The new-found interest in the dormant Alaska Natural GasTransportation System (ANGTS) hasn’t gone unnoticed by FERCChairman James Hoecker.

“I’m very pleased to see renewed interest in the ANGTS comingout of Alaska due to the projected gas supply shortfalls in theCanadian market,” he said during a conference sponsored by TheEnergy Council in Washington D.C. last Monday.

Part of the reason for the sudden appeal of ANGTS, which hasbeen dormant for 25 years, is that “the gas cushion, the reinjectedgas on the North Slope, is no longer necessary. In fact, it’sactually a detriment to the continued production of a lot of thecrude reserves up there,” Hoecker told NGI.

“So the question is what do we do with that gas? Well obviouslyif we’re going to get to a 30 Tcf market and given certaindeliverability shortfalls in western Canada, that would be a veryimportant source to look at” to meet expanding demand in the lower48 states, he said. It’s estimated Alaska holds as much as 50 Tcfof natural gas reserves.

Although certain portions of ANGTS have been pre-built, Hoeckersaid about 1,500 miles still would need to be constructed.Foothills Pipe Lines Ltd., which is owned by TransCanada PipeLinesand Westcoast Energy, is trying to revive interest in the originalANGTS project through Canada’s Yukon Territory. A newer groupcalled Arctic Resources (Alaska), which is backed by Houston-basedMunicipal Energy Resources Corp., has proposed an alternative whichwould start the pipeline at Prudhoe Bay, jump offshore and run eastto Canada’s Mackenzie Delta and then south to the United States.(See NGI, 3/13/00).

Alaska hasn’t taken a position on any of the proposals floatingaround, said Bill Van Dyke, petroleum manager with the state’sDivision of Oil and Gas. “None of them jump out as being robust,”he noted, but the state doesn’t want to discourage interest.

Why the interest in ANGST now? “I think people are takinganother hard look at the project’s economics,” he said. The projectmay have cost $14 billion or $18 billion if it had been built 20years ago, but the costs have come down considerably due to newconstruction techniques. Also, he believes people are starting tothink “maybe there’s a place for Alaska gas” in meeting the 30-35Tcf market that’s projected for the U.S. by 2010-2015.

Although some U.S. producers have their doubts, Hoecker said hebelieves “a 30-35 Tcf gas market in the U.S. is within reach.” Henoted the Commission has taken several actions “to ensure a betterfuture” gas supply. “It has proposed a more competitive and fairlyregulated gas and oil transportation on the Outer ContinentalShelf. It is changing course to preserve Section 29 tax credits forgas production from tight [sand] formations…..It [also] hasadopted policies that will help promote the expansion of [an]interstate natural gas pipeline network in a prompt but responsibleway.”

Susan Parker

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