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Producers Band to Explore Northern Project

Producers Band to Explore Northern Project

While the Yukon and Alaska claimed the lead, Canada's Northwest Territories remained far from forfeiting as action heated up on both sides of the international rivalry to be first to take advantage of surging natural gas markets with Arctic supplies.

Canada's Yukon Territory saluted the American side when the big-three owners of Alaskan gas put a dollar figure on their previously-announced commitment to collaborate on devising ways to tap and ship south about 35 Tcf of gas reserves made available by declining oil production at the 32-year-old Prudhoe Bay field. The Anchorage-based, Alaskan branches of BP, Phillips Petroleum and Exxon Mobil declared intentions to put US$75 million into a program that involve up to 100 employees of the companies and generate "significant" supporting work by contractors.

The Yukon was especially encouraged when the U.S. producers said the effort will center on transportation issues and gave the proposal a name, the Alaskan Gas Pipeline Project. As in the past, the producers refrained from saying who they want to build and operate the system, leaving open a door for the campaign by TransCanada PipeLines's Foothills Pipe Lines to revive the dormant Alaska Natural Gas Transportation System.

The American companies said their work will concentrate on design, costs, obtaining permits, the eventual commercial structure of a northern megaproject, and its economic viability. The declared objective remains to evaluate and select a route, then file construction applications with authorities in Canada and the U.S.

Simultaneously, on the Canadian side of the northern gas race, government authorities moved into position to respond quickly to arctic pipeline proposals. The National Energy Board and the Mackenzie Valley Environmental Impact Review Board signed a memorandum of understanding on cooperation. NEB chairman Ken Vollman described the arrangement as a first major step toward establishing an orderly, efficient method of dealing with northern pipeline proposals.

NEB officials have been keeping close tabs on the northern pipeline revival and say they expect to start seeing applications as early as mid-2001 arising from one or more of up to half a dozen schemes that have been under increasingly active discussion in the industry since tightening gas supplies began driving up prices more than a year ago. The proposals are variations on three themes: a revival of the ANGTS route along the Alaska Highway through the Yukon Territory, a revival of Mackenzie Valley pipeline proposals, and alternatives for connecting the two into a vast new northern pipeline grid.

In Whitehorse, a delighted Yukon Premier Minister Pat Duncan said it is obvious that support for construction of the Alaska Highway Pipeline is gaining momentum. She pointed to a unanimous resolution in support of their project that was passed by the annual meeting of the U.S. Western Governors in San Diego. The resolution called on the U.S. and Canadian federal governments to work together on advancing the Alaska Highway route. The governors urged all sides to try completing a project within six years.

But the Northwest Territories is far from giving up on hope for a project centered on gas reserves in the Mackenzie Delta-Beaufort Sea region. The Canadian federal government gave fresh signs that it intends to cooperate with the ambitions. Expanding on successful auctions in 1999 and earlier this year of drilling prospects in the Mackenzie Valley and on the Delta, Indian and Northern Affairs Canada issued an invitation to another big sale.

The invitation called for "nominations" of drilling targets for a new auction, tentatively scheduled for February, from among more than 100 million hectares (about one million square kilometers or 400,000 square miles) of the Delta, the Beaufort Sea and the western Arctic Islands. The region being thrown open reaches from the eastern boundary of the Yukon east into the new northern territory of Nunavut, and from the Inuvik region on the Delta north to 80ø latitude.

The new invitation raises possibilities of activity on the Canada's Arctic Islands for the first time since surpluses and falling prices in the mid-1980s brought an end to a marathon drilling campaign by the Panarctic Oils consortium.

Gordon Jaremko, Calgary

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