Today's Energy Bill Conference Agenda & Webcast Link Below

Kyoto Erupts As Major Issue In Canada

Wall Street Journal Takes Position On Alaska Gasline Routing and Incentives

Canadian Ambassador Opposes New Gas Price Guarantee Formula

  Northern News Services by Thorunn Howatt (NGP Photo, 6-02), Yellowknife - The gap is widening in the race to build an Arctic natural gas pipeline -- and it looks like the NWT is way ahead.  Ex-Alberta Premier Peter Lougheed's visit to Yellowknife this week and Imperial Oil's aggressive push to move quickly on the project signal the Aboriginal Pipeline Group (APG) is closer to getting the $70 million it needs for its one-third portion of pipeline research.  "We're meeting with (Lougheed) in Yellowknife this week," said APG member Doug Cardinal.  ... "He's joined our team in helping us put that together," said Cardinal, adding the group will have more to say by week's end. ... Until now, solid aboriginal support was a missing ingredient in the attempt to build the line.  "Northern support is essential and clearly, Northern aboriginal support is a big part of that in the Northwest Territories," said Imperial Oil's Joanne Young.  The producers group's best chance of bringing aboriginals on board is by giving the APG a one-third ownership.   But the aboriginal group didn't have money for the expensive venture. ... On Imperial's front, Tim Hearn, the company's new chief executive officer said last week the pipeline will be up and running by 2007 if efforts to speed up regulatory reviews and construction are successful....     *     Financial Post by Claudia Cattaneo (NGP Photo, 11-01)-Indignation over the Kyoto accord may have led the agenda for Canada's energy industry this week, but the biggest development for the oilpatch -- one with equally far-reaching, and decidedly more positive impact -- was the news that Imperial Oil Ltd. is looking to accelerate construction of a Mackenzie Valley pipeline. ... More intriguing, the news seems to show that ExxonMobil Corp., Imperial's parent company and the owner of the biggest gas reserves in Alaska, wants the the Mackenzie pipeline built. And that could well mean that the race between the Mackenzie pipeline and the rival Alaska highway route is already over, and the promise of US$31-billion in loans and subsidies from the U.S. government to help it along is effectively irrelevant.  Tim Hearn, the new chief executive of Imperial, Canada's largest oil producer, told the Peters & Co. investment conference in Toronto this week that the pipeline could be up and running as early as 2007 if efforts under way to speed up regulatory reviews and construction are successful. ... By stepping up the tempo on the Mackenzie Valley project, Imperial and its partners, Conoco Phillips Canada and Shell Canada Ltd., have clearly put themselves in position to be the first to bring their natural gas to market, addressing a major concern that if the much-larger Alaska project had moved first, it would have put on the shelf a Mackenzie Valley pipeline for about a decade.  The move also lends support to industry speculation ExxonMobil Corp., the dominant decision maker in the Mackenzie Delta through its 69% ownership of Imperial, has permanently set aside the Alaska-highway option, while warming to an alternative, over-the-top route that would connect the two Arctic basins, rather than have them compete.  "The evidence keeps piling up that that's their plan," said Harvie Andre, chairman of Arctigas Resources, a proponent of the over-the-top plan. Said Wilf Gobert, research director at Peters & Co.: "The decisions Imperial Oil is making are telling us ExxonMobil believes the Mackenzie Delta is a standalone, high priority project. You could read between the lines that Exxon believes ultimately the best development of Alaska is to ... piggyback Mackenzie Valley."  ...  As Mr. Hearn put it, "Ultimately market forces will prevail in this whole process."  ....     *     Bill Wicker, Communications Director, Senate Energy Committee advised us last night that the next energy conference meeting will be today at 9:30 a.m. in Rayburn 2123.  Agenda for the meeting is 1) Senate consideration of the House offer on CAFE and 2) House consideration of an offer on electricity.  According to Wicker, "The Chairman expects roll call votes (Members).  He also said he intends to conduct the meeting under the House's so-called "five-minute rule," in which Conferees will be recognized for five minutes only in support of, or opposition to, specific matters before the conference."   Like last week, our readers can watch via a webcast -- here (Link now inactive, 17:37 ET -dh).  The link will become active at 9:15 a.m. ET.  Wicker provided us with a handy recap of what's been accomplished, and what's ahead:
"--  There have been three Conferee meetings to date: June 27, July 25 and Sept. 12.
"--  Two major issues before the conference have been resolved: pipeline safety provisions and reauthorization of the Price-Anderson nuclear liability act.
"--  We have substantially resolved numerous issues in 14 other areas covered in the House and Senate bills.  These are: energy efficiency; housing energy use; renewable energy; LIHEAP, state energy programs and weatherization; rural and remote energy infrastructure; nuclear energy provisions; energy development on Indian lands; streamlining the process of siting and building the Alaska natural gas pipeline; permanently reauthorizing the Strategic Petroleum Reserve; fuel economy of the Federal vehicle fleet; clean coal provisions; and programs related to personnel and training of the next generation of scientists, engineers and skilled workers to meet the energy needs of the country.
"--  Ahead are a mix of issues close to resolution, and others that will require more intensive work by Conferees.  Issues that are moving toward resolution include: R&D programs and provisions related to alternative-fueled vehicles (non-CAFE and non-ethanol).
"--  Major issues before the conference that still need to be addressed include: electricity/RPS; CAFE; climate change; ethanol/phase-out of MTBE; ANWR and taxes (which include the Alaska pipeline gas credit and loan guarantee provisions).
"Senator Bingaman believes that the progress made so far has been good.  He also acknowledges that there is a lot of work yet to be done before this energy conference can conclude."     *      The Report, by Mike Byfield-FOR the first time since he retired as Alberta's premier in 1985, Peter Lougheed is wielding his full personal clout in the political arena (Ref.). His concern: the Kyoto Protocol, a proposed climate treaty whose ratification Prime Minister Jean Chrétien has just vowed to ram through Parliament. (Our opinion.)     *     The Wall Street Journal Weighs in on Congressional manipulation of gas pipeline route and gas price/loan guarantees...links ethanol (as we have).     *     Platt's-Canadian Ambassador to the United States Michael Kergin said Wednesday that Canada still opposes any U.S. tax credit for expediting an Alaska gas pipeline, including the BP plan outlined earlier this week ( GD 9/18).  Kergin, at a meeting of the Canadian American Business Council in Washington, D.C., asserted that price subsidy proposals being floated in Congress and by BP “could well retard North American natural gas development, both in Canada and the rest of the U.S.”  On Tuesday, BP, one of the three major Alaskan gas producers, said it is pushing a production tax credit under which producers would get a 52¢/MMBtu credit that would phase out when field prices are in the range of 83¢ to $1.35/MMBtu. That compares with a plan currently under consideration in the Senate energy bill that would provide a credit to the pipeline developers if the price of gas in Alberta drops under $3.25/MMBtu over the course of the project’s construction. That credit would have to be repaid by the companies after prices stabilize. Kergin told reporters that the BP plan does not take into consideration the “law of unintended consequences. We don’t know what the results of that application would be. From our preliminary view, [credits] don’t help much and still have an impact on pricing.”  (Ref.)

