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Northward, Ho! Williams, Others Mushing to Northern Frontier

Northward, Ho! Williams, Others Mushing to Northern Frontier

Just when you thought Florida was the place to be this spring for pipeline construction, the ice is melting and activity is starting to blossom on the Northern frontier - think Alaska and the Northwest Territories.

"We certainly think Canada, particularly the frontier areas of Canada, will be very critical in providing a portion of the supply required to serve a market demand in excess of 30 Tcf," Cuba Wadlington, CEO of the Williams pipeline unit, told NGI. "There will be significant opportunities, and we intend to participate in those opportunities.....It's on our radar screen," Wadlington's remarks came in response to a question about new Canadian construction. And while he doesn't expect to make an announcement next week "we would hope not long after that."

The Williams' executive's remarks are the latest in a string of developments over the last few months relating to far-out reserves now that $3.00 gas and 30 Tcf are the driving numbers.

The U.S. ambassador to Canada started the discussion with a mid-winter visit to the developing Fort Liard area in the Northwest Territories. (See story, this issue) Then Federal Energy Regulatory Commission Chairman James Hoecker chimed in with a speech last month extolling the virtues of Alaskan gas, in particular the never-completed northern portion of the Alaska Natural Gas Transportation System (ANGTS). (See NGI, March 20) Also, recently a new group has been pushing an ANGTS alternative that would include both the original Prudhoe Bay Alaska target and the Fort Liard area. (See NGI, Jan. 24)

While TransCanada PipeLines has said it expects to see some decline in throughput with the start-up of the new Alliance Pipeline this coming winter, the primary Canadian pipes from western Canada into the Midwest --- Alliance, TransCanada and Northern Border --- will all have to run "at substantially high capacity" to meet the 30 Tcf market, Wadlington said. He pointed out that new pipelines typically do not run full at the outset. "It's very difficult to have a pipeline scheduled to be built simultaneously with the market coming onstream." If you plan it right "demand catches up with capacity. You have to make a decision to go out and build a pipeline and get it in place." Wadlington pointed out that Northern Border and Kern River both started out underutilized, but both were soon running full.

"As we have been throughout the nineties, we are very, very high on the North American market. Williams is the only major pipeline group which has stayed in North America and not gone out prospecting around the world," Wadlington said. "We firmly believe natural gas is the fuel of this century."

Wadlington did not reveal Williams' plans, but the company, through its northwestern pipeline subsidiaries and its interest in Northern Border Pipeline, has been involved in the past in the ANGTS project which was designed, certificated and signed by President Carter in the late 70s to send gas from Prudhoe Bay south to Canada and the lower 48. Only the two southern legs of the project - Pacific Gas Transmission and Northern Border - were completed. Foothills Pipelines, the Canadian partner in the ANGST project, continues to push for construction north to Alaska.

The project would tap the 3 Tcf/year of gas currently being reinjected into the Alaskan Prudhoe Bay oil fields now that the need for re-injection is declining as oil reserves are tapped out. There are some other alternatives, however.

A project to carry North Slope gas to the Alaskan coast for liquefaction and export to the Pacific Rim also has been certificated and has the support of Alaskan interests. One of those supporters is Senate Energy Committee Chairman Frank Murkowski (R-AK), who was in Taiwan two weeks ago to talk about overseas investment in the project. Several Alaska municipalities have received a favorable Internal Revenue Service opinion on a proposal to offer tax-free bonds to help finance the LNG project. A spokesman said that would knock the pricetag to between $8 to $10 billion from $13 billion.

Meanwhile, a Murkowski aide suggested that since the ANGTS certificate is more than 20 years old its environmental impact statement is "stale" and probably would need to be reviewed. He also pointed out that Exxon, a major interest holder in the Alaskan gas, has been experimenting with a gas to liquids process, and might well be more interested in holding onto the gas reserves with an eye to eventually making up shortfalls in oil shipments south through the existing crude oil line with gas liquids.

Ellen Beswick

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