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2009
LINKS: FERC Reports
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2,
3,
4,
5,
6,
7....;
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2008 LINKS:
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2007 ACES tax bill links;
Department of Revenue 2007 ACES
tax documents;
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2007 ACES tax news;
Alaska Gas Pipeline Training and
Jobs;
Gas Pipeline and Economic
Development; Andrew Halcro;
Bjørn Lomborg;
FERC's Natural Gas Website Links
WASHINGTON:
Alaska Natural Gas Pipeline Act;
History of H.R. 4;
DOE Energy Bill Position, 6-02;
Daschle-Bingaman Energy Bill
(Alaska, Sec. 1236 & tax credit, Sec. 2503 &
H.R. 4 Conferees),
Tax Credit;
See amendments, "Energy
Policy Act of 2002";
"Alaska Natural Gas Pipeline Act
of 2001 (Draft)" &
Background Paper,
8-9-01;Alaska
Legislature Joint Committee position;
Governor's position;
Governor's 10-Point Plan;
Anadarko Analysis;
U.S. Senate Energy Committee
Testimony, 10-2-01 -
text version; U.S.
Senate Energy Committee Testimony, 9-14-00;
Report on the Alaska Natural Gas
Transportation Act of 1971, prepared by staff of the Federal Energy Regulatory
Commission, 1-18-01
ALASKA:
1-23-03,
Governor
Frank Murkowski's State of the State Speech;
2002 DRAFT Recommendations to 2003
Legislature;
'02 Alaska Legislation;
Alaska Highway Natural Gas
Pipeline Policy Council;
Joint
Legislative Gas Pipeline Committee; 9-01 Alaska Models:
Canadian Routes,
LNG,
GTL;
HR 4 Story;
Cook Inlet Supply-Demand Report:
AEDC;
Commonwealth North Investigation
&
Our Article;
Report: Backbone;
Legislature Contacts;
State Gas Pipeline Financing Study;
5-02 Alaska Producer Update;
Kenai: "Oil & Gas Industry Issues
and Activities Report, 11-02";
Alaska Oil & Gas Tax Structure;
2-27-02 Royalty Sale Background;
Alaska Gas Pipeline Office
opens, 7-01, and
closes, 5-02;
Betty Galbraith's
1997-1998 Chronology.
Our copy.
CANADA:
1-10-03, "Arctic Gas Pipeline
Construction Impacts On Northern Transp."-Transport Canada-PROLOG Canada
Inc.-The Van Horne Institute;Hill
Times Reports, 8-30-02;
9-30-02, Cons. Info. Requirements;
CBC Archives, Berger Commission;
GNWT Economic Impact Study,
5-13-02;
GNWT-Purvin & Gertz Study, 5-8-02;
Alberta-Alaska MOU 6-02;
Draft Pan- Northern Protocol for
Oil and Gas Development;
Yukon Government Economic Effects:
4-02 &
PPT;
Gas Pipeline Cooperation Plan
Draft &
Mackenzie Valley Environmental
Impact Review Board;
Mackenzie Valley Pipeline MOU
Draft, 6-01;
FirstEnergy Analysis: 10-19-01;
Integrated Delta Studies;
National Post on Mackenzie
Pipeline, 1-02;Northern
Pipeline Act;
Haida
Nation v. British Columbia;
Indian Claims Commission;
Skeena Cellulose decision --
aboriginal consultations required, 12-02;
Misc. Pipeline Studies '02
COMPANIES:
Alaska Gas Producers Pipeline Team
Newsletter, 7-27-01;
APG Newsletter: 5-02,
7-02
&
9-02;
ArctiGas NEB PIP Filing Background;
NRGPC Newsletter: Fall-02;
4-02 ArctiGas Reduces Field Work;
BP's Natural Gas Page;
Enbridge Perspective;
Foothills Perspective;
Williams Perspective;
YPC Perspective, 7-02
MEDIA
REFERENCE: Alaska Journal of
Commerce; Alaska Inc. Magazine; Anchorage Daily News; Canadian Broadcasting
Corporation; Fairbanks Daily News Miner, Juneau Empire; Northern News Services;
Oil & Gas Reporter; Petroleum News Alaska; Whitehorse Star, etc.
EXTENDED CONFERENCE NEWS:
Alaska
Support Industry Alliance,
Anchorage
Chamber of Commerce,
Canadian Institute,
Insight Information,
Inuvik Petroleum Shows,
International Association of Energy Economists,
Resource
Development Council for Alaska,
Ziff Energy Group
LEST WE FORGET!
| |
Northern Gas Pipelines: Please Scroll Down for
May News
5-31 Updates: 01:30, 02:20, 10:44, 11:05, 12:45,
13:00, 13:30, 13:47, 18:47 ET. (Not
without challenges, nevertheless Mackenzie Gas Project momentum continues.
-dh)
Northern News Services by Mike W. Bryant, Fort Simpson - Now that the
feasibility stage is over, it's time to think about stage two, project
definition, said
Mackenzie
Gas project development executive Randy Ottenbreit (NGP Photo, 4-29-02).
The Imperial Oil executive flew into Fort Simpson Monday for an up close
consultation meeting with the public…. Drowned out at times by a deafening
racket of balls bouncing against the walls from the adjacent gymnasium at the
Fort Simpson Recreation Centre, Ottenbreit did his best to explain the next
phase in development and dispel community fears. … "If people support the
pipeline, and want the pipeline, is there any reason to wait three or four
years?" asked village councillor Duncan Canvin. "We don't want to take a
shortcut in case we have regulatory approval that winds up in court," Ottenbreit
said. He explained that the present development phase will take at least that
much time to clear the various regulatory review boards in the NWT, who
themselves must consult with the public before approval of the pipeline can be
given. The opening of pipeline consultation offices in Fort Simpson, Inuvik and
Norman Wells this summer will be there for that very purpose, said Ottenbreit.
"What we're trying to do is provide information to the communities, to hear
their comments and consider them in our plans," said Ottenbreit. Ernest
Tonka, a long-time heavy machinery operator, wanted to know if gas companies
are merely attempting to placate the region without offering any firm job
security. … Ottenbreit refused to
make any promises on behalf of the pipeline producers, saying, "I don't think it
would be realistic that a Mackenzie Valley pipeline will solve all of the
North's problems, but it's a step." Aboriginal Pipeline Group executive
Doug Cardinal (NGP Photo, 4-26-02 ) stepped into the fray by saying this
time the unions will be on board. "The unions are ... with First Nations," said
Cardinal. ... Public consultations are carrying on this week throughout the Deh
Cho. *
NGP Comment: Gas pipeline news is below the horizon this week and,
on the U.S. side at least, players are quietly pursuing a moving target.
Senate Energy Committee
Chairman Jeff Bingaman (Photo) has urged the House to appoint conference
committee members. Even if the House made appointments now, a contentious
conference consuming months of negotiation could follow. Not to mention
the myriad of other issues, resistance is building to several gas pipeline
elements of the Senate version of H.R. 4 and, of course, the House wants to
retain its ANWR provision. Our evaluation is that--absent powerful
statesmanship--passage of a non-neutered energy bill this year has little better
than 50% odds. We have heard from reliable sources that the Senate's price
floor incentive is attracting more negative attention, with passage of time.
Some senators didn't grasp the full impact of the provision when they voted on
the bill, which readers recall was not 'heard' by the Senate Energy Committee.
There are suggestions in Washington that the floor and ceiling numbers are
'negotiable', yet some say the general concept will not survive growing
pressures from producing states. Some Lower 48 and Canadian producers
believe it not to be in their interest for taxpayers to support bringing over 4
BCFD of ANS gas south. They believe such an infusion cannot help but
soften prices for them. At least one Congressional office we spoke with,
hopes there is a 'private sector' substitute for the price floor guarantee that
would still reduce risk for the Alaska Highway project. This could take
the form of 20 year fixed price contracts, yet gas buyers for such huge volumes
at a fixed price may be sparse. Long term contracts are, in-effect, bets
("calls") on higher gas prices, and the general subject of 'hedging' is not very
popular in wake of Enron. However, creatively written contract models
could emerge which might satisfy both producers and buyers without alienating
industry leaders and the producer state politicians who represent them.
Alaska's government, during the legislative session just ended, did nothing to
support a gas project. The good news is that they didn't pass a gas
reserves tax measure. The Alaska Gas Producers Pipeline Team dismantled
itself in Q1 after a year's work and $125 million. They have
announced that no Alaska gas project is yet feasible and that two of their four
fundamental requirements are Federal enabling legislation and Alaska fiscal
certainty. With no progress in Alaska, movement toward fiscal certainty is
delayed at least a year. Then, earlier this week, Foothills
Pipe Lines, Ltd. caught even those close to it by surprise, 'temporarily'
suspending its right-of-way work in Alaska. This caused the Gas Pipeline
Office (funded by Foothills reimbursements) to begin 'ramping down'.
If Congress passes enabling legislation contained in the energy bill an ANS gas
project still has life, albeit with dubious feasibility. If it includes
incentives to minimize risk, the momentum may even continue until Alaska acts
more positively. If Congress doesn't pass an energy bill or passes a bill
without needed gasline provisions, momentum stops. The best scenario: 1.
Alaska convenes a special session this summer to confront both its own fiscal
crisis and the fiscal clarity producers need, and 2. The Congressional
energy bill conference approves gas pipeline enabling legislation along with
'acceptable' incentives which materially reduce project risks. The optimist in us
struggles with the realities that no Alaska leader has advocated a special
session, that Congress is so divided on so many energy bill issues and that
producers are not united on incentive issues. -dh
*
Financial Times by Peter Larson-The US energy trading sector has been
in trouble for the past six months. But in the past week, it has plunged into a
full-blown crisis. * Williams
Energy News Live-Friday marks the next deadline for
energy companies to file responses to the Federal Energy Regulatory Commission
regarding their energy trading business. Companies must admit or deny under oath
whether they engaged in round-trip trading.
*
CANADA - Prime Minister Jean Chrétien today announced the creation of
a Prime Minister's Task Force on Canada-United States Relations. The Task Force
will examine the relationship and consider ways to strengthen and improve
dialogue between elected officials in our two countries. (Note: this group
is bound to focus on energy and tariff issues, as we have
repeatedly
discussed herein. -dh) *
CBC,
Whitehorse, Yukon -
Yukon MP
Larry Bagnell (NGP Photo-Left with author, 2-9-02) may be a lonely voice in
Ottawa but he says he's doing all he can to drum up support for the Alaska
Highway natural gas pipeline. However, he says he could use some help. The
debate over northern gas pipelines was reignited when federal natural resources
minister Herb Dhaliwal came down in favour of the Mackenzie Valley route
recently. …
"He's
concerned, you'll probably notice in some of his releases, with the
American subsidy," Bagnell says, adding the minister is concerned an Alaska
Highway pipeline would mean Canadian gas is stranded. That comment had Yukon
ministers saying Dhaliwal does not fully understand the issue since there is
plenty of gas in the Yukon, but Bagnell says he seems up to date. "We had a
little debate about how much Yukon gas would be stranded. He was aware of it,"
Bagnell says, adding that he drove home the point that the Alaska Highway route
would be beneficial, not only to Yukon, but to all Canadians. He says it would
be helpful if Yukon organizations such as the chamber of commerce and other
business associations could mount an effective lobby in favour of the Alaska
pipeline.
5-30 Updates: 00:10, 01:25, 11:45, 13:26 ET. Juneau-Yesterday
Alaska Governor Tony Knowles signed five bills into law, including SB 308
- Coastal Zone Management Program - Amends the Alaska Coastal Management Program
to allow the state to make consistency determinations in separate phases for a
North Slope natural gas pipeline project that parallels the Trans Alaska
Pipeline System and the Alaska Highway or a route that runs to Alaska tidewater.
This change is necessary because of the unprecedented scale of such a project,
and the inappropriateness of reviewing every aspect of it all at once.
* TRANS ALASKA OIL PIPELINE-Public hearings for
submittal of comments on the TAPS Renewal Draft EIS, the State of Alaska DNR
Commissioner's Analysis and Proposed Determination, and ANILCA 810 Subsistence
will be held in seven Alaskan communities from July 26 - August 9, 2002.
