Industry, labor spar over route of gas pipeline

Posted: Sunday, August 05, 2001

JUNEAU (AP) -- Oil industry executives under pressure from labor and government officials to find an Alaska route to pump natural gas from the North Slope say their compass will ultimately follow the bottom line.

With new gas supplies in the Rocky Mountains, the Gulf of Mexico and Canada, North Slope producers must think competitively, said Michael Hurley of Phillips Petroleum Co.

Speaking for the Alaska Gas Producers Pipeline Team -- a working group for the three oil companies -- Hurley said the route that a natural gas pipeline would take wouldn't be determined until the end of the year.

''At this point, it's premature to be precluding any options,'' Hurley said.

But he said companies are focused on a pipeline for the American market, which they consider more likely than an all-Alaska pipeline to Valdez where gas would follow the existing oil pipeline to be liquefied and shipped to Asian markets.

The comments came at the Alaska Highway Natural Gas Policy Council meeting on Thursday. Gov. Tony Knowles created the council in January to study the issue.

Three possible routes include the Valdez pipeline, an Alaska Highway route to Alberta or an ''over-the-top'' route where gas would reach the Mackenzie Delta via an offshore pipeline in the Beaufort Sea, then head south in Canada.

Knowles supports the pipeline route -- nearly 2,000 miles long -- that would follow the existing oil pipeline from the North Slope to Fairbanks, and then parallel the Alaska Highway to Alberta, where it would tie into the North American grid.

He signed into law a bill barring leases across state land for a gas line that would follow the so-called ''over-the-top'' route through the Beaufort Sea.

A similar prohibition was included in a national energy bill approved his week by the U.S. House of Representatives, but some Canadians have disputed whether that kind of ban is allowed under current free trade agreements.

Supporters of the ''over-the-top'' route say it would be about 300 miles shorter, cross less mountainous terrain and pick up additional reserves in the Mackenzie Delta.

Knowles, legislators, labor and business leaders have opposed the ''over-the-top'' route, arguing it would minimize the economic benefits to state coffers and employment.

Complicating the issue further, whaling captains on the North Slope oppose the offshore pipeline, and environmentalists oppose any route that cuts through the Arctic National Wildlife Refuge or disturbs migrating Porcupine caribou.

Sue Schrader, of the Alaska Conservation Alliance, said her group opposes any route that doesn't follow an existing transportation corridor.

Hurley said Phillips, BP Exploration (Alaska) Inc., and ExxonMobil Corp. will continue to look for the most competitive project, whatever route it takes.

The natural gas council is expected to report to Knowles on Nov. 30 with recommendations on how to advance the project, including whether to take the state's royalty in gas or money.

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