9-18-02 Updates: 00:17, 01:00, 02:05, 11:09 ET. CANADIAN EFFORTS ARE INTENSE WHILE WASHINGTON WORKS.  CBC, YELLOWKNIFE, N.W.T. - Not so fast – that's how some environmental and aboriginal groups are responding to reports that Imperial Oil wants to speed up development of a Mackenzie Valley pipeline.   Even the Northwest Territory's minister of economic development admits the prospect of moving gas down the Mackenzie Valley by 2007 may not be practical.  Tim Hearn, the new chairman of Imperial Oil, told investors last week he wants gas to flow down the Mackenzie Valley in five years' time. That's at least a year earlier than previous estimates.  Jim Antoine (NGP Photo, 11-01) the territory's minister of economic development, says the new schedule took him by surprise.   "Saying he's going to speed it up is a good sign, however we still do have our environmental review process that has to do its work," he says.   That environmental and regulatory review is expected to take between two and three years. On Friday, federal Natural Resources Minister Herb Dhaliwal indicated he could see the process moving smoothly for the energy giant.  "That's assuming that absolutely everything is done on time, which more than often never happens," says Kevin O'Reilly of the Canadian Arctic Resources Committee (CARC) , who plans to take part in the review.   Once the permits are in place, construction is supposed to take three years. But before any ground is broken, even before the regulatory process begins, the Deh Cho First Nations want to negotiate their own terms for the pipeline.   "It might very well not ever happen if they don't get down to serious negotiations with the Deh Cho on resource revenue sharing," says Chris Reid, their chief negotiator.   All of this adds up to a formidable list of obstacles that could dampen the enthusiasm Imperial's new head has for speeding the project up.   Meanwhile, a company spokesman has confirmed the company plans to file a preliminary information package by the end of the month. The package of 100-200 pages will provide an overview of the Mackenzie gas project.   Its purpose is to alert the Mackenzie Valley boards and the National Energy Board about what to expect from the application to build a pipeline.   That application is expected in the latter half of next year, and will run to thousands of pages.     *     Globe & Mail, by Patrick Brethour, Toronto — Imperial Oil Ltd. is aiming to jump ahead in the race to build a pipeline from gas reserves in the Canadian Arctic as support reportedly withers for U.S. subsidies to a competing pipeline from Alaska.  The company said Wednesday that it wants gas to start flowing through the pipeline as early as 2007, assuming it gets regulatory approval and that the consortium of Imperial and other producers then decides to go ahead with the megaproject. Previously, the consortium had set a goal of 2008, or earlier if possible. ... "Every effort is being made to advance this project as quickly as possible," said Tim Hearn, Imperial's chairman, president and chief executive officer. He added that the government has been "stellar" to date in working with the consortium.  Roland George (NGP Photo, 11-01), principal with oil and gas consultancy Purvin & Gertz Inc., said the 2007 goal is achievable, but only if no serious roadblocks emerge. "This is as aggressive a timeline as I've ever heard," he said. ... A day before Mr. Hearn discussed a stepped-up schedule for the Mackenzie pipeline, Natural Resources Minister Herb Dhaliwal said that key U.S. legislators told him they are worried about the economic distortion resulting from subsidies to an Alaskan pipeline. He also said lawmakers representing natural gas producing states were worried that energy firms in their states would ask for similar subsidies. "There will be huge pressure to say, 'Well, hold it, you're subsidizing that [Alaskan] gas field, but what about us?' " the Minister said. ... The Alaskan pipeline wouldn't take any longer to build than the Mackenzie project, but it does have to balance the interests of more governments, which could lead to delays, said Brian Prokop, an analyst at Peters & Co. "There's fewer moving parts and fewer stakeholders."  ...  Winfried Fruehauf, an analyst with National Bank Financial, said the approval process is hard to predict.  ... However, Mr. Hearn seemed sure Wednesday that the decision on each project will be based solely on economic factors. "Ultimately, market forces will prevail."     *     Northern News Services, Inuvik - Despite the speculation of a Mackenzie Valley pipeline, there is not much exploration activity planned this winter from most producers.   ... Imperial Oil spokesperson Hart Searle said this year's work in the NWT will be limited to Norman Wells.  "In our plan for next year, we're looking at drilling four in-fill wells in our Norman Wells field next summer," Searle said. "We do not have any exploration planned for the winter season."   ConocoPhillips' general manager of public affairs, Peter Hunt, said the company plans a "moderate-sized" 2-D seismic program on exploration license 384 and 385, near Parsons Lake.  ... Shell Canada's senior seismic supervisor, John Brown, said most of the work to be done this year will be based on the outcome of Shell's work last year.  "We're hoping to go ahead with a drilling program, but we're still doing the technical work on that," Brown said.   ... Rob Jefferies, manager of land frontiers for Anadarko Canada Corporation, says the company plans to continue a seismic program they started last year.   ... EnCana has up-coming community consultation beginning in Inuvik on Sept. 16 and would not release any details until then. ChevronTexaco spokesperson Delona Butcher said the company's Mackenzie Delta Partnership with BP and Burlington Resources, has sought approval to drill this winter.  "We'll be drilling one well on North Langley Island, which is on exploration licence EL-394," Butcher said. ... Heather Taylor, community and Northern affairs advisor with Devon Canada said they will be working with partners PetroCanada, but have not finalized plans for the winter program yet.   ... Devon's partner PetroCanada will take the lead on another well near Tuk, hoping for the same success they had with a 200 to 300 billion cubic feet of gas discovered at the M-18 well last year.   PetroCan spokesperson Chris Dawson said the Nuna well is located about 40 kilometres south of Tuk. ..."If you compare it to years past, I guess it is a bit of a slowdown for us this year," Dawson said. "We are in the midst of regrouping a bit to tailor our exploration in years to come."     *     Whitehorse Star-Energy, Mines and Resources Minister Scott Kent is continuing his lengthy push for the development of two northern pipelines at the annual Conference of Mines and Energy Ministers. The meeting began today in Winnipeg, and will end tomorrow. ... “The Yukon is poised to play a significant role in Canada’s energy future,” Kent said in a pre-conference statement. “I will be stressing the North’s critical role in supplying North America’s future energy needs and will continue to advocate the development of both the Alaska Highway and Mackenzie Valley pipelines.”    *     Northern News Services, Fort Liard  - ...  last week about 150 government officials, aboriginal chiefs and politicians joined business people to talk about energy exploration, a proposed Mackenzie Valley pipeline and the business implications and opportunities for aboriginal Northerners. ... Last week's event was slightly reminiscent of a meeting in Fort Liard a little over two years ago. That's when aboriginal leaders from all over the NWT emerged with an optimistic and united front. Their dream was to own a piece of a Mackenzie Valley pipeline and maximize their benefits through business partnerships.... "We thought it was the right time. We thought everyone in the communities was in favour," said Fort Liard's Harry Deneron. He was a key instigator of oil and gas development of the Deh Cho region and a major advocate for ownership of a Mackenzie Valley pipeline. ...despite the dissension, economic spin-offs from energy exploration have to be optimized, insisted Deneron.  "This pipeline is going to happen. Someone is going to build it."   Imperial Oil is leading a group called the Mackenzie Delta Producers' Group, which wants to have natural gas flowing down a Mackenzie Valley pipeline by 2007.      *      ANCHORAGE-Gov. Tony Knowles this week welcomes to Alaska four Russian Far East governors, the American ambassador to the Russian Federation, U.S. and Russian government officials from Washington, D.C., and Moscow, and numerous other high-level business and government officials for the 7th Annual West Coast-Russian Far East Working Group meeting. Most of the sessions are being held at the Anchorage Sheraton Hotel.

