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Foothills CEO Sees Alaskan Gas Deliveries Ahead

Foothills CEO Sees Alaskan Gas Deliveries Ahead

Foothills Pipeline CEO Robert L. Pierce said last week it won't be long before Alaskan natural gas is absolutely necessary to meet U.S. demand. And he remains convinced that the long-proposed Alaska Natural Gas Transportation System (ANGTS) from Prudhoe Bay along the Alaska Highway and eventually to Alberta is the best way to make it happen.

"There is a growing demand for natural gas in the United States, estimated to reach 30 Tcf/year," he noted. "I have recently met with interested parties in Ottawa, Washington, Whitehorse and Anchorage and advised them to this effect and that in my opinion Alaskan gas will be required to meet this 30 Tcf demand."

Despite the high $6 billion price tag, the market is not that far from making such a project economic, Pierce said. Spot prices have to average $3/MMBtu at the Chicago hub and they are only a few years from accomplishing that, he predicted.

"We think it's a manageable cost. It's very close to being an acceptable figure and it continues to go down," he said in an interview with NGI. "If you can get the right volume to the border you have a very economical project." At one point in its decades-long history the projected delivery price was $11/MMBtu.

"Timing [of construction] depends on how much the market will take at a given time, and we would think that in two or three years there will be a shortfall of gas and it won't be very long thereafter that for demand to grow large enough to move an economical amount of gas through this system." He predicted an in-service date of winter 2005.

The system, which was granted initial certifications in 1977, already includes an unprecedented level of agreement and legislation between the Canadian and U.S. governments. It still would require typical pipeline regulatory approvals, however. "We've got an awful lot of things already in place."

The southern portions of the project already have been built. They include the Foothills/Northern Border pipeline and PG&E GT-NW. The proposed northern extension to Alaska would include a Dempster Lateral pipeline lateral to the Mackenzie Delta. The pipeline would span about 1,700 miles and carry 2 Bcf/d of gas from Alaska to the Alberta border. Foothills is the Canadian sponsor and a partner in the Alaskan segment.

"We were told at a recent hearing that there was an indication that [in winter 2000] there would be a shortfall [of production] out of Canada on the order of 2 Bcf/d," said Pierce. "If demand continues growing like everyone thinks it will and if supply does not grow then you're going to have to make up that difference in supply from new volumes, which may very well be LNG from Trinidad and elsewhere. But clearly if you need pipeline delivered volumes there's only one place where the [infrastructure] is already established today, and that's Alaska." He said proved reserves there amount to about 33 Tcf.

"Our re-assessments of the project in light of advances in technology, our northern research and our operating experience have resulted in significant reductions in costs from our original estimate. Because of the ANGTS head start resulting from its regulatory approvals, advancements in project engineering, full scale testing in northern conditions and the certificates held for construction and operation, I believe the ANGTS not only remains economically viable, but will be earliest to lower 48 markets. No other project is in that position."

Rocco Canonica

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