Engineering News

Canada won't derail Alaska gas pipeline - officials
Tue Mar 28, 2006 11:00 PM ET

ANCHORAGE, Alaska, March 28 (Reuters) - Canada will not stand in the way of a $20 billion natural gas pipeline along the Alaska Highway, because its construction is vital to the economies of Alberta, the Yukon Territory and British Columbia, leaders from those Canadian regions said on Tuesday.

The proposal calls for a pipeline to carry the 35 trillion cubic feet of known natural gas in Alaska's North Slope through western Canada to the lower 48 U.S. states.

"No way will Yukon, Alberta and B.C. stand in the way of the project, and I want to assure you our new federal government has the same view," Yukon Premier Dennis Fentie said at a luncheon on Alaska-Canada relations.

"We want to do our part. We want to contribute to make sure that the Alaska Highway pipeline is soon to be a reality."

While the proposal has been discussed for three decades, the project is finally nearing economic feasibility with the current high levels of natural gas prices, Alaska state officials said.

Alaska Gov. Frank Murkowski announced last month that he had reached a tentative agreement for a natural gas pipeline with the three major North Slope oil producers, ConocoPhillips, BP Plc and Exxon Mobil.

For Alberta, a pipeline carrying Alaska's vast reserves of natural gas is extremely important to the province's petrochemicals industry and to its ambitions for producing new energy from the region's oil sands, said Premier Ralph Klein.

"The gas from the North Slope of Alaska contains some very rich liquids and we would like to be able to strip some of those liquids for the petrochemical industry," Klein told reporters at a news conference following the luncheon.

Without Alaska's natural gas, the Alberta petrochemicals industry would have to rely on much smaller reserves within the province or eventually deliver natural gas from a yet-unbuilt Mackenzie River Valley pipeline, Klein said.

Murkowski said one risk to the pipeline is if Alaska lawmakers try to change the state's oil-production taxes too drastically. The tentative agreement Murkowski has in place with the oil companies depends on the oil tax he proposed.

If the final legislation sets the tax rate too high or differs too greatly, it could jeopardize the agreement.

"If the producers don't feel that there is a fair resolve on the production tax ... the deal on the gas line will be off," said Murkowski at the news conference.

Source: Reuters

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