Members of the public are encouraged to participate in the TAPS Renewal EIS
process. The next public comment period will begin in early July 2002, after the
Draft Environmental Impact Statement and the DNR Commissioner's Analysis and
Proposed Determination are presented for public review and comment. Exact dates
for the 45-day public comment period will be posted on the TAPS Renewal EIS web
site (http://tapseis.anl.gov) and the JPO TAPS Renewal web site
(http://www.tapsrenewal.jpo.doi.gov) when they are available.
*
Northern News Services , Yellowknife - The territorial government wants to
build more bridges up the Mackenzie Valley, a move the transportation minister
says will pave the way to an all-weather road to Fort Good Hope and, eventually,
Tsiigehtchic. "We'll have 24 new bridges along the Mackenzie Valley, which
bridges every stream up to Fort Good Hope," Joe Handley said. "That becomes
the beginning of an all-weather road up the Mackenzie Valley." The bridges are
part of a four-year $243-million proposal the GNWT has developed in an attempt
to tap into a $2-billion federal infrastructure fund. The proposal calls for
$67 million in funding from territorial coffers, $43 million to be collected
from tolls on a bridge proposed for the Mackenzie River at Fort Providence and
$133 million from the federal fund…. *
Houston Chronicle, by Nelson Antosh - InterOil Corp. of The Woodlands
is on the final stretch of moving a refinery from a village in Alaska to Port
Moresby, Papua New Guinea, on the other side of the world. … Although the
refinery is tiny by Houston standards -- with local operations more than 10
times its 32,500 barrels-per-day capacity -- that is sufficient to supply the
country's entire needs, leaving about 35 percent for export. … The refinery, too
small for its former home in Alaska, is the right size for this rapidly growing
country of some 5 million residents off the northern coast of Australia. … The
refinery started its odyssey in 1994 when … chanced upon it in Nikiski, an oil
industry support town a few miles from Kenai, Alaska. Chevron decided to sell
the plant because of a large competitor next door. A sales deal had just fallen
through, and … quickly saw that the equipment was "rock solid" despite having
been in Alaska since 1962. … Up to that point it was the largest modular
refinery ever built, said Pierre Mulacek, brother of the chief executive.
It was designed in California and built in the Pacific Northwest for Standard
Oil of California, in a modular fashion for final construction Alaska, where the
windows for work is brief. "A refinery is like a big still. All of the pots and
pans were in good shape," he observed. Pierre took charge of the disassembly on
May 1, 1995, and had it finished by the end of July. … It sat in Nikiski, then
at the Gulf Copper docks for a couple of years before the refurbishing work
began last December. … As it turns out, the type of crude used in Alaska and the
type to be used in Papua New Guinea are very similar, both light and sweet. This
makes it a "hand in glove" situation, Mulacek said.
5-29 Updates: 03:45, 04:15, 04:55, 05:04, 11:30,
14:38, 20:50 ET.
-
Alaska’s Gas Pipeline Office coordinator,
William G. Britt, Jr. (NGP Photo, 4-27-01 ), told Northern
Gas Pipelines late yesterday of his resignation, effective June 14.
“Several months ago I advised the Commissioner’s office that I would be leaving
state government,” he said, agreeing to remain through the end of the
legislative session. He indicated he would be spending more time with his
family while developing a consulting practice. (Note: we would like to say that
Bill Britt's name has emerged in conversations more and more frequently during
the past year, in Canada and throughout U.S. Always Bill's work has been
held in respect. As he leaves, we would further observe that his
accomplishments have reflected credit upon the state administration and his own
abilities. See story on
office opening. -dh)
-
The company promoting the Alaska Highway gas
pipeline project for over 20 years has asked Alaska’s Gas Pipeline Office to
'put on hold for a time' its application for a right-of-way lease
across state lands for the Alaska Natural Gas Transportation System ("ANGTS")'.
The request came via a letter from John R. Ellwood (NGP Photo, 2-8-02 ),
Executive Vice President of Foothills Pipe Lines Alaska, Inc. addressed to
William G. Britt, Jr. on May 24. According to the letter, the company
based its action on "...the existence of several uncertainties and recent
related developments...." It said, "The Federal energy legislation sought
by the ANS producers is pending the outcome of a House-Senate conference
committee. Given this and other uncertainties, our customers, the
producers, are not likely to be in a position to make significant commercial
decisions until the first half of 2003." Ellwood went on to describe lack
of progress from Juneau as well. "In addition," he said, "legislation
introduced in the Alaska legislature, which would have provided a resolution to
important legal issues identified in the context of our efforts to finalize a
right-of-way lease and which included provisions to expedite State actions
related to an Alaska North Slope ("ANS") natural gas pipeline and to clarify the
scope of judicial review, was not enacted. Thus," he said, "we are
re-evaluating the appropriate time and method to proceed with the processing of
ANNGTC's right-of-way lease application."
Rocco
Ciancio is Communications Manager of the Alaska Highway Pipeline Project, in
Foothills’ Calgary office. Late yesterday he told Northern Gas Pipelines,
“we are allowing time for other aspects of the project to progress further and
catch up to our Right-Of-Way application process. For instance, the
federal energy bill sought by the ANS producers is currently awaiting the
outcome of the House-Senate conference. The final content of this legislation
could have a significant impact on the project.” (Note: we observed recently,
here and
here, how lack of
state action, particularly in the area of "fiscal certainty", could delay
progress of an Alaska gas pipeline. The conference committee in Congress
may not act until Fall, though
Senator Bingaman has
called for faster action. The Senate version of the energy bill could
permit an Alaska pipeline
to be built outside of the "ANGTA regime" whose standard Foothills carries.
Also, commercial feasibility of the Highway project may in large measure depend
on Congressional enactment of a gas price floor,
not a certainty. -dh)
Readers may download a copy of Ellwood's letter to Britt
(This is an easier file to download now. 20:50 ET).
-
Alaska's Gas Pipeline Office (GPO) will close.
The state's gas pipeline operations primarily exist at the present time to
process Foothills' application for a state right-of-way lease for the Alaska
Natural Gas Transportation System Foothills represents. In its letter,
Foothills gave the state a 90 day notice to terminate the memorandum of
understanding and reimbursement agreement between the state and Foothills
interests.
"Based on that letter
invoking the 90 day clause in the MOU," GPO Coordinator, Bill Britt, told
Northern Gas Pipelines, "I am in the process of developing a plan to ramp
down the office's operations." Britt said that about a dozen state
employees in the office will be affected, while BLM and MMS employees on loan to
the office will return to their Federal agencies. The office
receives most of its funds from reimbursements paid by Foothills for work
performed. This Spring the Gas Pipeline Office moved into new, leased
offices in Anchorage's downtown area, the KeyBank building. The lease
terminates at the end of June. Britt said the agency will attempt to
maintain the KeyBank office facility until operations conclude later this
summer. Primary focus of the office for the
remaining months, will be properly organizing and storing the large volume of
files the office has accumulated. -dh
5-28 Updates: 01:45, 02:19, 03:00, 11:15, 12:10,
13:00, 14:55, 19:00, 19:25 ET. Anchorage-In
a first of its kind, the Province of Alberta and the State of
Alaska
will formally adopt a memorandum of understanding of compatibility of goals and
objectives regarding development of gas pipeline projects. The
Petroleum Services Association of
Canada (PSAC) and The Alaska Support Industry
Alliance (The Alliance) will also adopt a memorandum of understanding to
further similar goals and objectives in the development of gas pipeline
projects. MOU presentation and remarks by: Honorable Ralph Klein, Premier of
Alberta (Photo-left) and Honorable Tony Knowles, Governor of Alaska
(NGP Photo, 2-7-02). This open meeting will be held June 4, Anchorage Hilton
Hotel, 11:45 a.m. * Yellowknife - Please
see first Aboriginal Pipeline Group (APG) Newsletter received this weekend...below.
*
CBC, Whitehorse,
Yukon -
Negotiations
to wrap up land claims in the Yukon resume Monday with the government and Kaska
negotiators sitting down for talks in Watson Lake for six days. Northern
Affairs Minister Robert Nault is hoping the Kaska sign on to the Yukon
umbrella agreement. "We're very hopeful we can get an agreement with Kaska
communities here in the Yukon and move forward with all First Nations
self-governing in the Yukon, which is a tremendous accomplishment in its own
right," he says. Under the federal mandate, negotiators have six days to wrap
up a deal. The two sides will concentrate on the Ross River and Liard First
Nations. "We are at the very end of the process as described by the minister,"
says Kaska negotiator Dave Porter.
If a deal can be reached on its claim in the Yukon the Kaska will then move
onto B.C. claim negotiations. Porter says Nault has an ongoing mandate to settle
those claims that straddle the Yukon-B.C. border as soon as possible. He says
if there is no deal, court actions may take place, which would tie up everything
in southeast Yukon. Also,
Whitehorse Star article. * Yellowknife - For Americans
traveling during the holiday week, see
GNWT Alaska gas pipeline study
released last week and Purvin & Gertz study of May 8.
5-27 Updates:
02:54, 03:31 ET. We bring you excerpts below, from a newsletter arriving
this weekend. It is being distributed by the Aboriginal Pipeline Group
(APG) this month. In the "Myth and Reality" section below, APG gives
detailed responses to statements made by those promoting 100% Aboriginal
ownership of a northern route pipeline for Prudhoe Bay and Mackenzie Delta gas.
APG is taking
part in the first round of public consultation meetings being organized by the
Project Operator for the Mackenzie Valley Pipeline. In March the APG
participated in meetings in the Sahtu communities of Tulita, Colville Lake,
Deline, Norman Wells and Fort Good Hope. In the last week of May the APG will be
part of the round of Deh Cho meetings in Fort Simpson, Jean Marie River, Wrigley
and Trout Lake. … APG participates in these meetings and answers questions about
the APG and its work to maximize Aboriginal ownership and benefits of a
Mackenzie Valley Pipeline.
APG Recruits
First President-Ads
ran in News/North in early May asking interested persons to apply to the Search
Committee that is looking for a full-time president for the APG. The president
will report to the Board of Directors that includes Chair Nellie Cournoyea
(Photo), Vice Chair Doug Cardinal (NGP Photo, 4-26-02) and Directors
Fred
Carmichael, Frank T’seleie and Gordon Yakeleya. * APG will be
participating in the Inuvik Petroleum Show June 20 ands 21. A member of the
APG’s Executive Committee will give one of the opening speeches on the first day
of conference. APG’s new brochure will be distributed at the conference…. * APG
Vice Chair Doug Cardinal had the opportunity to tell the APG story at a major
conference April 26, 2002 in Edmonton. Doug spoke to the “Aboriginal Oil and Gas
Ventures Conference” which was attended by senior people from Aboriginal
organizations, business and government.
Regulatory
Process-The project developers expect to submit applications for regulatory
approval in 2003. * Public Consultation-The project developers are committed
to a two-way public consultation process, which is open, timely, respectful and
responsive. Input will be sought from interested individuals, communities and
associations during all phases of the project, including project definition,
construction, operations and abandonment and reclamation. *
Feasibility
Study-2000 to 2001. * Project Definition-3 to 4 Years. * Construction, 3 to
4 Years.
Myth and
Reality: ARC’s Claims and the Facts.
Over the last few
months, officials of
ARC
(composed of Arctic Resources Company of Texas, Arctigas Resources Corporation
and Northern Route Gas Pipeline Corporation) have vigorously attacked the
Mackenzie Valley stand-alone natural gas pipeline project which is endorsed by a
majority of Aboriginal communities in the Northwest Territories. Until
recently, APG simply chose to let the information it had presented, along with
the Memorandum of Understanding with the Producers Group, speak for itself.
However recent published reports of meetings in the Mackenzie Delta make it
essential to respond to ARC’s claims and misinformation. We have documented a
number of ARC claims below and given you the facts to let you see the
distortions and inconsistencies. We would welcome your feedback. (Note:
Northern Gas Pipelines is happy to put readers in touch with the various
parties mentioned in this report, on request. -dh)
ARC CLAIM:
A cornerstone
of this project (ArctiGas) is 100% ownership for the Canadian segment of the
pipeline by Northern Gas Route Pipeline Corporation (NRGPC), a wholly-owned
Aboriginal Canadian corporation. Arctigas Public Information Document,
December 20, 2001.
FACTS:
ARC’s
proposal of 100% Aboriginal ownership does not provide Aboriginal control.
