Interest in finally tapping natural gas on the northernfrontiers of North America reaches into the inner circles ofWashington, the Canadian supply community has learned.

The word has been spread twice in ways that include personaldemonstrations by United States Ambassador to Canada Gordon Giffen.It was more than a bit of diplomatic adventure tourism when Giffentrekked about 1,200 miles northwest of Calgary to Fort Liard in themiddle of the winter. “I learned 40-below is cold,” he said. But healso indicated the U.S. has a genuine interest in the gas drilling,community relations, production development and pipelinebreakthroughs being scored in the Northwest Territories by the10-company Liard consortium led by Chevron Canada Resources. “Ilearned a ton about the valuation of natural gas, the MackenzieValley Delta analysis, potential reserves, transportation issues,pipelines, and the perspectives and interests of the aboriginalgroups.”

On a spring trip to Calgary, for the annual meeting of theCanadian Association of Petroleum Producers, Giffen kept any publicstatements so diplomatic that they were barely noticed. But therewas a message between the lines. It was conveyed in meetings atinner sanctums like the Calgary Petroleum Club, where his contactsincluded former territorial premier Nellie Cournoyea, an Inuvialuitleader from the gas-rich Mackenzie Delta.

Giffen put his message on the line in an interview: “Let’s getoff the dime. Let’s assess the considerations and move forward.” Hewas referring to the resurrection of pipeline megaproject proposalsto tap the northern gas reserves that the Chevron group is provingto be at last becoming available as a result of advancingtechnology, better sensitivity to environmental issues and vastlyimproved community relations. While there are competing versions,all the grand designs contemplate eventually tying in both Alaskanand northern Canadian gas. Giffen acknowledged the legacy ofresistance to Arctic gas projects on grounds that they involveindustrializing sensitive frontier terrain. He said, “This is notsomething being imposed on Canada. It’s opportunities that we needto talk about together.”

Giffen stressed that the U.S. is interested in both Alaskan andCanadian gas sources. He reported learning a startling fact, atleast by Washington standards. As much gas has been re-injectedannually into the Prudhoe Bay oilfield as Canada uses in a year(about 3 Tcf). That gas is coming available because it is no longerneeded as a driver for fading Alaskan oil production.

The revival of interest in northern gas is a sharp about-facethat has been gratifying to long-time advocates of frontierdevelopment such as Foothills Pipe Lines Chairman Bob Pierce, whohas been busy in recent months on a long string of meetings in thenorth as well as in the Canadian and U.S. capitals. Only eightyears ago, the U.S. Office of the Federal Inspector of the AlaskaNatural Gas Transportation System urged the president to bury thenorthern pipeline project as a white elephant. It was said thatANGTS and the supporting 1977 pipeline treaty with Canada had beenrendered uneconomic and a burden on both countries’ industries andgovernments by energy free trade and gas surpluses. ANGTS remainson the books. The president rejected the inspector’s advice, thanksnot least to efforts by the megaproject’s Canadian sponsors:Foothills and its owners, TransCanada PipeLines and WestcoastEnergy.

Giffen made it plain Washington is not afraid that southern U.S.or Canadian gas reserves are about to run dry. The ambassador, whohas made a study of these issues, knows the difference betweengeological resource endowments and the inventory of reserves bookedwith engineering verification as known to be available forproduction at current prices. In the U.S., “there’s always been anestimate that reserves are enough to keep us going for eight moreyears. That’s been the story for 75 years,” Giffen observed.

The reason for the reviving interest lies in a broader view ofenergy trade that was confirmed by the painful winter price spikes,especially for heating oil along the Atlantic seaboard. There is adesire to ensure the U.S. does not keep all its energy eggs in onebasket. The ideal is competition among suppliers. Giffen said “weneed to work together to harmonize regulatory regimes to makeefficient transactions possible, to make sure we manage reciprocalenergy interests in a way that enhances the prosperity of NorthAmerica and helps us attain more energy independence as acontinent.”

The ambassador to Canada predicted, “If we expand on the optionsavailable in North America we will reduce the potential impact ofOPEC getting together and affecting energy prices the way they didmost recently.”

In encouraging even closer energy ties between Canada and theU.S., Giffen stressed that both sides stand to gain. “This is not aone-way street.” He pointed out that electricity flows north fromthe U.S. into British Columbia every winter, and dramatically intoQuebec from Vermont during emergencies such as the 1998 ice stormthat curtailed heat, light and power supplies for millions ofhouseholds in central Canada. Giffen added “the economics of therelationship flow north. There are jobs and prosperity in Canadabecause there is a market in the U.S.”

Gordon Jaremko, Calgary

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