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FERC's Hoecker Supports Interest in ANGTS Project

FERC's Hoecker Supports Interest in ANGTS Project

The new-found interest in the dormant Alaska Natural Gas Transportation System (ANGTS) hasn't gone unnoticed by FERC Chairman James Hoecker.

"I'm very pleased to see renewed interest in the ANGTS coming out of Alaska due to the projected gas supply shortfalls in the Canadian market," he said during a conference sponsored by The Energy Council in Washington D.C. last Monday.

Part of the reason for the sudden appeal of ANGTS, which has been dormant for 25 years, is that "the gas cushion, the reinjected gas on the North Slope, is no longer necessary. In fact, it's actually a detriment to the continued production of a lot of the crude reserves up there," Hoecker told NGI.

"So the question is what do we do with that gas? Well obviously if we're going to get to a 30 Tcf market and given certain deliverability shortfalls in western Canada, that would be a very important source to look at" to meet expanding demand in the lower 48 states, he said. It's estimated Alaska holds as much as 50 Tcf of natural gas reserves.

Although certain portions of ANGTS have been pre-built, Hoecker said about 1,500 miles still would need to be constructed. Foothills Pipe Lines Ltd., which is owned by TransCanada PipeLines and Westcoast Energy, is trying to revive interest in the original ANGTS project through Canada's Yukon Territory. A newer group called Arctic Resources (Alaska), which is backed by Houston-based Municipal Energy Resources Corp., has proposed an alternative which would start the pipeline at Prudhoe Bay, jump offshore and run east to Canada's Mackenzie Delta and then south to the United States. (See NGI, 3/13/00).

Alaska hasn't taken a position on any of the proposals floating around, said Bill Van Dyke, petroleum manager with the state's Division of Oil and Gas. "None of them jump out as being robust," he noted, but the state doesn't want to discourage interest.

Why the interest in ANGST now? "I think people are taking another hard look at the project's economics," he said. The project may have cost $14 billion or $18 billion if it had been built 20 years ago, but the costs have come down considerably due to new construction techniques. Also, he believes people are starting to think "maybe there's a place for Alaska gas" in meeting the 30-35 Tcf market that's projected for the U.S. by 2010-2015.

Although some U.S. producers have their doubts, Hoecker said he believes "a 30-35 Tcf gas market in the U.S. is within reach." He noted the Commission has taken several actions "to ensure a better future" gas supply. "It has proposed a more competitive and fairly regulated gas and oil transportation on the Outer Continental Shelf. It is changing course to preserve Section 29 tax credits for gas production from tight [sand] formations.....It [also] has adopted policies that will help promote the expansion of [an] interstate natural gas pipeline network in a prompt but responsible way."

Susan Parker

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