Foothills Pipe Lines Ltd. has joined as a sponsor of the AlaskaNorth Slope Gas Project, adding its pipeline expertise to the mixwhich includes producers and a marketer behind the multi-billiondollar project to carry North Slope gas to the Alaskan coast,liquefy it and ship the LNG to Pacific Rim markets.

Foothills is lining up with a 22% interest next to ARCO Alaska(37%), Marubeni Corp. (17%), Phillips Petroleum (12%) and CSX Corp.(12%). CSX is the parent of Yukon Pacific which has been planningthe project and gathering regulatory authorizations for more than15 years. Recently it requested yet another extension for theconstruction start date on its FERC certificate from this yearuntil May 2001, projecting an in-service date between 2005 and2010. Its original target for construction start-up was 1997.

“We’ve got the right group with the right skills,” according toTerry Cameron, Foothills senior vice president. ARCO is one of thethree major producers of North Slope gas, which currently is beingreinjected to boost oil production. The other two are Exxon and BP.Marubeni is a very large Japanese trading company involved inenergy, which presumably could help in marketing the LNG to PacificRim countries,

The project involves construction and operation ofgas-conditioning facilities on the North Slope and an 800-milepipeline to ship over 2 Bcf/d of gas southwest across Alaska to theport of Valdez or Cook Inlet where a liquefaction facility andmarine terminal would be built. The project also would involvecommissioning of about 15 LNG tankers. The last estimate of thecost of the project was $13 billion in 1993 dollars.

The main aim of the initial four-year, $100 million phase of theproject “is to define what we can do to reduce costs” and minimize”the economic uncertainty of the overall project,” Cameron said.”We believe the underlying market will be there and we areorganizing ourselves to meet it.” The project will be built whenproducers can realize more by selling the gas than they can byreinjecting itand selling the oil, or when the declining NorthSlope oil runs out. Transportation costs are critical in thisequation.

Meanwhile Cameron said Foothills is not giving up its role ofthe main remaining proponent of completion of the Alaska NaturalGas Transportation System (ANGTS). The export routes for the twoprojects would run parallel from Prudhoe Bay to Fairbanks. “There’senough gas there to support both projects,” Cameron said.Foothills/Northern Border is one leg of the Pre-Build or southernportion of that system designed to carry gas from Alaska to thelower 48. The remainder of that system was put on hold in 1983 whenit was calculated the gas would have to sell for $11/Mcf in thestates to pay the freight.

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