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."
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