The fate of two major long-haul natural gas pipelines intended to carry supplies to the Lower 48 appears to be stuck in neutral because of growing U.S. onshore production and the global financial crisis, U.S. and Canadian energy officials said.

Both regulators and energy executives downplayed the prospects for an Alaska gasline and the Mackenzie Delta gas project on Thursday and Friday in Toronto at the LDC Forum Canada, which was held in conjunction with Canada’s Industrial Gas Users Association.

National Energy Board (NEB) CEO Gaetan Caron said Friday that Canadian regulators are “ready for any filing. When the parties want to file something under whatever format, we’re ready for that.”

Caron pointed to Alaska Gov. Sarah Palin’s support for a gasline to move gas through Canada and then into the United States, but he did not indicate that any more progress had been made since Palin signed legislation in August that authorized the state to award a license to TransCanada Alaska to begin developing a 1,7150mile pipe from a treatment plant at Prudhoe Bay to the Alberta Hub in Canada (see NGI, Sept. 1).

“I assume the interest continues,” Caron told the forum audience. “Whatever happens, we’re ready for that process.” Canadian regulators have been “investing in discussions” with stakeholders that would be affected by the North American pipe, but he indicated that it was difficult to continue without some indication that the pipeline’s sponsors were ready to move forward.

Progress on the Mackenzie Gas Project (MGP), also designed to carry gas supplies to Lower 48 markets, also appears to be stalled.

“I can’t say much about it,” said Caron. Hearings were completed in Yellowknife in September 2007, but to date the NEB has not received the joint review panel’s final report. Once the NEB has the report in hand, “we will then consider it, the affected parties and governments will review it, and then we will have a response and then hear final arguments. We expect to convene for the final hearings about four months after getting the report.”

If the pipeline projects get off the ground, “they will be game changers,” said Nexen Marketing’s David Slater, who manages the company’s marketing division. “But there are huge hurdles to get this done, to lay the groundwork to get this done. TransCanada and the government of Alaska have done some good things lately, but we have a lot more work in front of us. I’m not holding my breath right now. It’s way down the time line before we see new production coming from the North.”

Based on data, Slater said “all of Canada’s major pipelines have capacity right now. No shale gas is included in that, and no Alaska gas is included. Some pipes are hurting right now, and they will continue to hurt going forward. TransCanada is primarily empty right now…Don’t hold your breath for northern gas.”

Developing Northern gas is part of TransCanada’s plans “to improve the economics” of the company’s transportation service, said TransCanada’s Don Bell, director of the company’s Mainline East pipe system. An advantage of the Alaska gasline is that it would be connected to the “Alberta Hub, which is the most liquid market in North America…with access to all North American markets coast to coast.”

The MGP, which TransCanada also is involved in, has “nearly completed its regulatory review,” Bell said. It now has “Canadian government endorsement, and at present the Mackenzie Valley pipeline is ahead of the Alaska pipeline.”

Lee Lunde, COO of North American gas for BP Canada Energy Co., said producers don’t necessarily have to have “long-term fixed prices,” but to participate in building pipelines like the MGP and the Alaska gasline, “we have to have long-term support for infrastructure.” Producers are being asked to make “huge investments for gas from Alaska, from Mackenzie to the Lower 48, and we need long-term contracting to support it…The theme needs to be to continue to work on not just a producer push, but a combination of producers working with utilities and the markets to make it happen.”

Caron seemed more optimistic about the prospects for regional gas pipes in certain areas of Canada. The Emera Brunswick Pipeline, he said, is “almost ready for service. And the Deep Panuke could be constructed at any time.” Those types of smaller pipes to take away capacity from smaller areas closer to markets are more likely to move forward, he said.

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