Knowles Signals Will Sign Bill Opposing MacKenzie Delta Line

Alaska Gov. Tony Knowles is expected to sign legislation this week that would block the construction of a long-line natural gas pipeline from the North Slope region across the Beaufort Sea to Canada's MacKenzie Delta, a move that assuredly will not sit well with producers. The governor's office signaled Knowles' intent last week after the legislation, SB 164, overwhelming passed both the Senate and the House.

The Northern American Natural Gas Pipeline Group, which includes North Slope producers BP Amoco, ExxonMobil and Shell, has indicated all along its opposition to the actions of the Alaska Legislation and Knowles to block consideration of the MacKenzie Delta route.

The latest development comes as the three producers have awarded the last four in a series of 10 contracts to companies responsible for studying all the routing alternatives for delivery of gas from the North Slope to Canada and the Lower 48 states.

Knowles firrmly supports the Alaskan Gas Transportation System (ANGTS) route to transport gas south along the Alaskan Highway, across the Yukon, northern British Columbia and Alberta, and finally to export points along the U.S. border. The southern portion of the route, which extends from Alberta into the United States, is already completed (in two legs: Foothills/Northern Border Pipeline and PG&E Gas Transmission Northwest). Only the northern portion remains to be built.

As revealed by the legislation, Knowles and other Alaska officials are widely opposed the alternative Alaskan route currently being considered, the Northern Gas Pipeline Project. It would run eastward from the North Slope and come ashore in the Northwest Territories' Mackenzie Delta area in northern Canada, then follow the Mackenzie River south through the Northwest Territories, then interconnect with pipelines in Alberta.

But producers and other market players agree that both pipeline projects can, and should, be built because the North American market can absorb their throughput (see NGI, April 9).

The four conceptual engineering contracts were awarded to three joint ventures, representing nine different contractors. The contracts are for engineering services for potential pipeline routes from the North Slope to Alberta; a new pipeline from Alberta to U.S. markets; a gas treatment plant located on the North Slope; and a natural gas liquids plant.

The contracts awarded were to:

  • VECO, headquartered in Anchorage, AK, through a joint effort with Fluor in Sugar Land, TX, and Calgary will provide engineering, conceptual design and evaluation for route possibilities from the North Slope to central Alberta. This work will provide a basis for possible future FERC and Canadian National Energy Board permit applications.
  • The AlasCan Group, based in Calgary, will be responsible for providing engineering, conceptual design and evaluation of new pipeline infrastructure from Alberta to U.S. markets. This group is a joint venture between five companies: Kellogg Brown & Root, based in Houston and Edmonton, AB; COLT Engineering, based in Calgary; Michael Baker Jr.'s Anchorage office, NATCHIQ and NANA/ Colt Engineering LLC, both headquartered in Anchorage.
  • NATCHIQ, headquartered in Anchorage, through a joint venture with Parsons Engineering based in Arcadia, CA, will be responsible for engineering and evaluation of a gas treatment plant (GTP) located on the North Slope. The GTP would condition gas for sale by removing CO2, and compressing and chilling gas before entering the pipeline. It would be the largest facility of its kind in the world.
  • Fluor and VECO will also be engineering and evaluating a natural gas liquids (NGLs) plant that may be built along the pipeline route at a location to be determined during the feasibility phase. This plant would remove NGLs, which can be used in a variety of petroleum applications.

The total of 10 contract packages covers a broad range of project activities and will involve several hundred contract and subcontract personnel in Alaska and Canada, BP said. The goals of the 10 contracts over next year will be conceptual design, project costing, permitting consideration, commercial structure, and the overall viability of the project. The expected budget for this evaluation project will be $75 million. The work effort is expected to be primarily managed and staffed in Anchorage.

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