It’s not a perfect world yet, but sponsors of the major projectsto tap reserves in the far north are working to avoid mistakes ofthe past by coming up with a joint plan to pipe supplies fromAlaska and the Northwest Territories to market areas in the south.
Sources say planning appears to be narrowing down toconstruction of the Alaska Natural Gas Transportation System(ANGTS) and the Mackenzie Valley route in a giant Y shape, with ajunction at Boundary Lake near the southern boundary of Canada’sYukon and Northwest Territories with the tops of Alberta andBritish Columbia.
Boundary Lake is in turn readily accessible to the Westcoast,TransCanada-Nova and Alliance systems. Senior Canadian governmentsources, who asked not to be identified, said that the big Y andthe Boundary junction look like the most attractive plan, althoughregulators will be careful not to pre-judge any rivalry thatdevelops in formal construction proposals expected next year.
One major party that appears to be keeping an open mind on thesubject is TransCanada PipeLines. After being shut out of thelatest major additions to the international pipeline grid, Canada’sbiggest natural-gas transporter aims to be in on all the next onesby considering all rivals to be potential partners.
TransCanada President Doug Baldwin, described the emergingmentality of flexibility in talking about prospects for connectingArctic gas. “We are interested in being an active participant inwhatever system gets built to move northern gas,” Baldwin said inan interview.
If that means making a switch to form a team with a competitorrather than putting up a fight for exclusive rights to atransportation-services market, so be it. TransCanada plainly wantsno repetition of the late 1990s, when holding out in hardregulatory fights for its own versions of projects ended in rivalsbuilding the Alliance and Maritimes & Northeast systems.
Baldwin said that in complicated and sensitive regulatory,political, environmental and aboriginal relations conditions of thenorth, “we’d be better off if we could figure out a way to do itcollaboratively.” For the moment, the Arctic pipeline scenecontinues to look like a contest, at least on the surface. On oneside stands a proposed revival of the dormant ANGTS, now a Canadianproject sponsored by the Foothills Pipe Lines partnership ofTransCanada and Westcoast Energy. On the other stands the proposalbecoming known as ARC, the Arctic Resources Corp. plan for a linethrough the Mackenzie Valley.
Behind the scenes, Baldwin said TransCanada has held discussionswith its apparent competitor. “We continue to talk to those peopleall the time.” In Canada, ARC is represented by a prominent formerConservative Member of Parliament, Harvie Andre, who as an engineerworked on early Arctic pipeline proposals and saw all of them windup on the shelf partly as a result of aggressive corporaterivalries. Baldwin described the Foothills partnership and theANGTS plan to transport gas from Prudhoe Bay as a natural startingpoint for northern pipeline development. But TransCanada alsorecognizes the strong interests among producers and northernauthorities in putting “equal emphasis” on gas from Alaska and theMackenzie Delta-Beaufort Sea region.
TransCanada’s map of contending northern proposals currently hasfive entries: the ANGTS route beside the Alaska Highway, ARC alongthe Mackenzie River, an underwater link across the Beaufort betweenthe Delta and Prudhoe Bay, a backwards L shaped route known as”under the park” linking the Mackenzie Valley and ANGTS south ofAlaska’s vast interior wildlife refuge, and the Dempster Lateralincluded in the old ANGTS design to pick up Delta-Beaufortproduction by following its namesake highway between Inuvik and theYukon capital of Whitehorse.
A process of natural selection is suggested by the map, whichwas being used but not released for public consumption at aninternational pipeline conference and trade fair earlier this monthin Calgary. By common consent among all the entries, the DempsterLateral has virtually dropped off the map as too indirect andexpensive. Most engineers describe the subsea connection as adelightful technical challenge – and just too exciting andhazardous to be tried. It features short, unpredictableconstruction seasons combined with the problems of inspecting andmaintaining an industrial installation that would be beneath awildly inhospitable cap of frozen ocean at least nine months of theyear.
The under-the-park proposal is being widely rated as anon-starter for environmental reasons. It not only brushes pastAlaska’s cherished wildlife refuge; it also crosses a Yukon plaincelebrated as the migration and breeding grounds for northernCanada’s immense caribou population, the Porcupine Herd.
That leaves the combined ANGTS and ARC projects, to be combinedin the Y formation. The pipeline debate is also narrowing down to awrangle over which northern supply source should be tapped first,Prudhoe Bay or Canada’s Delta-Beaufort region. In Canada at least,the reason for having such a debate at all is being questioned as aresult of North American market conditions that seem to suggestthere will be plenty of demand to go around.
Baldwin, pointing to high gas prices combined with widespreadprojections of rapid demand escalation across the United States andCanada, said “the market dynamics are in place to see our industryembark on a period of growth that we haven’t seen since steel pipemoved the first molecule of gas from the Western CanadianSedimentary Basin to a handful of consumers in eastern Canada.”
The TransCanada president observed that if the demandpredictions come true, North American gas consumption will reachabout 31 Tcf per year. “We’re more than ready to do what’snecessary to meet an additional 21 Bcf/d in natural gas demand inNorth America – a 30% increase in 12 years. To put that inperspective, it represents three times the size of TransCanada’smainline.” Baldwin said “60% of this expected new gas demand is inmarkets where TransCanada already has a presence….. ourprojection is that gas flowing via Canadian pipe could capture asmuch as 20% of the U.S. market by 2010.”
Gordon Jaremko, Calgary
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