The Alaska Highway natural gas pipeline project, which was on the fast track about a year ago as natural gas prices rose, got another boost on Thursday with the signing of a memorandum of understanding (MOU) between six major American energy companies and three Canadian firms. The companies plan to “immediately” develop a proposal to transport Alaska’s North Slope gas, with plans to deliver a proposal to North Slope producers within six weeks.

Boasting confidence that the producers will reach agreement quickly, the U.S. and Canadian consortium said its goal is to deliver Alaska gas to Canada and the Lower 48 by 2008. The six U.S. companies include subsidiaries of Williams, Duke Energy, Sempra Energy International, Enron Corp., PG&E Corp. and El Paso Corp. The three Canadian companies, TransCanada PipeLines, Westcoast Energy and Foothills Pipe Lines, have remained active partners in the Alaska Natural Gas Transportation System (ANGTS) from its inception.

“All the MOU signatories were involved in developing the Alaska Highway project at one point,” says Dennis McConaghy, co-CEO of Foothills Pipe Lines Ltd., headquartered in Calgary. “Through this agreement, the companies are demonstrating their intent to renew their commitment to the commercialization of vital natural gas infrastructure from the Alaska North Slope to Canada and the Lower 48 states.”

On Capitol Hill Thursday, Sen. Frank Murkowski (R-AK) hailed the agreement as a major advancement for the development of an Alaska gas pipeline system. “While this does not guarantee construction of a North Slope gas delivery system, it is a big step in the right direction.”

As part of the agreement, the U.S. and Canadian pipelines have agreed to settle their claims to $4 billion in costs, plus interest, that they spent back in 1977 in developing the ANGST project, said an aide to Murkowski. Pipelines have been hesitant to participate with Alaska’s producers in their efforts to build an Alaska gas line because of the outstanding liability issue, he added.

The MOU establishes key principles for re-enlisting in the Alaskan partnership to construct the Alaskan portion of the Alaska Highway natural gas pipeline project, with the focus on a commitment to “eliminate the historic and other commercial barriers” to the project thus far.

“Williams has been actively engaged in developing Alaska’s natural resources for over twenty-five years,” says Cuba Wadlington Jr., CEO of Williams Gas Pipeline. “We now look forward to working with our pipeline industry peers, the North Slope producers and the State of Alaska to build this essential link connecting North Slope gas to North American markets.”

The Alaska Highway project stretches more than 1,700 miles, from the North Slope to northwest Alberta. The gas would then be transported from northwest Alberta to markets throughout Canada and the United States. The companies signing the MOU are the original partners in the Alaskan Northwest Natural Gas Transportation Co. (ANNGTC), which was designated by Congress to construct and operate the Alaska segment of the ANGTS in 1977.

ANNGTC already holds a certificate from the Federal Energy Regulatory Commission as well as numerous other federal permits for the construction and operation of the ANGTS. The statutory framework for the ANGTS provides for the expedited approval of the remaining permits necessary to proceed with the construction of the pipeline. The ANGTS also has the regulatory and diplomatic framework in place to expedite construction of an Alaska gas pipeline. This framework includes U.S. and Canadian legislation and an international treaty between the two countries.

Now, the Canadian and U.S. sponsors of the ANGTS have turned their attention to developing commercial proposals and negotiating with prospective shippers and investors, including the Alaska North Slope producers, including Phillips Petroleum, BP and ExxonMobil, as well as the State of Alaska.

“The economic benefits of this multi-billion dollar project would impact most regions of the U.S. and Canada,” says Mike Stewart, co-CEO of Foothills. “Our expanded partnership is committed to enhancing these benefits by eliminating commercial barriers and offering a market-responsive proposal to producers and other gas shippers. We know the delivered price of Alaskan gas must compete in the market at the major pricing centers of North America.”

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