9-17-02 Updates: 02:10, 02:40, 03:00, 03:12, 03:40, 11:45, 12:04, 12:31, 17:43 ET.  Yesterday, Chamber Chairman George Vakalis introduced this week's keynote speaker, saying it was Governor Tony Knowles' (NGP Photo, 9-17-02) farewell presentation to the Anchorage Chamber after 8 years in office.  While Knowles is deeply involved in final Congressional activity affecting the outcome of gas pipeline and ANWR policies, he is also rushing to complete longer term building and highway plans with assistance from Transportation and Public Facilities Commissioner Joe Perkins and transition plans for a new administration.  Please see our special report here.    *    ENERGY BILL DEVELOPMENTS FOLLOW    *     Stephanie Stanton of Williams Energy News Live reports that, "A member of the Senate Energy Committee is calling for a reassessment of the U.S. energy policy - especially the country's dependence on foreign oil. Senator Conrad Burns is not only calling for an increase in domestic oil production, he also wants the U.S. to reduce oil imports from Saudi Arabia and the Middle East in favor of Russia and the Caspian region."  (Note: we hear that similar themes from other elected leaders assists in momentum of Alaska issues, though sufficient complexities and divergent interests may still cause deferral of the energy bill to next year.  -dh)    *    Last night, Bill Wicker, Senate Energy Committee Communications Director sent us a message that, "With last week's progress -- pipeline safety, Price-Anderson, energy efficiency, renewables, Alaska gas pipeline provisions, clean coal, etc. -- the energy conference again has momentum."  He said that staff members were working to develop as much informal agreement as possible in preparation for a potential Energy Bill Conference on Thursday, agenda as yet undetermined.  He said staff and Conference members could be close to dealing with remaining tax title and Tier I issues (i.e. in which Alaska is interested, including gas price and loan guarantees and ANWR.)     *      Congressional Quarterly-President Bush urged Congress today to get to work on legislation that has slowed or stalled, as the time runs out before both chambers plan to break for the Nov. 5 election. Speaking in Davenport, Iowa, Bush...also asked that Congress send an energy bill (HR 4) to his desk before the election.  (Comment: In our opinion the President is right to ask for a bill before the October break {'kick in the pants'}, but he could have rightly--and wisely--acknowledged the hard work of Conference Members and staff to date {'pat on the back'}.  -dh)     *     CBC, CALGARY - Officials in the oil industry and provincial representatives will be watching closely Monday when federal and provincial energy ministers meet to discuss the Kyoto agreement.  Many people in the oil industry say frustration is mounting because they don't have enough information about ratification (See our editorial, links and gas pipeline references).  "We continue to wait for more clarity from the federal government and the uncertainty continues to grow," says Pierre Alvarez (NGP Photo, 6-02), president of the Canadian Association of Petroleum Producers (Ref.).   Prime Minister Jean Chrétien says Canada will ratify the treaty to cut greenhouse gas emissions by the end of this year. But the Alberta government and many people in the energy industry are against ratifying the agreement. They believe ratification will have a drastic effect on this province's oil-rich economy.   Last week, Premier Ralph Klein (NGP Photo, 6-02) said the prime minister told him that ratifying Kyoto will have a 15 per cent negative impact on industry. Klein says he doesn't know what that figure means.  This is the time of year when oil companies do most of their budgeting and forecasting, Alvarez says. He needs more information, but he says he doesn't understand the 15 per cent figure Chrétien discussed with Klein.  "At this point, we have absolutely no idea whether this refers to revenues, emissions, production, activity levels or any of the other measures that we use," he says.  The energy industry invests $25 billion per year in capital spending across Canada, Alvarez says.  (Former Alberta Premier, Peter Lougheed, has been retained by Alberta to assist with Kyoto issues and by the Aboriginal Pipeline Group to assist with Mackenzie Valley Pipeline issues.  -dh)

