Foothills Pipeline CEO Robert L. Pierce said last week it won’tbe long before Alaskan natural gas is absolutely necessary to meetU.S. demand. And he remains convinced that the long-proposed AlaskaNatural Gas Transportation System (ANGTS) from Prudhoe Bay alongthe Alaska Highway and eventually to Alberta is the best way tomake it happen.

“There is a growing demand for natural gas in the United States,estimated to reach 30 Tcf/year,” he noted. “I have recently metwith interested parties in Ottawa, Washington, Whitehorse andAnchorage and advised them to this effect and that in my opinionAlaskan gas will be required to meet this 30 Tcf demand.”

Despite the high $6 billion price tag, the market is not thatfar from making such a project economic, Pierce said. Spot priceshave to average $3/MMBtu at the Chicago hub and they are only a fewyears from accomplishing that, he predicted.

“We think it’s a manageable cost. It’s very close to being anacceptable figure and it continues to go down,” he said in aninterview with NGI. “If you can get the right volume to the borderyou have a very economical project.” At one point in itsdecades-long history the projected delivery price was $11/MMBtu.

“Timing [of construction] depends on how much the market willtake at a given time, and we would think that in two or three yearsthere will be a shortfall of gas and it won’t be very longthereafter that for demand to grow large enough to move aneconomical amount of gas through this system.” He predicted anin-service date of winter 2005.

The system, which was granted initial certifications in 1977,already includes an unprecedented level of agreement andlegislation between the Canadian and U.S. governments. It stillwould require typical pipeline regulatory approvals, however.”We’ve got an awful lot of things already in place.”

The southern portions of the project already have been built.They include the Foothills/Northern Border pipeline and PG&EGT-NW. The proposed northern extension to Alaska would include aDempster Lateral pipeline lateral to the Mackenzie Delta. Thepipeline would span about 1,700 miles and carry 2 Bcf/d of gas fromAlaska to the Alberta border. Foothills is the Canadian sponsor anda partner in the Alaskan segment.

“We were told at a recent hearing that there was an indicationthat [in winter 2000] there would be a shortfall [of production]out of Canada on the order of 2 Bcf/d,” said Pierce. “If demandcontinues growing like everyone thinks it will and if supply doesnot grow then you’re going to have to make up that difference insupply from new volumes, which may very well be LNG from Trinidadand elsewhere. But clearly if you need pipeline delivered volumesthere’s only one place where the [infrastructure] is alreadyestablished today, and that’s Alaska.” He said proved reservesthere amount to about 33 Tcf.

“Our re-assessments of the project in light of advances intechnology, our northern research and our operating experience haveresulted in significant reductions in costs from our originalestimate. Because of the ANGTS head start resulting from itsregulatory approvals, advancements in project engineering, fullscale testing in northern conditions and the certificates held forconstruction and operation, I believe the ANGTS not only remainseconomically viable, but will be earliest to lower 48 markets. Noother project is in that position.”

Rocco Canonica

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