While TransCanada Pipe Lines continues its push to revive its original route for the Alaska gas pipeline, another Canadian pipeline giant, Enbridge Inc., which made its mark in oil pipelines and now is moving into natural gas, is pressing the Canadian government to open up the field for competition.
TransCanada is attempting to reactivate the original version of the project sponsored by TransCanada's Foothills Pipe Lines under the 1970s Northern Pipeline Act. But the legislation and the route is outdated and liable to cause delays and cost increases, Enbridge President Pat Daniel told the analysts in a quarterly conference call last Wednesday. "We are urging the government to maintain regulatory neutrality and to avoid any decisions that will limit the commercial flexibility of this project."
Enbridge believes the project should be subject to National Energy Board and Canadian Environmental Assessment Act approvals. "The construction and right of way must be viewed with a present day and market perspective, taking into account today's markets, today's environmental issues and today's virginal issues....In our view, the government should confirm that an application can be made under either process and the feasible applications will be processed in a full, fair, and unfettered manner," Daniels said.
If the old TransCanada route gets the backing of the gas producers, the locals, and the federal and provincial governments "we will not oppose it," but "to insist we follow a particular route simply because somebody thought it was the right way 25 years ago isn't good enough for me."
Daniels agreed with an analyst who said it would be "preposterous if the owners of the gas" and their proposals for a pipeline were shut out of the process of choosing a pipeline. Alaska and Alaska NGI June 28, 2004
In Alaska, the pipeline most likely would extend about 745 miles along the Alaska Highway from Prudhoe Bay south through Fairbanks to a connection with the Canadian portion of the project at the Yukon border. The project would then traverse about 1,000 miles of western Canada from the Yukon Territory, across northern British Columbia and then ending somewhere in Alberta at a connection with the existing Canadian gas grid. It is expected to deliver 4-6 Bcf/d of gas. TransCanada currently owns all the right of way outside the state of Alaska for its pipeline route, and while it has said it is open to cooperation with a consortium for the project, it has indicated it intends to play a leadership role (see NGI, June 7, 2004).
Enbridge moved into the natural gas transmission business in the last few years, acquiring a majority interest in Vector Pipeline in 2003 and on Jan. 1, 2005, completing the purchase of Shell Gas Transmission LLC for $613 million (see NGI, Jan. 10), which positions the Canadian company as a major player to develop gas supply and transport in the deepwater Gulf of Mexico. Enbridge also has increased its interest in the Alberta-to-Chicago Alliance Pipeline over recent years to 50%.
In the conference call Daniels told analysts the company would continue to grow its gas transmission business "prudently, but we're going to grow it aggressively as well."
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