The Yukon Territory’s new Liberal government has stepped forwardto go to bat for a revival of the dormant Alaska Natural GasTransportation System (ANGTS) as its enthusiastic choice for anorthern pipeline project.

Yukon Premier Pat Duncan told a Calgary audience of seniorindustry and government officials that “we are aggressivelypromoting the Alaska Highway pipeline route to move northern gas tomarket.”

Duncan also said, unlike her counterparts in the NorthwestTerritories, the Yukon government regards the northern pipeline aspurely a “private sector project.” There are no demands by theYukon for special rights to ownership interests in the proposedpipeline for natives or any other group, said Duncan, whoseLiberals took power from left-leaning New Democrats in a springelection.

At the same time as the Yukon premier paid her calls on theCanadian gas capital, political and native leaders in the NorthwestTerritories laid out their demands. Those are topped by majoritynative ownership of a rival entry to ANGTS in the northern pipelinecontest, the Arctic Resources project with its route south throughthe Mackenzie Valley from the Delta-Beaufort region and a spur westto the North Slope of Alaska (see Daily GPI, June 14). Financialbacking for Arctic’s project would be sought from the federalgovernment in Ottawa. Tariff-backed bonds would be issued byspecial purpose entities to be owned by aboriginal and governmentgroups, which could own the pipeline.

In Calgary, industry and government officials who listened toDuncan predicted it will be 2001 before numerous northern pipelineprojects now being talked about take on solid enough form to startappearing as filings with regulatory authorities. There is also aconsensus, solidified during the June World Petroleum Congress inCalgary, that it will take a normal winter and resulting highnatural-gas prices to convince gas suppliers, buyers andtransporters in the United States that the time has truly arrivedfor the northern pipeline. There still is some doubt among theprincipal owners of northern gas in Alaska – BP Amoco-ARCO,ExxonMobil and Phillips Petroleum. The trio dominate ownership ofabout 30 Tcf of Alaskan gas, which is currently produced at a rateof 8 Bcf/d only to be re-injected into the Prudhoe Bay oilfield.The oil reserves are running down, freeing the companies to thinkabout exploiting the gas.

Industry sources say the producers are divided in theirthinking. Phillips is understood to favor a gas pipeline, whileExxonMobil is inclined to try using gas-to-liquids technology ithas spent more than US$400 million developing to tap remotereserves throughout its global empire. At the June petroleumcongress, BP chairman John Browne made it plain his organization isstill on the fence, studying all the options and is especiallyinterested in confirming whether the lower-48 states are ready fornorthern gas.

The Yukon government is a staunch believer that the northernpipeline megaproject will be revived, and quickly. “The growing useof natural gas for the generation of electricity and the shift tonatural gas as the clean fuel of choice, suggests to me that thechanges are as structural as they are cyclical,” Duncan said.”Clearly the demand for natural gas is only going to increase.”

The Yukon premier said, “Based on what I have been hearing andreading lately, the North American demand for northern gas will beupon us sooner rather than later, certainly in closer to five yearsthan 10.” She said the Yukon endorses ANGTS as the option that bothstands ready to go under international agreements dating back tothe 1970s and stands out as the most environmentally acceptableproposal.

Duncan said her government will oppose, on environmentalgrounds, any attempt to open up new offshore or land transportationcorridors directly linking the North Slope of Alaska and Canada’sDelta-Beaufort region. She said the Yukon continues to support theANGTS plan of following the Alaska Highway with the main northernpipeline, then eventually the Dempster Highway between Whitehorseand Inuvik with a “lateral” to pick up Canada’s arctic gas. Shepointed out that the entire project won Canadian and U.S. approvalstwo decades ago. Canadian government officials confirmed that theone-window regulatory apparatus created for ANGTS, northernpipeline commissioners in Ottawa and Washington, still existslegally and could be put back into action with some personnelappointments.

As an added advantage, the Yukon premier pointed out “we’re thefrontier next door,” relatively accessible for potential new supplydevelopment as well as a pipeline route. “Alaska to the northwest,the Mackenzie Delta and the Beaufort Sea to the north, BritishColumbia and Alberta to the south – the geology does not stop atthe borders. The potential for new and exciting discoveries is veryreal.”

Activity already shows signs of picking up in the Yukon.Following successful auctions of drilling rights, seismic surveywork is scheduled to start this summer on the Yukon’s share of theLiard Plateau, where a group led by Chevron Canada recently startedproducing spectacular discoveries via a new pipeline on theNorthwest Territories’ share of the region.

Yukon natives are showing they are as eager for job-creatingindustrial activity as their peers in the Northwest Territories. Inthe southeastern Yukon, the government has reached an agreementwith the native Kaska Nation on a procedure to allow drillingbefore a land-claim settlement is reached, Duncan reported.

The premier added that preparations are under way for moreauctions of Yukon drilling rights, in response to industryexpressions of interest. “The Yukon is virtually unexplored.”

Gordon Jaremko, Calgary

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