9-16-02 Updates: 01:13, 01:49, 11:17, 11:37 ET.   Anchorage reader Ray Kreig, tips us to this thorough CBC review of Berger Commission background which we have added to our 'Quick Reference' section in the left gray border under 'Canada'.      *     Anchorage Chamber of Commerce-Governor Tony Knowles (NGP Photo, 1-02), whose second term of office concludes at the end of the year, will give a "Farewell Address" to Anchorage Chamber membership and the public.  We will report on gas pipeline related remarks.       *    Russian Far East Oil & Gas Opportunity, hosted by Governor Knowles: beginning tomorrow.  Special rates: Sheraton Anchorage Hotel and Alaska Airlines.  Also note the associated:  Alaska Energy Summit, IBC Energy @ Sheraton Anchorage, beginning today.    *     Yukon Director of Oil & Gas, Greg Komaromi (NGP Photo, 6-02), kindly offers us this viewpoint following our earlier story: "Mr. Lougheed has also been asked by the Province of Alberta to lead a constitutional challenge of the Canadian federal government's decision to ratify Kyoto. Kyoto may well become THE big issue on the Canadian energy landscape this fall. Provinces are going offside which means the federal government is going to have its hands full.  (Kyoto reference)"     *     National Post by Bill Curry-OTTAWA - Canadians are either "ignorant" or "in denial" about how the energy they use is produced, with 78% thinking it comes from relatively clean hydro-electric power. … In reality, only about 7% of Canada's energy comes from hydro-electric generation. According to the federal government, 41% of Canada's power comes from natural gas, 30% from oil, 12% from coal, 6% from nuclear power and 4% from renewable sources such as wind and solar power.  The recent public opinion studies show the government faces an uphill battle with Canadians as it attempts to reduce energy consumption in order to meet Canada's commitments under the Kyoto protocol.  Jean Chrétien, the Prime Minister, has announced that Parliament will vote on ratifying the international agreement, which would commit Canada to reduce greenhouse gas emissions significantly.  (Our editorial opinion.)     *     This week's Senate Committee on Energy and Natural Resources Schedule of Meetings.  *    History of H.R. 4, Energy Bill, through last week's conference, 9-12-02.     *     Environment and Energy Daily - Conference resumes this week, probably Thursday.  The more politically difficult provisions in rival House and Senate energy bills move to center stage this week when the House-Senate energy conference resumes to resolve issues related to federal fuel economy standards.  Following votes last week on Price-Anderson Act reauthorization, pipeline safety and construction of a natural gas pipeline to Alaska's North Slope….  On pipeline safety, a deal wrought by Sen. John Breaux (D-La.) and Rep. Don Young (R-Alaska) found Senate and House negotiators meeting somewhere in the middle of several counter proposals. Early in the debate, Breaux tried to insert language that would have required pipeline operators to inspect older pipelines at an accelerated rate, within 7.5 years of enactment, but Young resisted and conferees finally settled on a longer deadline. … Conferees also agreed to adopt language that would mandate use of the so-called "southern route" through the heart of Alaska for a possible natural gas pipeline to the North Slope. Action on about $11 billion in loan guarantees for the project was put off until later in the conference, probably when members take up more than $34 billion in tax credits included in the House energy bill, H.R. 4.  Markey tried but failed on two amendments that would have forced the pipeline project to establish a union labor agreement and use of U.S. steel for construction. The two-part rejection came after the president of BP, David Welch, sent a letter to Tauzin on Sept. 11 urging opposition to the steel and project-labor attempts. ….

