Torgerson invites pipeline talks

Posted: Tuesday, August 28, 2001

Sen. John Torgerson, R-Kasilof, has invited top officials from Canada's Northwest Territories and provinces to seek common ground on issues surrounding the delivery of Arctic national gas to southern markets.

"This would be an important forum for all five governments to exchange information and ideas on gas pipeline proposals and to cooperate on issues of mutual concern," Torgerson said. "While our interests converge on some points, we still have much in common in terms of supplying our people with energy for the future and securing the economic benefits of constructing such pipelines."

Torgerson, chair of the Alaska Legislature's Joint Committee on Natural Gas Pipelines, invited Canadian leaders to the table while leading a delegation of nine Alaska legislators on a four-day trip to the Yukon Territory, Northwest Territories, Alberta and British Columbia.

He proposed a working group composed of high-level officials with decision-making powers, said Rep. Joe Green, R-Anchorage, a member of the Alaska delegation.

Yukon Premier Pat Duncan embraced the proposal for a working group. The Yukon and Northwest Territories agreed to send representatives to a Sept. 19 meeting of the Joint Committee on Natural Gas Pipelines. Other provinces have promised to consider joining the working group, which Green said could begin meeting in October.

Participants would share their information on topics such as costs and market availability and compare that to information supplied by the producers, Green said. They also would share technical and political information.

The working group also could help Alaskans and Canadians to avoid misunderstandings, Alaska legislators said.

The major producers of North Slope natural gas are exploring three main options for bringing it to market -- a pipeline to the Lower 48, a plant to convert the gas to synthetic crude oil, which could be shipped through the existing oil pipeline to Valdez, or a gas pipeline to Nikiski or Valdez, where the gas could be cooled to a liquid and loaded onto ships. A gas line to Nikiski also could supply homes and businesses from Fairbanks to Kenai.

Phillips, BP and Exxon Mobil, the three major owners of North Slope gas, pooled their resources in December to explore the feasibility of a pipeline to the Lower 48. They expect to spend $75 million this year, complete much of the engineering and design and be ready, if the project looks feasible, to apply for permits. Green said the feasibility study should be done by early next year.

BP also is building a pilot plant in Nikiski to test its technology for converting natural gas to synthetic diesel fuel.

Phillips, BP and Exxon Mobil are studying two possible routes from Prudhoe Bay to Alberta, from which the gas could be shipped to Lower 48 markets. The 1,650-mile northern route runs under the Beaufort Sea, then follows the Mackenzie River valley through the Northwest Territories. The 2,000-mile southern route parallels the trans-Alaska pipeline to Fairbanks and Delta Junction, then follows the Alaska Highway through the Yukon Territory and British Columbia.

A northern route pipeline also might carry gas from the Macken-zie River delta, where there are 9 trillion cubic feet of proven reserves and potential reserves of 60 trillion cubic feet. An Alaska Highway pipeline also could supply Fairbanks and open the doors for a pipeline to Cook Inlet.

Yukon officials strongly favor a pipeline along the Alaska Highway route, while Northwest Territories leaders strongly favor a pipeline along the northern route. The Alaska Legislature passed a bill last session that bans the state from granting leases in or adjacent to the Beaufort Sea for a pipeline to the Mackenzie River valley. U.S. Rep. Don Young, R-Alaska, inserted language into a House-passed version of a national energy bill that would block federal permits for a pipeline along the northern route.

"It was recognized that there was a great need for increased discussions and interactions by all parties," Torgerson said. "We explained the reasons for Alaska's position against the over-the-top route to the Mackenzie River and engaged in frank discussion of corresponding needs and concerns from other areas."

Green said Northwest Terri-tories officials were friendly, but the territorial premier did not attend meetings with Alaska legislators. He said there still are some options to discuss that might satisfy Northwest Territories needs.

For example, Northwest Terri-tories might build a pipeline from east to west to link with a pipeline along the Alaska Highway route, Green said, but Northwest Territories probably will not like that idea.

"They'd lose the gas, the jobs and everything else, because it wouldn't be coming through the Mackenzie River area," he said.

There may be sufficient markets to build two pipelines -- one down the Alaska Highway route and one to carry Mackenzie River gas to market, he said.

"Their concern was that if we beat them to market, it could put them out of business for 15 or 20 years. I don't think so, but that's their concern," Green said.

Alaska legislators received a mixed reception in Alberta, Green said. The executive director of an industry association there could not understand why Alaskans are not willing to let market forces determine the route of the pipeline, he said. Alberta, which would be the terminus of a pipeline along either route, favors whichever alternative makes construction most likely.

British Columbia does not expect to participate in the pipeline project, and officials there expressed no preference for a route, Green said.

The Canadian federal government originally leaned toward the northern route, but has since taken a more neutral stand, he said.

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