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Canada Gas Building Toward Alaska

Canada Gas Building Toward Alaska

The growth in Canada's natural gas supply is moving northward and at some point is expected to be "within reach" of Alaska, where the United States has "huge reserves" of gas. If this trend continues, the still-under-construction Alliance Pipeline conceivably one day could be transporting both Canadian and Alaskan gas supplies, an executive with the pipeline said.

One of three schemes being considered to transport Alaska North Slope gas to the U.S. market "potentially" could involve Alliance in the future, noted Jack Crawford, senior vice president for public government and regulatory affairs with the Calgary-based Alliance. However, he said the pipeline wasn't "actively" pursing this angle at this time, given that it's still "fully occupied" with the construction of the Canada-to-Chicago Alliance project, which is targeted to begin operation "full steam" next October.

Speaking at the winter meeting of the National Association of Regulatory Utility Commissioners (NARUC) in Washington D.C. last week, he said he doubted that Alliance would be immediately affected by the FERC's hold-up of projects that would transport some of Alliance's 1.3 Bcf/d of gas from Chicago to East Coast markets.

"It may have a longer term effect, but it won't have a short-term effect because our capacity is essentially sold out for [the next] 15 years," Crawford told NGI. If the take-away projects aren't certificated eventually, however, "it may delay expansions" of the Alliance system in the future. Alliance is counting on Vector Pipeline, which has been certificated and is under construction, to handle much of the gas overflow.

As for the Alliance pipeline itself, which has four sponsors, Crawford said it has incurred some construction overruns. But they have been "very localized," occurring mostly in North Dakota, and have been "relatively modest" in amount. The sponsors include Coastal Corp., Williams, Enbridge Inc. (formerly IPL Energy) and the Fort Chicago Energy Partners.

The pipeline recently began to put gas into the system, about 200 MMcf, he noted. That's just the first injection of approximately 8 Bcf of natural gas that Alliance plans to put in between now and next October, when it begins operation.

Crawford estimated Alliance still has about 120 miles to construct on the U.S. side of its mainline, and about 180 miles more to go on the Canadian side. But there's still "considerably more work to be done" on the lateral portion of its receipt system.

Crawford said the 'biggest task...has been that of dealing with landowners," about 6,000 of them. But he said Alliance was able to reach voluntary agreements with all but less than 1%.

Once Alliance is operating, it's expected that Canadian gas exports to the U.S. market will rise to between 10 Bcf/d and 12 Bcf/d in early 2001, which translates to about 4-4.5 Tcf per year. That's compared to last October's gas export volumes of 8.9 Bcf/d.

There isn't likely to be a let-up in Canada's growth. Todd Persells, assistant vice president for project development and marketing at ANR Pipeline, said forecasts for 15 years out indicate Canadian exports will grow by 25%, and Canadian production will rise by 33%.

It's estimated Canada has "ultimate marketable potential" gas reserves of 662 Tcf, almost half of which (350 Tcf) derive from the Western Canada Sedimentary Basin --- where the Alliance Pipeline originates. The estimates are from the Canadian Gas Potential Committee and the NEB.

In the past three to four years, Canadian producers have been adding to reserves at a rate of 4 Tcf per year. "This has been due to mostly offshore and above-average drilling activities in the Western Canada Sedimentary Basin," said Neil McCrank, chair of the Alberta Energy Utilities Board, who also spoke at the NARUC meeting.

Susan Parker

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