Even ARC’s own words say “... Control and management of the project is dictated
by the terms of the Program Management Agreement between Arctigas and NRGPC.
Participation in Arctigas will be offered to all stakeholders and no single or
select group of stakeholders, including the founders, will have a majority
interest.” - that’s not Aboriginal control - control will rest with ARC. Access
fees and benefit agreements will still need to be negotiated separately, as is
the case with the Mackenzie Valley stand-alone pipeline project proposed by the
Delta Producers Group and the Aboriginal Pipeline Group.
ARC CLAIM:
“Would be
cheaper to transport gas.” Northern News Services, May 17, 2002.
FACTS:
This
would only be true if the project combined Alaskan and Mackenzie Delta gas in a
single project. ARC continues to ignore the fact that there is no current
support in Alaska for such a project. The Alaskan Government, the Aboriginal
people of the Alaskan North Slope and the Alaskan producers have all said no to
the ARC proposal. APG, on the other hand, is committed to a stand-alone
Mackenzie Valley Pipeline that has the support of the producers, the NWT
Government and most Aboriginal groups in the NWT.
ARC CLAIM:
“(The APG
plan) provides for an average annual rate of return less than one percent (1%)
on the $1 Billion.” Rick Hardy, February 13, 2002.
FACTS:
The rate of
return on APG’s equity portion would be 12%. APG would have to borrow
approximately $300 million for its equity investment. The remaining $700 million
(of APG’s $1 billion) would be a standard borrowing with recourse by the
borrowers against the shippers’ contracts - not the Aboriginal groups in APG.
The 12% that is earned on APG’s equity portion would be divided between the
suppliers of the equity funds (likely major banks) and APG. The APG portion
would be paid to regional Aboriginal owners through a limited partnership.
ARC CLAIM:
“The ArctiGas
proposal provides for annual revenues ... of $75 to $100 million per year after
full ramp-up.” ARC Information Item, February 2002.
FACTS:
The ARC
proposal assumes that the National Energy Board will allow what is effectively a
royalty on throughput to be rolled into the pipeline tolls. This has never been
done before in Canada and this undermines the credibility of the ARC proposal.
Pipeline tolls are normally based on the cost of the line and its operating
costs, not on the value of the commodity.
ARC CLAIM:
“Phase 1 for
Northwest Territories gas is proposed to come on-stream in the 3rd quarter 2007,
while Phase 2 for Alaska gas delivery is proposed to come on-stream in the 3rd
quarter 2008. ARC Preliminary Information Package, December 2001.
FACTS:
ARC
has cut back on its fieldwork and is not known to be currently doing any field
engineering, field environmental or field socioeconomic studies to support an
application to regulatory authorities. On March 26, 2002,
in an open letter, ARC
Managing Director Bruce Hall wrote, “Although meeting with some success,
ArctiGas finds the immediate political situation too uncertain at this time to
allow it to proceed with the major capital expenditures required for these
Pipeline Construction Evaluation Programs.”
ARC CLAIM:
“The concept
of 100% financing could still be used to lower the cost of the pipeline tariff
in Canada.” Rick Hardy, Fort Simpson, Feb 13, 2002.
FACTS:
Support for
the ARC financing strategy is eroding. On December 20, 2001 international
financial advisors RBC Dain Rauscher wrote, “We believe that based on our
understanding of the Project and current market conditions, a 100% debt
financing for this project is feasible.” This letter was included by ARC in its
Preliminary Information Package sent to regulatory authorities. That
endorsement has now been withdrawn by RBC Dain Rauscher and they have asked that
ARC remove that letter from its filing with the National Energy Board.
ARC CLAIM:
“Through
construction sequencing, the proposed project will accommodate Canadian gas
first, with Alaskan gas following approximately one year later.” ARC
Preliminary.
Information
Package Filing, December 2001.
FACTS:
ARC has no
plans for a Mackenzie Delta stand-alone project. The implication of the quoted
statement is that the Canadian line could be built and that the Alaskan line
would simply follow. The facts are that the Canadian line could not be built by
ARC unless a very large Alaskan line was guaranteed.
ARC CLAIM:
“They (the
Mackenzie Delta producers) think you’re a bunch of fools. They lied to you 25
years ago and they continue to do so.” Attributed to ARC Managing Director
Bruce Hall
by Northern News
Services, May 17, 2002.
FACTS:
What can we
say? Such accusations are a tactic of the desperate. The Mackenzie Delta
Producers Group and APG negotiated long and hard to reach an agreement and sign
a Memorandum of Understanding (MOU) that commits both parties to the planning
and
ultimately the ownership of a Mackenzie Valley Pipeline.
Download
APG's complete newsletter,
courtesy of Brian McCutcheon (Photo),
Outcrop
Communications, Ltd.
5-25/26 Memorial Day Weekend Updates: Sat. 14:00,
Sun. 23:50 ET.
Enjoy the weekend and celebrate freedom. Reports will be posted as they
occur. Please review yesterday's significant information, below.
*
The "International Alaska
Highway Pipeline Committee Industry Forum", Cosponsored by Alaska, Alberta,
British Columbia and Yukon, gathers in Calgary, June 12, 2002, 9:00 a.m. – 4:30
p.m., Stampede Grounds, Boyce Theatre.
Here is your program, featuring a star cast of Alaska Highway gas pipeline
proponents beginning with: Senator John Torgerson, Minister Scott Kent,
Minister Murray Smith, and Minister Richard Neufeld. Note
other related, Calgary conferences, right margin. *
(Comment: Delta gas for oil sands projects. Since
last October, we have provided this
FirstEnergy link in the left margin under 'Canada'. Mackenzie Delta
producers--Conoco, Imperial and Shell--also have significant oil sands (bitumen)
holdings projected to demand more natural gas than throughput of the
Mackenzie Valley gas pipeline is projected to offer by 2010. Accordingly, the
optimistic oil sands development report below has positive implications for the
Mackenzie Valley pipeline project. -dh) Realtime
News, by Jeffery Jones, CALGARY (Reuters) - Canada, bolstered by a huge
number of planned oil sands projects, is set to boost dramatically crude exports
to the ever thirsty U.S. market, providing stiff competition to OPEC, analysts
said on Friday. The country has long been one of the top U.S. suppliers, now
accounting for about 7 percent of the 20 million barrels a day U.S. market, but
tens of billions of dollars being funneled into projects that tap Alberta's vast
oil sands reserves has that number on track to jump considerably. Paul
Cheng, an analyst with Lehman Brothers in New York, estimated that
Canada will boost output by an annual average of 150,000 barrels a day over the
next decade, starting late this year with the commissioning of Shell Canada
Ltd.'s Athabasca oil sands project near Fort McMurray, Alberta. Since February,
Canada has been sending around 1.4 million bpd of crude to the United States,
according to industry group the American Petroleum Institute. Last week, that
level ballooned to a record 1.9 million bpd the API said, although analysts
cautioned that weekly figures can oscillate wildly. ... Canada is one of a
handful of non-OPEC countries boosting production this year, causing a thorny
problem for the cartel as it weighs whether to extend supply curbs to keep oil
prices near its $25 a barrel target price. ... This year, new projects have
boosted Canadian production, including Suncor Energy Inc.'s expansion of its oil
sands operation, aimed at nearly doubling output to 225,000 bpd, and the 125,000
bpd Terra Nova oil development off the coast of Newfoundland. Other
developments, such as Petro-Canada's Mackay River oil sands project and Syncrude
Canada's next expansion, are scheduled to start up in the next two years,
providing a foil to Canada's declining conventional light crude output. ... "We
definitely see the exports going up," said Martin King, analyst with FirstEnergy
Capital Corp. in Calgary. "It's looking like the Citgo refinery outside Chicago
is going to be coming on stream, either by the end of this month, or the first
few weeks of June and we estimate that refinery takes about 60,000 barrels a day
of Canadian heavy crude." ....
5-24 Updates: 00:15, 02:06, 10:54, 12:37, 13:00,
13:20, 18:33 ET. YELLOWKNIFE-We are delighted to provide you with a copy of a
study which Wright Mansell Research Ltd.
provided to its clients, the Government of
the Northwest Territories (GNWT) and TransCanada PipeLines Ltd., on May 13,
2002: "An Evaluation of the Economic Impacts Associated With The Mackenzie
Valley Gas Pipeline and Mackenzie Delta Gas Development." The summary
says, "This study provides an evaluation of the economic impacts associated with
the development and production of natural gas reserves in the Mackenzie Delta
and the construction and operation of a pipeline down the Mackenzie Valley to
move the gas to markets. Evaluated over the period 2002-2033, and for two
gas price scenarios, it is concluded that the overall Canadian impacts would be
substantial and spread across all regions of the country."
Download document here. Download GNWT's earlier
Purvin & Gertz study. For reference: earlier
Yukon Government Backgrounder.
* WASHINGTON-In a floor speech yesterday, Energy Committee
Chairman Jeff Bingaman (Photo) urged progress toward an energy
conference. He noted that it has been one month since the Senate passed energy
legislation ... voiced frustration at the "delay" in moving to conference ...
pointed out that the House chaired the last energy conference and that it's now
the Senate's turn ... and articulated a plan on how to have an effective and
productive conference.
We bring you the full text here. *
ANCHORAGE-Yesterday,
Dr. Scott Goldsmith (NGP Photo, 5-23-02), discussed the state fiscal
crisis (i.e. as he has for the past two-plus decades) at this spring's last
weekly meeting of the Alaska Support Industry Alliance.
You may review story and photos
here. *
Anchorage Daily News by Wesley Loy-State
lawmakers wrote some big checks...but a few others bounced. Among the
rejects: state incentives to prod construction of a natural gas pipeline from
the North Slope, including a $600 million tax break for builders (Note: while a
significant tax incentive, this measure would not have provided fiscal certainty
to investors. Indeed, no gas pipeline fiscal certainty legislation passed,
effectively delaying gas
pipeline progress until the legislature acts in 2003, absent a special
session later in 2002. -dh) * Related
ADN story by Rosemary Shinohara-Anchorage received $200 million in
benefits from the legislative session, which did not resolve its $1 billion/year
deficit funded from a Constitutional Budget Reserve fund projected for depletion
by 2004. -dh *
Financial Times by David Buchan and Scheherazade Daneshkhu in
London and Mark Nicholson in Edinburgh-Oil companies could pull out of
the North Sea even before they have extracted all its reserves, because of the
UK government's planned tax increase on their profits, the industry warned on
Thursday. (Note: North American Governments desiring Northern Gas Pipelines investors should find this case history of value. -dh)
5-23 Updates: 00:30, 01:26, 13:46, 15:05, 20:12 ET.
Alaska Journal of Commerce by Tim Bradner (NGP Photo, 5-01) - After
all the hue and cry this
spring, Alaska lawmakers did nothing to help spur North Slope producers to
commit to a natural gas pipeline during their 2002 regular session. (See
our 5-20 comment. -dh) *
...on that subject
Northern Gas Pipelines asked five leading
U.S. and Canadian economists and analysts familiar with gas pipeline issues to
comment on Alaska's gas pipeline strategy. We identified these as highly
regarded professionals, objective, and not committed advocates. None knew
the other was commenting, yet the responses are alarmingly consistent,
reflecting important views of how Alaska is currently perceived throughout North
America.
Please click here for
their responses.
*
Northern News Services by
Michelle DaCruz,
Yellowknife - Growth, change and promise are in
Yellowknife's future, Mayor Gordon Van Tighem told the Yellowknife
Chamber of Commerce in his 'State of the City' address Friday.
"For 2001, residential construction was up almost three times
from the year 2000. Commercial construction was up 39 per cent," said Van
Tighem. *
Realtime News-BP spokesman Paul Laird said Tuesday the audit
highlighted the company's efforts to make good on promises to maximize Northstar
benefits to Alaskans.
5-22 Updates: 00:08, 00:30, 11:14, 11:47, 12:12,
12:28, 13:18 ET.
Anchorage/Yellowknife-The Government of the Northwest Territories
(GNWT) retained Purvin and Gertz to provide it with a study entitled, "Impact of
Alaskan Gas Subsidy". Objective of the study--just released--was to assess the impact of
the Alaska natural gas tax credit proposed and passed in the U.S. Senate Energy
Bill.
