Senior pipeline executives agree that Alaskan gas will play a key role in solving a growing natural gas supply crunch in North America. But they differ on when Alaskan North Slope gas will flow to market and the most effective regulatory approach to get it there.
The participants at a Ziff Energy conference Nov. 9 in Calgary were unanimous that Alaskan gas, and gas from the Mackenzie Delta, as well as LNG and other sources, such as coalbed methane, are essential to meeting expected demand in the US.
But estimates of when gas might flow from Alaska ranged from 2012 to 2014 or later. And there are different views on the best regulatory process to use for the extensive Canadian section of the Alaska Highway line, which extends through Canada's Yukon Territory en route to Alberta pipeline connections.
Gas supply opportunities
Hal Kvisle, president and CEO of TransCanada PipeLines Ltd., said northern gas can provide as much as 6 bcfd in the next 10 years.
Kvisle said gas production is essentially flat in the US, increasing the need for supplemental supply from western Canada, where production has been flat since 2002.
The Alaska Highway project can be completed by 2012 if existing Canadian legislation is used along with enabling legislation in Alaska, he said, noting that TransCanada acquired Foothills Pipe Lines Ltd., which holds certificates from a previous project for the Canadian section of the Alaska Highway route. There also is a Canada-US treaty in place for the project.
Kvisle said there is a clear advantage to using existing certificates of approval and Canada's Northern Pipeline Act (NPA), which he said provides a single regulatory avenue. All cost estimates have been updated, the executive said, and the latest advances in technology and environmental requirements would be incorporated. If commercial arrangements can be worked out in 2005, a pipeline could be in place by 2012, he said.
Kvisle said TransCanada is ready to work with all stakeholders to move the project forward. He sees a lengthy collaborative process ahead with the state of Alaska, the federal government, Alaskan producers, and other stakeholders.
He said the project would use existing and expanded pipeline infrastructure in Alberta to move gas to markets.
Best-case scenario
Ken MacDonald, vice-president of Alaska-Canada gas pipelines for BP Canada, said that under a best-case scenario gas could flow in 2014, about 9 years after a decision to proceed. And even that might be optimistic.
Estimates of earlier completion, he said, are not realistic for an enormously complex project, which can't be rushed. MacDonald also said Canada's National Energy Board would be the best regulatory route because relying on NPA would raise concerns about litigation.
Stephen Letwin, group vice-president of gas strategy and development for Enbridge Inc., said the Alaskan project needs to move ahead because of demand expectations and the likelihood of continued price volatility without additional supplies.
The notional supply-demand gap could reach 15 bcfd in the next 10 years, Letwin noted, and the Alaskan line could fill one third of that need.
Letwin said there should be spare capacity in the Alberta pipeline system to handle Alaskan gas. He said the Alliance and Duke Energy Corp. pipeline systems can be expanded, and TransCanada will have spare capacity.
Issues facing the Alaskan line, he said, include the need for a large pool of skilled labor and the need to get all stakeholders in alignment on the project.
The Enbridge executive said the project could be in place 9 years from now if everything falls into place.
Project 'on track'
Michael Yeager, a director and senior vice-president of Imperial Oil Ltd., said the pipeline project to move gas from Canada's Mackenzie Delta is proceeding on track. The line would move as much as 1.2 bcfd with a separate liquids line to an existing crude oil line at Norman Wells, NWT, operated by Enbridge.
Regulatory applications for the project were filed in October. Hearings are expected to begin next spring.
Yeager said, subject to a decision to proceed by the project partners, gas could flow south by the end of the decade. He said an extensive process of project definition is under way as well as consultation with all stakeholders.
A decision on whether to construct the pipeline to Alberta is expected late in 2006 after a ruling by the NEB.
Yeager said the line would be built over two or three winters, when pipelaying is restricted by weather to 50-70 days/year. The project will require about 6,000 workers and large amounts of equipment.
Yeager said Imperial and its partners are pleased overall with progress on the project to date.