Vowing to take a cooperative approach, Enbridge Inc. announced plans last week to submit an application to the state of Alaska to compete for a commercial agreement to build and operate the 750-mile in-state portion of the Alaska Highway Pipeline Project from Prudhoe Bay to the Alaska-Yukon border.

Enbridge said it is interested in becoming an equity partner in a consortium that will jointly build and operate the project. It also said it is exploring opportunities to be involved in the development of the Canadian portion of the project from the Alaskan border to markets in Canada and the United States.

“Enbridge is well positioned to participate as a key partner in the Alaska Highway Pipeline Project,” said Enbridge CEO Patrick D. Daniel. “Our expansive reach into North American energy markets, combined with our significant natural gas expertise and experience with both liquids and natural gas systems in the far North, are solid foundations for a partnership to deliver Alaskan energy to continental markets.”

The company cited its ownership of the world’s longest crude oil and liquids pipeline system, its ownership of Canada’s largest gas distribution company, its stake in the Alliance (50%) and Vector (60%) pipeline systems and its experience through its Norman Wells liquids pipeline and Inuvik Gas building and operating oil and gas pipelines in northern permafrost.

Enbridge’s decision to throw its hat in the Alaska pipeline ring comes only a week after a group led by Berkshire Hathaway’s MidAmerican Energy Holdings dropped out of the competition because the state failed to meet its terms that would have allowed it to move forward on an accelerated schedule with an exclusive five-year development period (see NGI, March 29). The MidAmerican application called for the construction of a 745-mile, 48-inch diameter pipeline (4.5 Bcf/d) from the North Slope southward to the Yukon border, with an in-service date of 2010.

“It’s a project whose timing is coming because the supply and demand conditions are sending a very strong signal,” Enbridge spokesman Jim Rennie said. He emphasized the Enbridge entry is not intended as a rival to the older offer by TransCanada PipeLines Ltd. “Our action is really nothing to do with competition,” Rennie said. “It’s a huge project. It’s going to take all the parties who can reasonably participate; it may take more than one pipeline company.”

Rennie’s statement echoed TransCanada president Hal Kvisle, who in a recent interview said his firm is not seeking an exclusive franchise in Alaska and is willing to work with any credible partner while preserving its rights established by 1970s treaty and regulatory approvals to lead the Canadian leg of the project.

The Canadians’ estimates peg the cost of the entire project at about US$12 billion, excluding the expense of any capacity that they will have to add to their established systems to accommodate Alaskan gas.

Both Canadian companies say conditions on their own pipelines give them strong interests in seeing the Alaska project be built. As the dominant partner in the five-year-old Alliance Pipeline from northern British Columbia to Chicago, Rennie said Enbridge sees Alaskan gas as creating opportunities to expand the system. TransCanada says Alaskan gas would fill spare capacity opening up on its system as aging Alberta production declines.

Enbridge said it has already been developing relationships with Alaskan producers ExxonMobil, ConocoPhillips and BP, which have likewise repeatedly said they are willing to hear from credible prospective pipeline partners after their own version of the project ran afoul of excessive costs for them to bear alone.

Enbridge has not yet decided how big a share it wants in the project or how large a financial commitment it is willing to make, Rennie said. “It’s pretty early days,” with no one in the industry suggesting the pipeline will be completed before at least 2010.

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