We are happy to make this copy available to Northern Gas Pipelines
readers, courtesy of GNWT. -dh (NGP Photo, 11-30-01, Purvin & Gertz Principal,
Roland R. George)
*
Alaska Oil & Gas Reporter by Ian McKinnon,
CALGARY, Alberta -- Canadian energy industry officials will be lobbying against
subsidies and tax credits for Alaska gas while in Washington this month for
meetings with Congressmen, senators and Bush administration members.
***also*** Tim Bradner reports on
latest cost estimates of Alaska gas project alternatives.
*
U.S. Senator Frank Murkowski (NGP Photo, 2-20-02) during the 43rd annual
Canada-U.S. Interparliamentary Conference held over the weekend in Rhode Island,
presented a briefing to Canadian members
on
the progress of Alaska energy developments. These include an explanation of
American efforts to push construction of a gas line to the
Lower 48 States, and of Alaska¹s
desire for oil development to occur in
a small part of the Arctic coastal plain in the Arctic National Wildlife Refuge.
Both Canadian and U.S. legislators agreed that a serious discussion needed to
take place on bringing additional energy resources to the Lower 48. They
expressed support for greater self reliance on energy sources within North
America. (Since proceedings of the Conference are confidential, we have
not yet learned of any concerns Canadian Members of Parliament may have passed
on to U.S. Congressmen regarding tariff issues or certain gas pipeline
provisions included in the Senate and House versions of the Energy Bill, H.R. 4.
Note Ambassador Michael Kergin
editorial.
-dh) *
Williams Energy News Live-Wednesday afternoon marks the
deadline for 150 energy companies to admit or deny they engaged in the same
energy trading strategies documented in the Enron memos. Most companies are
expected to file confidentially, while others plan on making their statements
public. *
Realtime News-"As Conoco expands around the world, our
goal is two-fold: to provide outstanding returns to our shareholders and to help
make the world a better place to live," said chairman and chief executive
Archie Dunham (Photo). "We will succeed in today's business environment only
by being a transparent, responsible and ethical company...." ***and***Anchorage
Daily News-Conoco
Inc. is once again a leaseholder on the North Slope, nearly a decade after
leaving Alaska. *
The Alaska legislature
adjourned last night without adopting a long-term fiscal plan or creating
fiscal certainty for gas pipeline investors. Here is an
Alaska Star Op-Ed piece by Rep. Fred Dyson, written earlier,
which suggests a way out of the briar patch--at least for a long-range plan.
5-21 Updates: 00:05, 02:42, 10:59, 11:06, 13:13,
20:18 ET. Recent data supports what economists have been predicting for
the past year: both Alaska and Mackenzie Delta gas have a strong and growing
market. -dh--Oil
& Gas Journal, HOUSTON --
Total US natural gas production is likely to drop by 3.5-4% this year instead of
the 2% decline previously predicted.... Robert Morris, oil and
gas exploration and production analyst for Salomon Smith Barney Inc., New York,
said, "Producers have run through a lot of their best prospects in trying to
drill up all they could" during a flurry of activity that started about mid-2000
last year and peaked at 1,293 active units in late July 2001. ... However, he said E&P companies are getting less new
production for each rig employed over a base of 500 rigs because of the smaller
fields being found and quickly depleted. With rig efficiency currently below the
average levels for the last 2 years, Morris said, "We would need 1,200 rigs in
the field next year to keep US production level." Canadian gas exports to the
US will likely decline by 1-2% this year, largely as a result of lower
production from Ladyfern field in Northeast British Colombia than initially
projected by the operators. "Other Canadian production also is depleting,"
Morris said. ...US gas demand is expected to rise by 5% this year with a
rebound in the economy and the recapture of that portion of the gas market lost
when previous high prices led power plants and industrial users to switch to
distillates and fuel oil. ..."with a normal winter, spot natural gas prices
will average $3.50/MMbtu in 2003," said Morris. A winter that's 10% colder than
normal could pump prices up to $4/MMbtu, while one that's 10% warmer ?than
normal could drop prices to $3/MMbtu. ... Raymond James & Associates Inc., a St.
Petersburg, Fla., investment banking firm, earlier projected US gas production
during the first quarter of this year would be down by 1.8% from the fourth
quarter and down 2.9% from the first quarter of 2001 (OGJ Online, Apr. 3, 2002).
It also reported that producers have been drilling wells that they could bring
on production quickly at high flow rates. And it projected that, with activity
on those types of prospects now halted, production from high-flow projects
likely will be down by 30-40% this year.
*
Northern News Services by
Thorunn Howatt,
Yellowknife - Energy companies committed more than $14
million last week in the search for oil and gas in the Mackenzie Delta and
Beaufort Sea. ...
Chevron Canada Resources partnered with BP Canada Energy Company
on a winning bid to explore on 18,912 Beaufort hectares. Chevron led the team to
commit $13.2 million worth of work in the area. In a different bid, Devon ARL
Corporation partnered with Petro-Canada, committing $1.1 million to explore
28,190 Beaufort hectares.... *
Northern News Services by Lynn Lau,
Inuvik - ...
Promising rich returns, 100-per-cent aboriginal ownership, and
all-weather roads linking the communities, ArctiGas Resources Corp. received a
warm audience with Gwich'in band councils in Inuvik, Aklavik, Fort McPherson and
Tsiigehtchic. ArctiGas is proposing a 2,710-kilometre natural gas
pipeline that would be fully owned by aboriginal groups. Dubbed the "Over the
Top" route, it would connect Prudhoe Bay to Edmonton via the Beaufort Sea and
Mackenzie Valley. Managing director Bruce Hall said the project would
provide the best deal for aboriginal groups, and the best rates for producers
when compared to the other pipeline proposals -- an Alaskan line and the
Mackenzie-only line, backed by four gas producers and a conglomerate of NWT
aboriginal groups called the Mackenzie Valley Aboriginal Pipeline Corp.
The ArctiGas proposal would involve aboriginal groups taking a loan for the full
project cost -- US $7.8 billion (CDN $12.1 billion). Even though aboriginal
groups would be the owners, they would not be shouldering any economic risk,
because the loan would be guaranteed by the sale of bonds, and the tariffs
charged to gas producers, Hall said. The plan has already won over the
Nihtat Gwich'in Council in Inuvik which passed a motion in March to support it.
"It seems like the one that is least risk," said Chief James Firth.
"They've filed with the National Energy Board - we know what they're offering."
David Edwards with the Ehdiitat Renewable Resource Council in Aklavik
said he personally believes the proposal to be the best for the Gwich'in. "I'm
really interested in this," he said after the presentation Tuesday evening.
"We're going to own this -- that's the way it should be anyway." Even if
ArctiGas can win the support of the aboriginal groups, the proposal still has
two major problems -- Alaskan legislators passed a law in March banning the
route, and so far, it has won no support from the natural gas producers.
Industry analysts say without producer support, the proposal is in trouble.
"Whatever gets determined is going to get determined by the producers," said
William Lacey, research analyst with the Calgary investment bank FirstEnergy
Capital Corp. "It comes back to these four words -- it is their gas."
Calgary analyst Ian Doig didn't mince words when asked about the project.
"In my estimation they (ArctiGas) are a bunch of Old Testament merchants outside
the temple gate waiting for their 10 per cent," said Doig, publisher of the
industry newsletter Doig's Digest. With 100-per-cent aboriginal ownership,
ArctiGas would have no financial stake in ensuring the project is successful, he
said. "They'll get their fat commission cheques for getting this proposal
together and if things go bad, they'll be able to bail out." ... Asked if
he thought the no-risk, all-benefit pipeline was too good to be true, band
manager Knute Hansen said he didn't think so. "It was good information,"
Hansen said. "The people need more of that. (Earlier
story.) *
Northern News Services by
Thorunn Howatt,
Calgary - Engineering research on a Mackenzie Valley
pipeline mean contracts and jobs for Northern businesses.
Calgary-based ColtKBR was awarded the engineering contract for
the Mackenzie gas project. "We will be subcontracting some of that type of work
out to companies in the North," said a vice-president at ColtKBR, Russ Grant.
... "It's pretty clear from the discussions we've had with the Mackenzie Delta
Producers Group in dealing on this contract that's a key factor on this factor -
they are interested in extending opportunities to Northern companies and
Northern individuals," said Grant. ... The company will also be engineering
roads, docks and airstrips needed to support an eventual pipeline. The value of
the contract was not disclosed but the producer consortium, made up of Imperial
Oil, Conoco, Shell and ExxonMobil, have estimated they will spend between $200
million and $250 million on this project definition stage. The stage includes
engineering as well as community consultation. "The work planning effort
includes visits to Northern communities," said Imperial Oil spokesperson Hart
Searle. "One of the foremost aspects of this contract award is that the
winner, the successful bidder, had to achieve our objectives for aboriginal and
Northern employment and businesses." (See
our earlier story and original release.) *
Globe & Mail by Barrie
McKenna-The U.S. International Trade Commission's final report on the
softwood lumber case was made public yesterday, two weeks after the panel voted
unanimously to uphold a 27.2-per-cent duty on $10-billion worth of Canadian
lumber. ...70 per cent of lumber produced in Canada winds up in the U.S. ...
Canadian lumber accounted for 34.3 per cent of the U.S. lumber market last year.
Exports are worth roughly $10-billion a year. ...Canadian lumber companies
to get back nearly $800-million in fees previously paid to the U.S. government.
Canadian companies had been posting bonds to cover a 32-per-cent preliminary
duty imposed last summer. The new 27.2-per-cent duty is slated to go into
effect Thursday. (Earlier
stories).
5-20 Updates: 01:35, 02:18, 02:48, 03:17, 03:28,
11:07 ET.
Your staff returns from a
therapeutic, sunny weekend in Seward, Alaska. Thoughts of
Northern Gas Pipelines, however, often reappeared as we jogged the bike
paths, exercised on the
Alaska SeaLife Center plaza, visited the docked
Princess Cruise ship and
Alaska Railroad dome
cars,
dined at Seward Windsong Lodge, visited Fox Island and toured Prince William
Sound on the Alaskan Explorer (NGP Photo-Bruce Bustamante,
ACVB President).
Pipedreams, we think are on the minds of others as well, during work and
holiday, during and after business hours....
Comment: Before leaving for Seward last Friday, we asked a well known economist
specializing in Alaska issues for comments on the state's inability to create a
long-range fiscal plan as it sails toward insolvency by 2004. In asking
him that question, we are aware that neither did the state legislature in 2002
produce fiscal certainty for a gas pipeline project. Since that is a
project requirement for any responsible investor, legislators through their own
lack of action could well have delayed an Alaska gas project for a year.
Their inaction also does not send a positive signal to U.S. House and Senate
conferees expected by fall to take action on the respective versions of H.R. 4
passed by their two bodies. Senate Energy Committee members last fall
expressed concern that while they were being asked to support an Alaska project,
Alaska had undertaken no positive support measures. Back to our esteemed
economist friend; he commented that, "I
still think that there is hope for this generation constructing the gas
pipeline. The hope stems from another of those laws we hear about so often.
People only act when they have a crisis on their hands. In Alaska a crisis is
defined as having your constituents beating down your door. By that definition
there is a good chance that a fiscal
solution will arrive in about three years when the CBR {i.e. savings account}
runs dry, followed closely by a less constraining
approach to gas pipeline construction. It is too bad that we have to do things
that way, but we (meaning homo "not so sapiens") almost always do." Also,
see yesterday's Anchorage Daily News
editorial. -dh *
Anchorage Daily News writer, Matt Zencey, calls former Arco
executive, Ken Thompson (NGP Photo, 10-26-01), "Alaska's
independent guru of natural gas". (Comment: Thompson advocates "tough
consequences" if an Alaska gas pipeline project is not underway by 2004.
By coincidence, 2004 is the year in which Alaska's $1billion/year overspending
will have depleted its savings accounts.
Astute observers will recall that in their attempts to move forward, gas
producers have long said that fiscal certainty is required in Alaska.
Indeed, no expert has challenged that reasonable request. Yet, in
the legislative session just ended, no bill was passed that could be said to
provide fiscal certainty for a gas pipeline's royalty & tax regime, theoretically delaying a project.
If anything, fiscal certainty for gas pipeline investors has diminished with the
legislature's failure to create a long-range fiscal plan for the state itself. We hope that in their well intended enthusiasm for promoting gas projects,
respected advocates and gurus alike are mindful that Alaska cannot fail to establish fiscal certainty for
pipeliners, then tell them that absent a project in 2004 they will punish them
by establishment of reserves taxes or other 'negative incentives'. Should
this happen, Alaska's orbit within the free-enterprise universe would move
closer to the outer limits of freedom and reality than it already is.
