Northward, Ho! Williams, Others Mushing to Northern Frontier
Just when you thought Florida was the place to be this spring
for pipeline construction, the ice is melting and activity is
starting to blossom on the Northern frontier - think Alaska and
the Northwest Territories.
"We certainly think Canada, particularly the frontier areas of
Canada, will be very critical in providing a portion of the supply
required to serve a market demand in excess of 30 Tcf," Cuba
Wadlington, CEO of the Williams pipeline unit, told NGI. "There
will be significant opportunities, and we intend to participate in
those opportunities.....It's on our radar screen," Wadlington's
remarks came in response to a question about new Canadian
construction. And while he doesn't expect to make an announcement
next week "we would hope not long after that."
The Williams' executive's remarks are the latest in a string of
developments over the last few months relating to far-out reserves
now that $3.00 gas and 30 Tcf are the driving numbers.
The U.S. ambassador to Canada started the discussion with a
mid-winter visit to the developing Fort Liard area in the Northwest
Territories. (See story, this issue) Then Federal Energy Regulatory
Commission Chairman James Hoecker chimed in with a speech last
month extolling the virtues of Alaskan gas, in particular the
never-completed northern portion of the Alaska Natural Gas
Transportation System (ANGTS). (See NGI, March 20) Also, recently a
new group has been pushing an ANGTS alternative that would include
both the original Prudhoe Bay Alaska target and the Fort Liard
area. (See NGI, Jan. 24)
While TransCanada PipeLines has said it expects to see some
decline in throughput with the start-up of the new Alliance
Pipeline this coming winter, the primary Canadian pipes from
western Canada into the Midwest --- Alliance, TransCanada and
Northern Border --- will all have to run "at substantially high
capacity" to meet the 30 Tcf market, Wadlington said. He pointed
out that new pipelines typically do not run full at the outset.
"It's very difficult to have a pipeline scheduled to be built
simultaneously with the market coming onstream." If you plan it
right "demand catches up with capacity. You have to make a decision
to go out and build a pipeline and get it in place." Wadlington
pointed out that Northern Border and Kern River both started out
underutilized, but both were soon running full.
"As we have been throughout the nineties, we are very, very high
on the North American market. Williams is the only major pipeline
group which has stayed in North America and not gone out
prospecting around the world," Wadlington said. "We firmly believe
natural gas is the fuel of this century."
Wadlington did not reveal Williams' plans, but the company,
through its northwestern pipeline subsidiaries and its interest in
Northern Border Pipeline, has been involved in the past in the
ANGTS project which was designed, certificated and signed by
President Carter in the late 70s to send gas from Prudhoe Bay south
to Canada and the lower 48. Only the two southern legs of the
project - Pacific Gas Transmission and Northern Border - were
completed. Foothills Pipelines, the Canadian partner in the ANGST
project, continues to push for construction north to Alaska.
The project would tap the 3 Tcf/year of gas currently being
reinjected into the Alaskan Prudhoe Bay oil fields now that the
need for re-injection is declining as oil reserves are tapped out.
There are some other alternatives, however.
A project to carry North Slope gas to the Alaskan coast for
liquefaction and export to the Pacific Rim also has been
certificated and has the support of Alaskan interests. One of those
supporters is Senate Energy Committee Chairman Frank Murkowski
(R-AK), who was in Taiwan two weeks ago to talk about overseas
investment in the project. Several Alaska municipalities have
received a favorable Internal Revenue Service opinion on a proposal
to offer tax-free bonds to help finance the LNG project. A
spokesman said that would knock the pricetag to between $8 to $10
billion from $13 billion.
Meanwhile, a Murkowski aide suggested that since the ANGTS
certificate is more than 20 years old its environmental impact
statement is "stale" and probably would need to be reviewed. He
also pointed out that Exxon, a major interest holder in the Alaskan
gas, has been experimenting with a gas to liquids process, and
might well be more interested in holding onto the gas reserves with
an eye to eventually making up shortfalls in oil shipments south
through the existing crude oil line with gas liquids.