9-14/15-02 Weekend Updates: While readers note our policy avoids reporting political campaign rhetoric, we do pick up on gas pipeline related remarks.  One of Alaska's candidates for Governor, U.S. Senator Frank Murkowski (NGP Photo, 11-3-01), held a press conference Saturday, in Anchorage, on transportation policy.  Following is the portion of the policy relating to a gas pipeline:

Alaska Gas Line 

Because natural gas has such potential to bring huge new state revenues and high-paying jobs, the Murkowski Administration will focus intently on bringing Alaska’s gas to market.  Marketing Alaska’s gas will share top economic priority with ANWR and NPRA oil development. 

Bringing the gas to market will mean using the Southern route through Canada, not the Northern tier route.  In addition to carrying natural gas to Lower 48 markets, Murkowski plans to use the Southern pipeline route as a springboard to a multi-modal system.  One transportation corridor could also carry a rail connection, a fiber-optic connection, power lines and other elements of a comprehensive link with the Lower 48 and Canada. 

Bringing the gas to market will also mean providing the option to bring Alaska’s gas to tidewater to meet LNG demand.  Murkowski will provide the leadership and experience in international markets in supporting the wishes of the Alaska people with an Authority if the All-Alaska gas line initiative passes in November.  The possibility of developing a petrochemical industry along with bringing the gas to tidewater is high on Murkowski’s agenda.

Murkowski sees both the Canadian gas line and the LNG projects as feasible.  “Alaska has more than enough gas to support both projects,” Murkowski states.  “I will hire the best people available to make these projects a reality.  I will make sure that we direct an intense effort on moving Alaska gas to market.  ”In addition," Murkowski said, "I am going to make myself personally available to go anytime, anywhere to help market Alaska’s gas.  And I’ve got one of the best little black sales books in the energy business.”

On Sept. 12 Murkowski announced the House-Senate Energy Conference Committee's approval of several proposals to facilitate construction of the trans-Alaska gas pipeline. These include major enabling provisions:

• A streamlined permitting and expedited court review process to speed construction and limit unnecessary delays.
• Provisions that allow Alaska to control in-state use of gas to facilitate use for heating or construction of petrochemical plants in Alaska.
• A guarantee that the gas pipeline will accommodate other potential gas projects in Alaska, including a potential LNG plant to be developed at tidewater in Alaska.  Provisions to guarantee that current and future gas producers in Alaska will be able to compete to get their gas through the pipeline to market.  A provision that authorizes $20 million for worker job training and promotes Alaska hire.

(See our earlier report.)  (Anchorage Daily News report.)

9-13-02 Updates: 01:15, 01:49, 02:36, 03:20, 03:38,11:26, 12:03, 12:24, 12:33, 12:55, 13:00, 14:12, 14:30 ET.

Link now available for Bob Marshall (GNWT) presentation delivered earlier this week.

New release: Brian McCutcheon, Senior Consultant with Outcrop Communications Ltd. (NGP Photo-l, 6-02), kindly provides us with the Aboriginal Pipeline Group's latest newsletter.

Op-Ed on Alaska's Proposition 3, Scott Heyworth

Opinion: Until now Northern Gas Pipelines has found the Canadian position on gas pipelines, trade and the joint anti-terrorism partnership mostly meritorious.  We regret the Prime Minister's recent statements kowtowing to unreasonable Kyoto demands and to those who would oppose terrorism by appeasing or analyzing it.  Unreasonable, international regulatory requirements leave a legacy of diminished project economic viability and job creation; without decisive freedom from terrorism, all projects and ways of life are at risk.  (9-27 follow-up: Chrétien talked, Canadians cringed)-dh