-dh) *
Financial Times by Dan Westell, Toronto-Calgary oil and gas
transportation company, Enbridge, has sold US natural gas assets to a related
partnership for US$29 million. *
National Post by Sheldon Alberts, OTTAWA
- Stephen Harper, the Canadian Alliance leader, says he plans to fight
the next federal election on free trade and target the Liberals for their
failure to persuade the White House to end protectionist policies that are
damaging Canada's agriculture and lumber industries. (Related
stories.)
*
Alaska Airlines is offering spectacular
Memorial Day fares to most of its cities in the Lower 48, Alaska and Canada.
There is no advance purchase required and fares start as low as US$39.00 one
way.
5-17 Updates: 01:00, 01:41, 14:07, 15:22, 17:33
ET.
Anchorage Daily News by Wesley Loy-Speaking
at a Midtown Anchorage breakfast
meeting of the Resource Development Council, Exxon's Alaska production manager,
Jack Williams (NGP Photo-01), outlined plans for the field. He said the
U.S. Environmental Protection Agency has begun an environmental review that will
involve public hearings, but Exxon and its partners won't decide for sure
whether to develop the field until late next year or early 2004. ... Developing
Point Thomson would be expensive and technically daunting because the field is
under extraordinary pressure, making it tough to control the gas when it reaches
the surface. The idea is to cycle the gas -- bring it up, capture the
"condensate" or gas liquids, then pump the "dry" gas back down holes for storage
underground. ... The liquids would be piped through a new 22-mile line west to
BP's Badami field, which is connected by a pipeline running another 25 miles
west to the 800-mile trans-Alaska oil pipeline. Engineers believe Point Thomson
holds 8 trillion cubic feet of gas and 400 million barrels of liquids. Oil
companies already have spent about $800 million to seek permits, with another $1
billion needed to finish the project, Williams said. If the project gets the
green light, the first production could come by the end of 2006, he said.
Mark Myers, director of the Alaska Division of Oil and Gas, said he's
hopeful Point Thomson finally will go. "Point Thomson development is very good
news for the state," Myers said. Not only could the field send liquids and,
someday, natural gas to market, it could serve as a jump-off point to search for
other petroleum pockets in the area, including in ANWR, he said.
*
A new
USGS
assessment
concludes that NPRA (USGS Map: North Slope) holds significantly greater
petroleum resources than previously estimated. Technically recoverable,
undiscovered oil beneath the Federal part of NPRA likely ranges between 5.9 and
13.2 billion barrels, with a mean (expected) value of 9.3 billion barrels. An
estimated 1.3 to 5.6 billion barrels of those technically recoverable oil
resources is economically recoverable at market prices of $22 to $30 per barrel.
Technically recoverable, undiscovered non-associated natural gas for the same
area likely ranges between 39.1 and 83.2 trillion cubic feet, with a mean
(expected) value of 59.7 trillion cubic feet. The economic viability of this gas
will depend on the availability of a natural-gas pipeline for transport to
market.
Download Fact Sheet.
Download
Full Report, by Kenneth J. Bird (NGP Photo, 2-8-02) and David W.
Houseknecht. * For our
Washington readers from Jay Rickerts, Williams Energy News Live:
Today, the Bush administration marks the first anniversary of
the release of the President's National Energy Plan with an event at the
Department of Energy. DOE Secretary Spencer Abraham, Interior Secretary
Gale Norton and EPA Administrator Christine Todd Whitman are
expected to take part. *
WASHINGTON, D.C. - Alaska Congressman Don Young today said
revised estimates of oil and gas resources in the National Petroleum
Reserve-Alaska (NPRA) are welcome news for America and American energy
security. The news affirms the need to approve the House of Representatives'
energy bill provisions, which would open the coastal plain of ANWR to oil
production. *
Anchorage Daily News by Ben Spiess
-- The Alaska Legislature failed for a second time to finish its business
Thursday, and called itself into special session to try, try again. ...After the
late-hour deal splintered, Republicans said their special session will run at
the same time as a special session called by the governor on subsistence.
* Trade Problems,
NNSL by Terry Halifax, Inuvik- The controversial energy bill before
the U.S Senate right has an amendment that would set a guaranteed price for
Alaskan natural gas delivered to the lower 48 states. Natural Resources
Minister Herb Dhaliwal hinted that Canada may impose the same subsidies
on Canadian gas, if the Americans went ahead with the plan. Liberal MP for
the Western Arctic Ethel Blondin Andrew said the Canadian government
can't consider subsidizing Canadian gas in a pipeline that hasn't been built or
even submitted for regulatory approval. ... She says there has been a shift in
the new administration that is starting to look like a trend to trade wars.
"It seems to be a retrenchment of the Americans, from a very liberalized trading
mode, to a very protectionist mode," she added.
(Northern Gas Pipelines continues to emphasize to U.S.
officials the interrelationship and importance of general trade issues to gas
pipeline prospects. -dh)
**Also** The ArctiGas Resources Corp. made a
presentation to the Inuvik Native Band on Monday night which outlined the
details of how their "Over the Top" pipeline would be constructed.
(Comment: An ArctiGas spokesman was reported to have made remarks which we
consider inappropriate for inclusion on this page. We encourage
straightforward, professional, logical presentation of facts and discourage
personal/emotional attacks on governments, companies and individuals, which
serve only to confuse citizens and delay projects. -dh)
5-16 Updates: 01:25, 10:24, 10:38, 11:02, 11:46,
15:40, 19:19
ET.
Engineering contract for Mackenzie Gas Project
awarded to COLTKBR
Calgary, AB., May 16, 2002
- Imperial Oil Resources, on behalf of the Mackenzie Delta
Producers
Group, has awarded the conceptual and preliminary engineering for the Mackenzie
Gas Project to COLTKBR. Headquartered in Calgary, COLTKBR is a long-term joint
venture of Colt Engineering Corporation (Colt) and Kellogg Brown & Root (KBR).
The engineering work will
assist in optimizing the commercial viability of the Mackenzie Gas Project and
support the development of regulatory applications. Imperial is the operator of
the gas gathering and pipeline systems for the project.
The Mackenzie Gas Project
involves natural gas production facilities, compression and gathering pipelines
in the Mackenzie Delta area, with a pipeline to the Norman Wells area where a
liquid recovery and compression facility will be installed. A natural gas
pipeline with compression facilities will then proceed south from Norman Wells
through the Mackenzie Valley into northwestern Alberta.
Speaking on
behalf of the Mackenzie Delta Producers Group and the Mackenzie Valley
Aboriginal Pipeline Corporation (MVAPC), K.C. Williams, senior-vice
president and director of Imperial Oil Limited, said "awarding this contract
marks another significant step towards the preparation and filing of regulatory
applications for the Mackenzie Gas Project. As the Producers Group and the
MVAPC continue to move forward, we will ensure the project remains focused on
safety, care for the natural environment and technical quality, as well as the
owners' shared objectives for Aboriginal and northern involvement."
John Read, Chief
Executive Officer of Colt Engineering Corporation, acknowledged “COLTKBR is
extremely pleased and excited to be awarded this contract and to be involved in
this significant Canadian project. COLTKBR understands the performance
expectations that the Mackenzie Delta Producers Group have for this project,
including the importance of the involvement of Aboriginal and northern peoples
in work related to this contract.”
Engineering services will
be executed in Imperial’s and Colt's offices in Calgary, with the participation
of specialists from the Mackenzie Gas Project owners and COLTKBR.
Colt is a major Canadian
engineering contractor with more than 2,200 employees. Colt provides
multi-discipline engineering, procurement, construction management and
construction services to the upstream and downstream oil and gas industries in
North America and internationally. Additional information is available at:
www.colteng.com
KBR, the wholly owned
engineering and construction subsidiary of Halliburton (NYSE: HAL) is an
international, technology-based engineering and construction company, which
provides a full spectrum of industry-leading services for governments, public
infrastructure and to the hydrocarbon, chemical, energy and forest products
industries. Founded in 1919, Halliburton is one of the world’s largest providers
of products and services to the petroleum and energy industries. The company’s
World Wide Web can be accessed at
www.halliburton.com.
The
Mackenzie Delta Producers Group - Imperial, Conoco Canada Limited, Shell Canada
Limited and ExxonMobil Canada, and the MVAPC announced their intent earlier this
year to begin preparation of regulatory applications needed to develop on-shore
natural gas resources in the Mackenzie Delta, including a Mackenzie Valley
Pipeline. The MVAPC is an entity created by the Aboriginal Pipeline Group (APG)
to represent and hold the interest of the Aboriginal peoples of the Northwest
Territories in a Mackenzie Valley Pipeline.
************** For further information, contact: Russ K. Grant,
P.Eng. COLTKBR, 403, 258-8055; and, Hart Searle, Imperial Oil Ltd., 403,
237-2710
5-16 Comment: The Alaska Legislative Session will adjourn
today after 123 days. Many will agree that the 40 house and 20 senate
members and governor
are well
intentioned, yet critical gas pipeline related legislation was either not
considered or did not pass. On the concept of 'fiscal certainty'
(addressed in yesterday's report, below), agreeing on a plan to thwart Alaska's
fiscal crisis is important to private and corporate citizens alike. Every
elected official can find fault with ideas others present. Everyone works
hard and is conscientious. Yet, agreement eluded the elected officials
this year. Many have announced retirement; more announcements will occur
in coming weeks. Accordingly, following November elections, 2003 will find
a new generation of freshmen legislators and new governor facing the fiscal
crisis legacy left by this generation. Today remains, but the 2002 window
of opportunity will close by midnight on many gas pipeline options with the
final gavel, unless Alaska's leaders call special legislative sessions to
finalize their work. (See Bill McAllister's story,
Juneau Empire and
Anchorage Daily News' AP review and
report on operating budget agreement.) On the bright side, Tuesday saw a new
contract high of $3.875/mmBtu for natural gas, within the price range an Alaska
gas pipeline can be called economically feasible. Experts project growing
demand and prices. If producers gain confidence in long term gas price
stability, their 'economic feasibility' criterion is within reach. That would
leave three other criteria still to be achieved: Federal expediting
legislation, Alaska fiscal certainty, and assurance of an efficient
Canadian government regulatory framework. Canada is developing its
Cooperation Plan framework and the former U.S. political goals probably pose the
greatest challenge. -dh
*
National Post by Robert Fife,
OTTAWA - Canada's International Trade Minister says George W. Bush, the
U.S. President, lacks the political courage to face down American protectionist
forces over trade policies that harm Canadian workers. In an interview
with the National Post yesterday, Pierre Pettigrew acknowledged that
Jean Chrétien.... (See
our reviews of how international trade issues affect gas pipeline progress.)
*
Petroleum News Alaska-Scott Heyworth of Our Gas Our Future (also,
candidate for Lt. Governor) and Commissioner of Revenue Wilson Condon
squared off over the start-up costs for a proposed Alaska Natural Gas
Development Authority March 14 at a House Special Committee on Oil and Gas
hearing on House Bill 410. The bill mirrors the gas authority initiative
Heyworth had certified for the November ballot.
5-15 Updates: 00:56, 01:37, 11:30, 12:14, 12:35,
13:10, 14:43, 15:00, 17:27 ET.
TULSA, Okla./ANCHORAGE,
Alaska/CALGARY, Alberta –Williams announced yesterday the summary results of
a proprietary study that evaluated the economic feasibility of a petrochemical
complex in conjunction with an Arctic gas pipeline. Results are not
conclusive. *
Juneau-The legislature had not worked
through a mountain of legislation by adjournment last night, so they extended
the session for the first time ever. Today and tomorrow, members will
attempt to pass operating and capital budget and other priorities. But the
priority list does not contain two components critical to 'fiscal clarity' of a
gas pipeline project: a) action to secure the tax and royalty regime of a gas
pipeline; and, b) legislation to resolve Alaska's fiscal crisis. See our
5-13 update below, whose conclusion is unchanged: "...the next generation is now
more likely to build an Alaska gas pipeline than this one." The lack
of action by Alaska to resolve its own finances and prepare the investment
climate for a gas pipeline will be fodder for the cannons of forces opposed to
Congressional gas pipeline incentives. One hopes that in the hours
remaining the governor and legislature will quickly put Alaska's house in order.
