An aside, but relavent (I think) ...
$20-billion pipeline to be biggest private project ever in N. America
Thousands of kilometres of pipe to bring natural gas to power-hungry markets
Alan Toulin
National Post
Kagan McLeod, National Post
FROM THE ARCTIC TO CONSUMERS: The natural gas pipeline has two possible routes: along the Alaska Highway, through the Yukon and into Alberta; or under the Beaufort Sea, through the Yukon and Northwest Territories and into Alberta. A new line would then take it to Chicago. The decision on which route to take is turning into a political battle.
OTTAWA - A planned pipeline to bring huge volumes of Alaska natural gas to market in the United States -- the largest private sector enterprise ever undertaken in North America -- will cost an estimated US$15- to $20-billion and is expected to require the construction of a high-capacity pipeline from Edmonton to Chicago.
For the first time, a consortium of Alaska gas producers is putting a cost on the mammoth project. Previous estimates by observers had put the price tag at US$10- to $12-billion. The new figures include the cost of building the high-volume pipeline from a site near Edmonton through Saskatchewan to the distribution hub of Chicago.
"The project cost -- and we've started to use this for the very first time -- is somewhere between US$15- and US$20-billion for the whole ball of wax," said Curtis Thayer, a spokesman for the Alaska gas producers consortium, which includes ExxonMobil, British Petroleum and Phillips.
The owners of the Alaska gas reserves believe only a massive pipeline, capable of carrying four billion cubic feet of natural gas a day, will make the project economically viable.
The consortium hopes to complete US$100-million in engineering and other studies and choose a route for the Alaska-to-Alberta portion of the pipeline by the end of the year, Mr. Thayer said.
The estimated reserves of natural gas in Alaska are 100 trillion cubic feet. Known reserves total 35 trillion cubic feet. It is estimated the gas could supply the American market for 50 to 60 years. In Canada, there is an estimated 10 trillion cubic feet of natural gas in the Beaufort Sea.
There are two routes under consideration for moving the gas from Prudhoe Bay in Alaska to the U.S. market.
One would travel down an existing land route in Alaska, across the Yukon and into Alberta. This is called the Alaska Highway project. The other route foresees a pipeline buried in a trench across the bottom of the Beaufort Sea, then turning southward and following the Mackenzie River to Alberta. Either route will likely require a new pipeline to be built from Alberta to Chicago to carry the gas to the American market, Mr. Thayer said.
Canadian gas reserves in the Beaufort Sea potentially could flow through this second proposed project, called the northern route, but Mr. Thayer said the project is being engineered and studied on the basis of bringing only Alaskan gas to the American market.
Yukon and the Northwest Territories have been lobbying for the route that will bring jobs and economic opportunity to their jurisdictions. The federal government has said it will let the private sector select the most economic route, but at the G8 meeting in Genoa, Jean Chrétien, the Prime Minister, indicated to George Bush, the U.S. President, that Canada prefers a Mackenzie River route.
"We're studying both routes and modelling on both of them. We don't know at this time which route is going to be preferred or if there is an economically viable project there," Mr. Thayer said.
The Alaska state government is solidly behind the Alaska Highway route. In an attempt to reinforce that message, the government recently passed legislation prohibiting any state agencies from participating in the northern route across the Beaufort Sea.
"We wish they had not done that," Mr. Thayer said. "If the only economic project is over the top [the northern route], the state will have to decide if there is going to be a pipeline or no."
A 1977 Canada-U.S. treaty on developing northern gas and the Alaska Highway route is deemed to be inadequate to address the needs of the new project.
The 1977 Alaska Natural Gas Transportation Act sets out a regulatory framework for building the Alaska Highway pipeline. The initial project involving the private sector did not fully materialize after the energy crisis of the 1970s waned.
Mr. Thayer said the scale of the project and other issues, such as environmental approvals, may render the treaty inadequate.
The routing of the pipeline envisioned in the treaty is 25 years old, he said. "We know that the route has changed to a degree. We know that we are going to have to do new environmental impact studies, there is no way the environmental studies done 25 years ago are current today.
"The technology has changed in that the pipe is larger, the pressure is larger," he said.
The 1977 treaty limits the pipeline's capacity to 2.5 billion cubic feet a day and does not permit the gas-producing companies to have an ownership stake in the pipeline. "It's a 25-year-old treaty and a 25-year-old process and we need to look at updating it and how it's updated has yet to be determined," Mr. Thayer said.
The expected extension of the Alaska pipeline from Edmonton to Chicago is also being considered because of the huge volume of natural gas the producers want to take to market.
"When you bring four billion cubic feet to that hub [Alberta], it's a bit overwhelming. So part of our study is to look to see if there is a need for a new line [to Chicago]," Mr. Thayer said. The existing gas pipeline was built to carry 1.7 billion cubic feet of gas a day and is currently operating at near capacity, he said.
Facts About Proposed Pipeline:
Estimated reserves would supply the American market for 50 to 60 years
Source: Kagan McLeod, National Post
