from Canadian fields.
Tapping arctic gas has been an oil industry mirage for more than three decades.
Many plans have been floated, including ideas to build a pipeline to Alaska's southern coast, to put gas in the existing oil pipeline or build a pipeline through Canada to the Lower 48. The plans always collapsed because of huge costs, a lack of markets and permitting problems.
But arctic gas is in play again, largely because of soaring prices.
A number of companies are exploring the project, but analysts said while there are many plans and players, no projects are under way.
''It's just a lot of posturing at this time, trying to get their story out into the media,'' said Bill Gwozd, an industry analyst with Ziff Energy in Calgary.
Arctic Resources proposes to finance the project entirely with low-cost bonds. The financing would allow the project the lowest transportation tariffs, Murphy said, of about $1.50 per 1,000 cubic feet.
So far, no one has joined the Arctic Resources consortium.
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