Failing that, one is doubtful the issues will be resolved in time next year, for
three reasons: a) Congress will already have resolved how it deals with the
Alaska gas pipeline; and b) next year's legislative agenda and complexity will
not be merely mountainous, but gargantuan, since it will be inheriting this
year's incomplete work as the fiscal crisis approaches calamity; and c) this
year's corporate investment decisions will be based on Alaska's current,
unimproved investment climate. This past year the governor and legislature
summoned public and private professionals to hundreds of meetings and hearings,
spending hundreds of thousands of hours of effort and studies and expenditures
that have resulted in no meaningful legislation. Unfortunately, the whole
spectacle gives credibility to government critics and insecurity to individual
and corporate citizens. We urge Alaska and U.S. Federal decision makers to
heed the words of Ambassador Kergin in today's Wall Street Journal, below.
-dh (See
Anchorage Daily News,
Juneau Empire,
KTOO
Reports.)
* The author provided a column to the current
issue of Far North Oil & Gas Review published in Yellowknife. The column,
"49 North" describes progress and current status of gas pipeline projects just
prior to Senate energy bill approval. It also discusses Alaska fiscal
issues as a component of the Alaska gas pipeline decision process. Editor
Sunny Munroe (Photo) has graciously agreed that
we
post the column here for your use (Subscribe
here). For other recent updates see Seattle Chamber presentations by
Deputy Revenue Commissioner
Larry Persily and
the author.
*
Trust the Market (and Canada), By Michael
Kergin (Photo) 05/15/2002
The Wall Street
Journal Page A18-Few Americans realize that Canada is the largest energy
supplier to the U.S., providing about 15% of all U.S. Natural Gas consumption,
and more crude and refined oil products than Saudi Arabia. In fact, we provide
9% of all the oil consumed in the U.S. The U.S. relies on foreign energy
for upwards of 53% of its consumption, but that figure falls to 44% if Canada is
included under the continental umbrella. Our exports total $37.5 billion and
contribute significantly to U.S. national energy security; this is an
unfettered, free-market source that flows every day without political
interference or cartel economics. From a national security perspective, one
cannot overstate the importance of deriving your largest source of imported
energy from a friend next door. This robust, mutually beneficial energy
relationship is founded upon our joint commitment to market-based energy policy,
as enunciated in the North American Free Trade Agreement. Canada's dedication to
free market energy policy has never been stronger. So it has been with
increasing dismay that we have watched energy legislation develop in Congress.
Proposed legislation includes two substantial intrusions into Natural Gas
markets. First, the House of Representatives and now the Senate have
intervened in private sector decision-making concerning the construction of a
pipeline along a route through Alaska. Their bills would prohibit industry from
considering a shorter (and by many accounts, cheaper) route under the Beaufort
Sea with access to significant proven Canadian reserves. The Senate has also
approved loan guarantees up to $10 billion for the construction of a pipeline
through Alaska. Canada strongly supports Alaska's desire for development,
and we are necessarily partners in development as at least two-thirds of either
pipeline from Alaska to the lower 48 states must go through Canada. However, the
private sector should ultimately decide whether such a pipeline should be
constructed. And in Canada's view, the private sector is best suited to decide
its route, subject to regulatory and environmental review procedures. The Bush
administration has also adopted a route-neutral position on the Alaska pipeline
project. Second, and of greater concern, the Senate has also approved a
tax credit to guarantee a floor price for Alaskan gas. This could result in a
vast subsidy; current Natural Gas price forecasts suggest that it would provide
tens of billions of dollars in transfers from U.S. taxpayers to producers of
Alaskan gas. It is up to Americans to decide whether they wish to provide
this huge open-ended subsidy (on top of loan guarantees). Canada's concern is
that a commodity price subsidy will distort North American Natural Gas markets
and ultimately undermine their efficiency. The consequences could prove
significant, slowing development and production in the rest of the U.S. and
Canada. Artificially diminishing the large potential of Canadian gas imports
will weaken U.S. energy security, counter to the stated purpose of the Energy
Policy Act of 2002. Indeed, the administration's National Energy Policy
concluded that U.S. energy security is directly linked not only to domestic and
international energy supplies, but also to those of its trading partners.
Canada urges Congress to refrain from distorting the North American energy
market. U.S. energy policy, like Canada's, is founded on free markets and free
trade, and on international relationships. We hope Congress shares this
understanding so that it is the marketplace, not government regulation, which
will ensure Americans receive secure, clean-burning gas at the lowest possible
price. (Mr. Kergin is Canada's ambassador to the U.S..
See our related
editorial below. -dh)
5-14 Updates: 00:35, 00:40, 01:53, 11:08, 11:52,
13:11, 14:38 ET. Writer Ted Enemark says, the
Alaska gas pipeline... "is likely the most important decision for the
long-term development of northern B.C. for the next 20 years. Its importance is
potentially huge, and much more immediate than other prospects, such as offshore
gas development." *
Alaska Journal of Commerce-WHITEHORSE, Yukon -- An Alaska Highway natural
gas pipeline would greatly boost the Yukon both before and after construction,
according to an economic analysis commissioned by the Yukon government. (See
our 5-3-02 story and download the study.) *
National Post-OTTAWA - There is growing concern within the federal Cabinet
that Jean Chrétien and his senior staff have no influence in blunting the
protectionist trade policies of the White House, senior government sources say.
...also,
this story: "What they've done, in our view, is going to be quite disruptive
to trade," said Dennis Laycraft, executive vice-president of the Canadian
Cattlemen's Association. (See
our earlier references to gas pipeline issues.)
*
Juneau Empire-With a day left in the Legislative session, still there is no
sign the state will resolve its budget crisis. Associated
Press, by Mike Chambers-Juneau
-- Ambitious plans touted by Republicans in the House and Senate are piling up
as wrecked hulls along the road out of Juneau.
(Lawmakers are also unable to agree on gas pipeline incentives. See related stories below,
"...the next generation is now more likely to build an Alaska gas pipeline than this
one." -dh)
5-13 Updates: 00:05, 09:00, 10:39, 11:50, 13:35,
17:18, 17:45, 18:10, 19:10 ET.
-
If today's news below represents the 'big
picture', we reluctantly conclude the next generation is now more likely to build an
Alaska gas pipeline than this one. -dh
-
Producers have said for over a year that
fiscal clarity in Alaska is one of the three principal requirements of a
successful Alaska gas pipeline project. As the Legislature draws to a
close, many are watching for approval of a plan to solve the
state's fiscal crisis, but it doesn't look promising; today's 100%
preventable fiscal crisis (i.e. which some have called a 'leadership crisis')
becomes a fiscal calamity by 2004 when state savings accounts are depleted.
This may partly explain retirement plans of a number of lawmakers.
Efforts to provide a gas pipeline
property tax incentive
have also failed. If state budget planning and pipeline fiscal security
issues are not addressed, Alaska gas pipeline momentum will slow
dramatically--even if Congress passes all of its pipeline incentive legislation,
which is optimistic. The number and value of other investments corporate
boards of directors could now detour out of Alaska due to fiscal uncertainty
will never be fully known. Such is the law of
cause and
effect. Check status of Alaska legislation
via these links.
(See the above comment validated by
producers two months later.)
-
More on Energy Bill, conference ahead.
Palm Beach Post-The Senate bill also includes incentives to companies to
build a pipeline capable of delivering natural gas reserves from Alaska's
Prudhoe Bay to major U.S. markets, a Democratic proposal that countered Bush's
recruitment of organized labor leaders with the promise of thousands of new jobs
in exploring for oil and gas in ANWR. The ANWR proposal is likely to be a
sticking point in the conference between the House and Senate. The House bill
includes the proposal. It also includes much broader tax incentives, about $33
billion worth, with more of the tax breaks going to fossil fuel energy
producers.
-
We continue to remind U.S. officials that a
deteriorating trade relationship with America's biggest trading partner works
against international gas pipeline progress.
See today's comment on Farm Bill.
See our earlier stories.
-dh
*
Northern News Services by Thorunn Howatt & Terry Halifax,
Yellowknife - Americans may want to make rules to suit their own game, but in a
pipeline race Canada won't let arctic natural gas be stranded, even if by a
bigger opponent. After slapping huge tariffs on Canadian B.C. lumber, an
American bill proposed that Alaska Highway pipeline users - large energy
companies - would be subsidized if prices fall below $3.25 US per thousand cubic
feet. It also proposes $10 billion US in project loan guarantees. Canadian gas
producers, along with Canada's Minister of Natural Resources Herb
Dhaliwal, have opposed the American bill, saying it could derail any
plans for Canadian pipeline routes and disrupt the natural gas market. "They
tend to forget that if they want the Alaska route, two-thirds of it is going to
have to come through Canada," said Dhaliwal in the National Post. "So they
should keep that in mind. At the end, it needs Canadian support." ... The
$3-billion Canadian proposal sees a pipeline starting at the Mackenzie Delta
carrying gas southward following the Mackenzie Valley. Dhaliwal said the
Canadian government may have to look at "other measures" to ensure Canadian gas
isn't stranded. Premier Stephen Kakfwi said the U.S.
complained and punished Canada for allegedly subsidizing softwood lumber and
then turned around to do the same thing with steel and farm subsidies and are
now trying the same with gas. "I think we have a problem," said Kakfwi. "We
have to stand up and be tough about it." Kakfwi returned recently from an oil
and gas meeting in B.C. "I think they were looking for some leadership and we're
trying to provide that." U.S. Energy Secretary Spencer Abraham
declared the administration will not support the subsidy. "This administration's
been very clear in terms of tax provisions we support with respect to that
subsidy," said Abraham. "The administration's position is a neutral one with
respect to route preference. We believe the market should make that decision."
-
Gas pipeline status. Review
most recent speeches
delivered to Seattle Chamber of Commerce last week, addressing gas pipeline
risks and other issues. Check other weekend news below.
-
History. 25 years ago: On May 10, 1977, The Globe and Mail reported that federal
opposition leaders hailed Justice Thomas Berger's call for a 10-year
moratorium on a Mackenzie Valley pipeline (Search
for 'Berger').
5-11/12 Weekend Updates: Sat. 13:30,
17:12, 17:26, 19:35; Sun. 11:34, 12:19, 12:26 ET.
Anchorage Daily News by
Tony Hopfinger-Ken Bird
(NGP Photo, 2-8-02), doesn't work for an oil company but the government
geologist has spent a quarter-century rocking out to help score Alaska's next
big oil discovery. (Calgary
story.) *
Anchorage
Daily News by Ben Spiess-Juneau
-- A bill to give builders of a natural gas pipeline a $600 million property tax
deferral will not pass in the House of Representatives this year, the measure's
sponsor said Saturday.
See Juneau Empire Story by Bill McAllister.
* Yellowknife & Calgary-According to several Northern
Gas Pipelines sources reporting in yesterday and today, announcement of the
Mackenzie Valley
Pipeline project definition engineering contract award is imminent. True
to our policy, we shall identify the contractor for you after receiving official
confirmation. *
Oil & Gas Journal, HOUSTON
-- So far this year, US natural gas production is declining faster than first
anticipated, said Raymond James & Associates Inc. in a recent report. And
with this fall in gas supplies, gas prices are expected to creep higher later in
the year, RJA said: "For the past 6 months, our mantra. . .has been that natural
gas will be the key driver of US energy stocks and that lower US natural gas
supply will drive gas prices higher."
