Canadians forge ahead with Mackenzie pipeline project

WHITEHORSE, Yukon Territory -- Canadian natural gas producers say a decision to go forward with the Mackenzie Valley pipeline project does not close the door on a future partnership with Alaska producers of natural gas.

The decision to advance the $3 billion Mackenzie project is based on an economic feasibility study of the 6 trillion cubic feet of natural gas reserves in the Mackenzie Delta.

"Not at any time did we contemplate Alaska gas," said Hart Searle, a spokesman for Imperial Oil.

The partnership of Mackenzie Delta gas producers and the Mackenzie Valley Aboriginal Pipeline Corp. announced Jan. 8 it would spend millions during the next year to prepare the project for regulatory application.

"Certainly, I think it is safe to say that an application will go in in 2003," Searle said. "The application work will take us through this year and some time into 2003, and we would be in a position to file in 2003."

The Alaska producers of North Slope gas are currently crunching the results of a $100 million research effort carried out during the last year. The producers are looking at the feasibility of two routes to pipe their product to the lower 48 states.

One option is to build a natural gas pipeline from Prudhoe Bay to Fairbanks, and then follow the Alaska Highway corridor south to central Alberta. The second option, the over-the-top route, is to lay an offshore pipeline across the Beaufort Sea from Prudhoe Bay to the Mackenzie Delta, then go south down the Mackenzie Valley to northern Alberta.

Searle said if the Alaska producers indicated an interest in working together with the Mackenzie Valley project, the Mackenzie Delta producers would be open to the idea.

However, Searle said there’s nothing to suggest that the Mackenzie project couldn’t go forward on its own.

Greg Komaromi, the Yukon’s director of oil and gas, said the announcement by the Mackenzie Valley consortium killed any chance of the Alaska producers going over-the-top with their pipeline.

Komaromi said that while the Mackenzie group is talking about a pipeline to move 800,000 to 1 billion cubic feet of gas per day, the Alaska producers are talking about a pipeline with a capacity more than four times that amount.

"I think it is good news for the Alaska Highway route, in the sense that we have always envisioned these two projects going hand-in-hand," said Bob King, Alaska Gov. Tony Knowles’ spokesman. "There is certainly enough demand in the U.S. and Canada for both projects."

Curtis Thayer, spokesman for the Alaska producers, said ExxonMobil Production Co., BP Exploration (Alaska) Inc., and Phillips Alaska Inc. are still expected to make an announcement on their findings before the end of March.

He said from the beginning the Alaska producers were focused on the north-south pipeline project based solely on the 35 trillion cubic feet of known gas reserves on Alaska’s North Slope.

01/21/2002 - 8:00pm