*
Financial Post by Ian Jack, OTTAWA - The Canadian
government could face another trade war with the United States, which is being
pushed by the major sports leagues and the Motion Picture Association of America
to take action over what they call Ottawa's foot-dragging in protecting their
broadcast rights. (Note: We have covered trade conflict issues
herein, as we believe the
contentious atmosphere affects gas pipeline progress. We also submit that
U.S. {i.e. to a larger extent} and Canadian energy
officials are not appreciating the impact other international issues can impose
on their critical energy policy relationships. -dh) *
Globe & Mail by Brent Jang, CALGARY --
The politicking behind building northern pipelines is a growth industry, and the
more politically messy it gets the longer it will take to start -- let alone
finish -- any line. ... Anyone expecting a speedy conclusion to the Arctic
pipeline race will be disappointed. The air is thick with rhetoric about letting
the free market determine the victor, but in reality, laying pipe in the Arctic
isn't on any corporation's list of must-do projects this decade. Exxon Mobil of
Irving, Tex., argues that even though some tantalizing U.S. subsidies are being
dangled in front of it and Alaskan partners Phillips Petroleum and BP, the gang
at Exxon Mobil would rather stick to its free-market principles. Predictably,
the folks backing the Mackenzie Valley project are none too happy about the
prospect of U.S. subsidies, but notice that these NWT supporters haven't exactly
slammed the door on Canadian handouts. A blatant subsidy is in the eye of the
beholder. ... Simply put, big corporations aren't boycotting government cheques
or tax breaks. They will gladly accept such economic incentives in a variety of
circumstances too numerous to list. Mobil, many years before it merged with
Exxon in late 1999, participated in a consortium that benefited from huge grants
from Ottawa to build the massive Hibernia oil platform off the coast of
Newfoundland. In northern Alberta's oil sands, where the Alberta government
introduced a new tax regime in the mid-1990s to entice Big Oil to invest
billions of dollars in megaprojects, the petroleum bosses knew a good thing when
they saw it. The notion that Alaskan or NWT producers would reject subsidies or
tax breaks is ludicrous. ... The problem with Arctic gas is that the economics
only make terrific sense if you put on rose-coloured glasses and assume that gas
prices will be extraordinarily strong for an unusually long time. Even if you
assume that gas prices will be moderately higher than normal, it still takes
mathematical contortions to make any Arctic pipeline project attractive enough
to pitch to corporate directors, who would need to willingly suspend their
disbelief before plunging ahead. ... There's plenty of internal housecleaning
to finish. Phillips has made it clear that it favours the Alaska Highway route.
Conoco, on the other hand, backs the Mackenzie Valley plan. The
soon-to-be-merged ConocoPhillips needs to reconcile the differences of opinion.
For the sake of argument, let's say the Alaskan producers unexpectedly drop out
of the race. Would this suddenly make the NWT jump for joy? It shouldn't,
because the Mackenzie Valley proposal is riddled with question marks, just like
its Alaskan counterpart. Expect the level of rhetoric to rise in the months
ahead, stirring much debate while leaving Arctic natural gas in the ground for
years to come. (Note: this editorial writer's analysis is generally consistent
with facts and views expressed in the Alaskan presentations delivered in Seattle last
week, links below. -dh)
5-10 Updates:
02:20, 03:10, 04:16, 05:25, 05:38, 06:24, 07:02, 08:10, 14:49, 15:39, 16:10 ET.
JUNEAU-As
Alaska's legislative session draws to a close, readers may check on
status of gas pipeline related
bills here. Also, refer to the left column for 'new' government
information links. *
Seattle-On Wednesday
Alaska's Deputy Commissioner of Revenue, Larry
Persily, and Northern Gas Pipelines' publisher,
Dave Harbour addressed the
Seattle Chamber of Commerce's Alaska Committee on gas pipeline and ANWR issues
and status. About 45 distinguished Seattle citizens attended, most with
existing business, social and family ties to Alaska (NGP Photo-Jim Odom,
left and Renata Benett, right). Canadian Consul General Roger
Simmons, P.C. (NGP Photo-speaking with members, with Persily in background-green
shirt) attended and participated in
the question/answer period which followed. We are delighted to provide you
copies of the two CURRENT STATUS presentations here:
Persily -
Harbour. Alaska Committee member, Suzanne Lagoni
(NGP Photo, upper left) writes,
"I've heard great comments
about the presentations. Members appreciated gaining some perspective beyond the
limited news reports they see here in Seattle, especially
relating to the overall effect on relations with Canada."
(Note: the two pieces may reflect the most current view of issues available
today. In the author's case, much more thorough comment and analysis is
provided in the paper than is normally included in this web page for two
reasons: this web page primarily focuses on the views of others, and it tries to
give support to all government and industry proponents. The informal
remarks based on the paper were as candid and thus meant to be as useful as
possible. As always, readers are encouraged to provide
additions/corrections, for the paper will be updated herein in such a way that
no reader with corrections to offer will feel that anything but the most
accurate information has been provided. If a reader does not agree with
the views presented, that is another matter. As you will see below,
we are delighted for this to be a forum for diverse opinion, as may be seen in
the Op-Ed pieces below. -dh)*
Financial Post by Claudia Cattaneo (NGP Photo, 2-8-02,
lower left), CALGARY - ExxonMobil Corp., the top natural gas reserve owner in
Alaska, says it disagrees with U.S. government subsidies
to
support building of a natural gas pipeline along the Alaska Highway and favours
a smaller project from Canada's Mackenzie Delta. Bob Davis, a spokesman
for the Irving, Tex-based company, said yesterday a more in-depth evaluation of
an Alaska line shows costs have escalated since estimates were first made last
fall, reinforcing the firm's views that the project remains uneconomic.
"Speaking for ExxonMobil, we are not looking for subsidies and it really doesn't
change our thinking on the economics of the project," Mr. Davis said. "We
philosophically usually do not agree with subsidies, because it's our view that
we like to let market forces and market conditions to work on their own. If it's
not economic -- which the Alaska project is not now -- we have always said we'd
rather wait until we can improve it on our own actions or wait until the market
conditions support the project." ... Mr. Davis made the comments as a
controversial U.S. Senate bill works its way through the U.S. Congress. The
bill, aimed at improving the Alaska line's economics, would create a US$3.25 per
thousand cubic feet floor price on natural gas shipped from Alaska. Under the
plan, promoted mostly by the state of Alaska, energy producers would also
receive loan guarantees to build the pipeline. ... Further evaluation by
ExxonMobil showed that both routes would cost about US$2-billion more -- or
US$19.4-billion for the southern route and US$18.6-billion for the northern
route -- after factoring in larger start-up, permitting, insurance, project
management costs, as well as increased pipeline capacity to 4.5 billion cubic
feet, from 4 billion cubic feet. Mr. Davis stressed that even those numbers are
uncertain. ...Mr. Davis said his firm would have to see a natural gas price of
US$3 to US$3.50 per thousand cubic feet on a long-term basis for the pipeline to
move ahead. Mr. Davis said his firm also views the Senate bill as a "strong
negative" because it prohibits the over-the-top route. The bill has also come
under heavy criticism in recent days from Canadian and U.S. producers with
interests in the Mackenzie Delta, as well as from the Northwest Territories and
Herb Dhaliwal, the federal Energy Minister. They are concerned
that such a subsidy would distort the North American market for natural gas and
undermine development of Mackenzie reserves.... *
Northern News Services by Richard Gleeson,
Yellowknife (May 10/02) - If recent experience with
diamond mining is any indication, a Mackenzie Valley pipeline will push the NWT
into financial and social turmoil. *
ANCHORAGE-The
“All-Alaska Gasline Initiative” certified by Lt. Governor Fran Ulmer and
will be on the November 5, General Election ballot. On April 22, the House
passed HB302; a bill entitled “An Act establishing the Alaska Gas Corporation”.
A heated discussion is now brewing
in Juneau as to whether the two pieces of legislation are “substantially
similar”. See
complete opinion piece by Scott Heyworth (NGP Photo, 5-24-01).
*
Anchorage Daily News Op-Ed by Governor Tony Knowles, (NGP Photo,
1-25-02) JUNEAU-Most Alaskans
would agree to give industry a tax incentive if they could be assured it
translated into Alaska jobs, a growing economy and sharing the benefits when
assuming some of the risks.
*
Anchorage Daily News Op-Ed by Dave Rose (NGP Photo-below
right, 9-21-01, attending
gas pipeline policy council meeting.) Anchorage-After months of public
and House of Representatives debate about the fiscal gap and potential methods
to be employed to close it, the House has acted thoughtfully and courageously to
pass a package of bills to address the problem. All eyes are now focused on the
Alaska State Senate. (As we have noted, how the state handles its fiscal
crisis will impact investor confidence in large projects
such as gas pipelines. -dh) *
The joint
conference of the Pacific Section of the American Association of Petroleum
Geologists (PS-AAPG) and the Western Region of the Society of Petroleum
Engineers (SPE) will occur in Anchorage, Alaska next week: May 18-23 (Technical
Sessions May 20-22). Theme of the meeting is "Energy
Frontiers: A 2002 Perspective" highlights the challenges, high stakes, and
excitement offered through technology to deliver our energy future.
*
Coming:
After unexpected delays, we shall attempt to have Edmonton and Houston
conference reports available by Monday; thank you for your patience.
5-9 Updates: 10:10, 11:42, 13:22, 15:56 ET.
CBC,
Yellowknife, N.W.T. - A northern free trade opponent says the Government of
the Northwest Territories should challenge proposed subsidies on U.S. natural
gas. ... Stephen Kakfwi has spent the last
few weeks lobbying against the American subsidies but a NAFTA challenge isn't
the way to fight them. "It's not time now to quibble about whether it's in the
[agreement] or whether its in violation of other international agreements," he
says. "The Americans are going to say prove it and we don't have time for
that." ... Kakfwi says the solution is to convince the U.S. not to implement
the subsidies in the first place, but admits that Canadian issues are not very
far up on the U.S. government agenda.
*
Northern News Services by Thorunn Howatt, Yellowknife - Canada can't
let arctic natural gas be stranded by American pipeline subsidies.
That was federal Natural Resources Minister Herb Dhaliwal's
message last week in Detroit at a meeting of energy ministers of the Group of
Eight richest countries. Until now the federal government hasn't taken a stand
on a natural gas pipeline that would carry arctic gas southward. There are two
competing proposals, one Alaskan and one Canadian. The American line would
follow the Alaska Highway southward and completely bypass Canadian gas reserves.
That $17-billion
project was deemed uneconomic but the U.S. government wants to make guarantees
and subsidies to help gas producers and lower the cost of building a pipeline.
The $3-billion Canadian proposal sees a pipeline starting at the Mackenzie Delta
carrying gas southward following the Mackenzie Valley. Dhaliwhal said the
Canadian government may have to look at "other measures" to ensure Canadian gas
isn't stranded.... *
Whitehorse Star-Larry Bagnell was recently appointed chair of the
Caucus Foreign Affairs, Defence and International Cooperation Committee. (Photo,
2-9-02-Bagnell, left, with author at Canada Gala in Anchorage.)
5-6 Updates: 12:03, 02:26, 06:02, 08:28 ET. Today
we leave for meetings in Seattle and will be addressing the Seattle Chamber's
Alaska Committee Wednesday morning. News updates will resume on 5-9, with
recent Edmonton and Houston conference reports and photos posted by next
weekend.
Please review the Friday and weekend reports below, and for April news reports, click here.
-dh *
Juneau Empire by Bill McAllister-Gov. Tony Knowles (NGP Photo,
2-20-02) said Saturday that he "could imagine" calling a special legislative
session on the state's $1 billion fiscal gap, if the Senate doesn't act by the
May 14 adjournment of the regular session...; and
Anchorage Daily News by Ben Spiess, Juneau -- Gov. Tony Knowles has
been on the sideline of the tax and revenue debate raging in the state House of
Representatives for most of the legislative session. Ten days ago, Knowles
stepped in to help House leaders agree on a package of revenue bills to help
fill the state's projected $963 million fiscal gap. (Note: Pipeliners will
require fiscal clarity in Alaska in addition to Congressional action discussed
herein at length. Gas tax and royalty stability applies directly to gas
pipeline decisions. More indirect but of no less importance to large
investors will be Alaska's commitment in dealing with its $1 billion/year
deficit. With only a few days remaining in the legislative session, the
Governor and lawmakers have precious little time to resolve the budget crisis
and affirm the fiscal responsibility of state government. Absent action
now, a special session may be ahead. -dh)
*
Milwaukee Journal Sentinel -
Last fall, the Bush administration launched a spirited effort to develop a
national strategy for dealing with future energy supply challenges. This spring,
it appears that the best Americans can hope for from Congress is a national
energy tactic, something that will win a battle here or there but will not win
the war.
*
Download your copy of H.R. 4, the Senate's Energy Policy Act of 2002, soon
to be resolved in conference with House Members.
*
Financial Post by Ian Jack, OTTAWA - Senior Liberal ministers admitted
yesterday they have little power to influence the United States on important
issues, including softwood lumber and agricultural subsidies, provoking the
opposition to label them "trade powder puffs." ... A U.S. trade panel on
Thursday confirmed a 27.2% duty on Canada's $10-billion a year in softwood
lumber exports, despite months of negotiations and protests by Ottawa. And a
bill passed earlier this week by the House of Representatives would pump
$45-billion into agricultural subsidies, despite commitments from the U.S.
administration to work to eliminate farm subsidies. (See our earlier
stories and
comment.)
* DON'T
FORGET: 6-19/21-02,
Second Inuvik Petroleum
Show; as of today, registrations are still available but the trade show is
sold out. Congratulations, Inuvik!
5-4/5 Weekend updates: Sat. 17:30, 18:04, 19:00,
21:05; Sun. 02:00, 18:27, 19:00 ET. Saying a successful partnership goes two ways, Gov.
Tony Knowles today proposed amendments to pending gasline incentive
legislation, House Bill 519.
(See our links to legislation
here.) Knowles' office reports that the current version of HB 519 would provide a direct, up-front
property tax exemption valued at more than $760 million and requires no payback.
Incentives in pending federal energy legislation include a payback
provision. "The commodity price floor provision reduces the
federal tax burden when the price of natural gas is low, but requires project
sponsors to re-pay the federal government when prices are high," Knowles said.
"We believe the same provision should be in place at the state level. What's
good for the feds should be good for the state." (Download
Governor Knowles' comments. Then see the
Republican response here.) *
Canadian Press-DETROIT (AP) - Delegates from the Group of Eight countries
homed in on energy infrastructure, emergency response and supply security in a
private summit meeting Friday. U.S. Energy Secretary Spencer Abraham
attended the ministerial meeting.... ...by 2020, oil consumption will
increase by 33 per cent, natural gas consumption by more than 50 per cent....
* DETROIT, May 3, (Reuters)
- The White House does not support subsidies for a multibillion-dollar natural
gas pipeline from Alaska, a proposal that has angered Canadian energy interests,
and instead favors a market approach to Arctic development, U.S. Energy
Secretary Spencer Abraham said on Friday. (Note: See
Herb
Dhaliwal story below.) *
Add farm subsidies to softwood tariff and gas pipeline issues of current concern
between neighbors:
CBC, CALGARY - Some Alberta farmers will see their profits slip
because of the passage of the U.S. Farm Bill this week. ...
Calgary Herald by Gina Teel-Canada's farmers want to know how federal
agriculture minister Lyle Vanclief plans to mitigate the impact of $45 billion
in American farm subsidies passed Thursday by the House of Representatives.
5-3 Updates:
01:20, 02:00, 10:40, 10:52, 11:28, 14:29, 15:56, 16:39 ET.
DETROIT (Reuters), by Jeffrey Jones - Canada's energy
minister threatened on Thursday to scrap
his free-market approach to Arctic gas pipelines and actively promote a Canadian
project if the United States implements a proposed tax incentive to spur
construction of a line from Alaska. Natural Resources Minister Herb
Dhaliwal (Photo-r) said the amendment in last week's U.S. Senate energy
bill amounted to a subsidy and would violate an agreement between Canada and the
United States to let the market decide pipeline routes from Alaska and the
Mackenzie Delta region of the Northwest Territories.
* WASHINGTON-Senator Frank Murkowski (NGP Photo, 2-20-02)
is pleased with the Senate's appointments to the energy bill conference
committee. "It's important to remember ANWR, as well as other issues in
disagreement between the House and Senate bills will need to be addressed. Given
these conferees, I expect a lively discussion, but I believe we have an
opportunity to report out a truly balanced energy bill that President Bush
can sign," said Murkowski. Named to the conference from the majority were:
Democrats Sen. Jeff Bingaman, N.M.; Ernest Hollings, S.C.; John
Breaux, La.; Max Baucus, Mont.; John Kerry, Mass.; Jay
Rockefeller, W.V.; Harry Reid, Nevada; Joe Lieberman, Conn.;
and Jim Jeffords, I-Vt. Named for the Republican minority were:
Murkowski, Pete Domenici, N.M., Charles Grassley, Iowa; Don
Nickles, Okla.; Trent Lott, Miss.; Larry Craig, Idaho; Ben
Nighthorse Campbell, Colo.; and Craig Thomas, Wyo.
*
Whitehorse Star by Chuck Tobin
- Construction of an Alaska Highway gas pipeline would be an economic windfall
for the Yukon before and after the pipe is in the ground, says the
$126,000-economic analysis commissioned by the Yukon government.
“Potential person years of employment in the Yukon range between 32,000 and
50,000 (over 24 years), depending on how government chooses to manage the
revenues,” Energy, Mines and Resources Minister Scott Kent (NGP Photo,
11-29-02) said this morning during at a press conference held to unveil the
work. (We are pleased to provide readers with:
Economic Effects of Pipeline: Final Report;
Informetrica Presentation;
Press Release. -dh) *
Northern News Services by Paul Bickford,
Hay River Reserve - An NWT aboriginal band is asking the
court to rule the national labour code does not apply on its reserve.
The K'atlodehche First Nation on the Hay River Reserve has launched a court
challenge to the authority of the Canada Industrial Relations Board.
*
Anchorage
Daily News by Tony Hopfinger-A proposed $20 billion natural
gas pipeline to the Lower 48 is far from a sure thing, but a Canadian company
gambled Wednesday that Alaska gas will eventually light up U.S. homes. During a
state oil and gas lease sale, Petro-Canada bid $8.5 million for leases covering
more than 1 million acres in the southern part of the North Slope. The move
builds on the Calgary-based company's bid for 283,000 acres in the same area
last year, according to the Alaska Division of Oil and Gas. ... It is the
largest oil and gas lease sale in Alaska history in terms of acreage. ...
Natural gas explorers like Petro-Canada are gambling that a 3,500-mile gas line
from Prudhoe Bay to Chicago will happen, despite a $125 million study by big oil
companies that recently concluded the massive project does not currently make
financial sense. "This is a sign from the marketplace that speaks to the
viability of a gas line," said Daniel Zobrist, an economist at
the state Division of Oil and Gas. ... "We know that every well there has struck
gas," said James Hansen, lease sales manager at the Division of
Oil and Gas. ... The gas producers told state leaders last week that neither
route makes sense at the moment. But Petro-Canada, one of Canada's largest oil
and gas companies, is speculating that a pipeline will eventually be built.
Depending on the final outcome of Wednesday's bids, the company is poised to
hold leases on the Slope totaling about 1.3 million acres. Petro-Canada and a
partner hold another 1.2 million acres of gas leases in the Mackenzie Delta of
the Northwest Territories, where a coalition is spending hundreds of millions to
study and permit a separate gas line that would connect to the Lower 48, said
Chris Dawson, a Petro-Canada spokesman. "Our view is both
Mackenzie Delta and Alaska gas will eventually be shipped to North America. And
we're positioning ourselves on both of these major gas frontiers," Dawson said.
Other companies that bid on the foothills leases were Unocal Corp., Anadarko
Petroleum Corp., and joint bids from Anadarko and Canada-based EnCana. The
Division of Oil and Gas also held an oil and gas lease sale in the Cook Inlet
area Wednesday. Six groups bid $581,290 for more than 82,500 acres scattered
throughout the Inlet, the agency said. *
Reuters via Energy Central-Petro-Canada's
chief executive on Tuesday blasted a proposed U.S. tax incentive aimed
at spurring construction of a huge gas pipeline from Alaska, saying it would
subsidize
one
region's supply in an otherwise free North American market. However,
Petro-Canada CEO Ron Brenneman (Photo) said he did not believe
such a move, part of last week's sweeping U.S. Senate energy bill, would
threaten the hopes of Canadian gas producers for another, more compact pipeline
from the Mackenzie Delta region of the Northwest Territories. ... "I think that
the viability of the Mackenzie Valley pipeline stands on its own, and I think
that with or without the Alaska pipeline we'll see gas moving out of the
Mackenzie Delta probably in 10 years' time or so," he said.
*
Northern News Services by
Thorunn Howatt,
Yellowknife - Playing both sides has proved to be good
business for Trans Canada PipeLines Ltd.
Its profits rose 15 per cent in its first financial quarter.
Building either an Alaska or Mackenzie Valley pipeline is key for Trans Canada.
A new U.S. tax incentive to spur construction of a multi-billion-dollar Alaska
Highway natural gas pipeline was positive for Trans Canada. The Foothills Pipe
Lines proposal is owned 50/50 with Duke Energy Corp. and Trans Canada. It
proposes the Alaska Highway route. *
(JUNEAU;
Readers know we have long counseled that fiscal stability in Alaska will be a
critical component of gas pipeline investment decisions.
Yesterday's action noted below is a possible solution, but final
compromise/action by the Senate and Governor would be required as the
Legislative Session draws to a close this month. -dh) - The House of
Representatives yesterday passed a package of four bills that would address
Alaska's long-range fiscal gap while protecting the Permanent Fund dividend,
sharing the effect of broad-based taxes fairly among Alaskans, stabilizing state
municipal revenue sharing and making modest increases to alcohol taxes. "I
commend the House leadership and all members for their tireless efforts to craft
a responsible solution to our state's most pressing challenge," said Speaker of
the House Brian Porter (NGP Photo, 12-14-01). "Everyone
can probably find something to love, and something to hate, somewhere inside
these four bills, which probably means we hit things just about right." The
four bills that passed the House in separate votes would, when fully implemented
in fiscal year 2004, together provide approximately $900 million toward filling
the state's projected $963 million budget gap, while preserving the
Constitutional Budget Reserve as a $2 billion budget shock-absorber:
- House
Bill 303 would impose a tax on income in Alaska generating approximately
$255 million per year when fully implemented in fiscal year2004, while
requiring those at all income levels to pay something to support state
government.
-
House Bill 304 would convert Alaska Permanent Fund payouts to an endowment
model, in which no more than 5 percent of its five-year average market value
could be spent each year. Half would go to pay for Permanent Fund dividends
and half for public education, while retaining enough earnings for
inflation-proofing.
- House
Bill 225 would raise Alaska's excise tax on alcohol to a dime a drink,
increasing that tax revenue from $12.1 million to nearly $30 million each year
to help offset the estimated $483 million annual state costs associated with
alcohol abuse.
- House
Bill 20 would use about $59.5 million in Permanent Fund earnings each year
to provide communities with municipal dividends as a stable source of revenue
that would fund revenue sharing, capital matching grants, community jails and
community safety programs.
4-24 to 5-2:We attended informative gas conferences in
Edmonton and Houston. Reports and photos will follow over the weekend
(5-4/5) as gas pipeline coverage continues.
Northern Gas Pipelines is scheduled to join you for two very timely Arctic gas
related conferences this month:
Arctic Gas Opportunities in the North comes to Houston next week, with a cast of
central players at a time when many producer, pipeline and Congressional
directions will be more obvious.
Aboriginal Oil and
Gas Ventures meeting in Edmonton
this week, provides insight to emerging Aboriginal
leadership and to corporations hoping to work with them and others already
venturing with them.
Discounts available for Northern Gas Pipelines readers...or...
Mention that you saw these
conferences on the Northern Gas Pipelines web page and you will receive a
10% discount off the registration price of: Aboriginal Oil & Gas Ventures
April 25/26, 2002 and/or Arctic Gas Pipelines
April 29/30, 2002. To take advantage of this special offer (i.e. in
which we, of course, have no financial interest) call Peter
Strickland at 1-866-456-2020 ext. 261
Northern Gas Pipelines Readers are Cordially Invited
To Informal, Post-Conference Discussions of Gas Pipeline
Issues/events.
No-host Bar and Snacks
Presented by:
Northern Gas Pipelines & Inuvialuit Environmental &
Geotechnical Inc.
1.
Edmonton, Sheraton Grande, Vintage Room: April 26, 4:30 p.m.
2.
Houston, Crowne Plaza Hotel, Ballroom area: April 30, 4:30 p.m.
R.S.V.P. helpful but not required: Peter Jalkotzy, B.Sc.,
P.Biol.
Vice President, Environment
IEG Inc.
1338R 36th Avenue NE
Calgary, Alberta, Canada T2E 6T6
(403) 219-1248 (direct)
(403) 863-0837 (cellular)
(403) 291-1150 (fax)
peter.jalkotzy@ieg.ca (email)
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