CBC-Premier Klein re: Kyoto.   *     Canadian Press by James Stevenson-CALGARY - Having gas flowing from the Northwest Territories within five years is an achievable target for Imperial Oil and other energy companies behind a proposed Mackenzie Valley pipeline, Natural Resources Minister Herb Dhaliwal said Thursday.     *     ENERGY BILL.  In the last two days, several readers have called for information on Energy Bill Conferees (link).     -     WENL-For the first time in weeks, progress is being made in Congress on a comprehensive energy bill.  (Yesterday, natural gas up .08 to $3.33.).  -  EENEWS-A chaotic yet productive Thursday at the House-Senate energy conference raised hopes that Congress may yet clear a comprehensive energy bill....  In a move bound to anger Canadian authorities and possibly the Bush administration, conferees also agreed to adopt language that would mandate use of the so-called "southern route" through the heart of Alaska for a possible natural gas pipeline to the North Slope. Action on about $11 billion in loan guarantees for the project was put off until later in the conference, probably when members take up more than $34 billion in tax credits included in the House energy bill, H.R. 4..... The official White House position on the project, as expressed by Energy Secretary Spencer Abraham in a recent Statement of Administration Policy, is firm opposition to predetermining an Alaska-only southern route in deference to Canadian wishes to let markets decide. The administration wants stripped from a conference report draft S. 517's $10 billion pipeline construction loan guarantee and a "safety net" meant to assist builders of an Alaska-only pipeline if the price of natural gas should fall below $3.25 per thousand cubic feet (Greenwire, July 22).   -    Realtime News report    -         Last evening, David Woodruff, Director of Communications for the Senate Energy and Natural Resources Committee (Photo-l) sent us a statement U.S. Senator Frank Murkowski (Photo-r) offered the Conference during the meeting yesterday (See meeting agenda in the 9-12 report below).  Murkowski prepared the way for difficult upcoming Conference debate on ANWR by saying, “Global events have changed significantly since the energy bill first got underway more than a year ago. The growing threat of a restless Saddam Hussein only makes the need for an energy bill more clear....   We must seek to find middle ground on these issues" he said. "We must find an answer on ANWR that recognizes the unique responsibility the Federal government has to the Kaktovik natives who hold title to 92,000 acres. We can and must find the best way to develop the energy resources of this sliver of Arctic land while protecting the environment. Earlier this year, the USGS released a report that made suggestions on how development and environmental protection could occur – we should look at that report to guide us. We should also carefully consider how we are going to use the billions of dollars in revenue generated by lease sales."                    -                In another statement, Murkowski announced the Conference's approval of several proposals to, "facilitate construction of the trans Alaska gas pipeline."  These include major 'enabling' provisions desired by gas producers and some wanted by State officials, including: --A streamlined permitting and expedited court review process to speed construction and limit unnecessary delays--Provisions that allow Alaska to control in-state use of gas to facilitate use for heating or construction of petrochemical plants in state--A guarantee that the gas pipeline will accommodate other potential gas projects in Alaska, including a potential LNG plant to be developed at tidewater in Alaska--Provisions to guarantee that current and future gas producers in Alaska will be able to compete to get their gas through the pipeline to market--a provision that authorizes $20 million for worker job training and promotes Alaska-hire provisions in-state.  (Note: still outstanding: gas price floor and loan guarantees)    -  Realtime News-In a speech at the National Press Club, Sen. Conrad Burns, R-Mont., called on the United States to distance itself from long-time friend Saudi Arabia and develop new energy sources, both domestically and in Russia and other producing areas of the world where there was less chance that oil revenues would end up in the hands of terrorists and anti-American regimes.     *          CBC, Yellowknife, N.W.T. - Travelers passing through Yellowknife's airport are going to experience more thorough security checks.  (NGP Photo-Yellowknife Airport)       *    TransCanada, owning half of Foothills PipeLines, Ltd., and with interest in progress of the Mackenzie Valley Gas Pipeline, has purchased Williams' Interest in Northern Border Partners, L.P.  One asset of the Partners, Northern Border Pipeline Co., was originally conceived in the 70s as the 'Eastern Leg' of the Arctic Gas project to provide North Slope gas to Midwest and eastern gas pipeline transmission companies and has subsequently evolved into a major U.S. transportation conduit for about 20% of Canadian gas imports.  New acquisition from El Paso: ManChief power plant.  -dh    *     Latest status: Trans-Alaska Pipeline System Right-of-Way Renewal.

9-12-02 Updates: 00:56, 10:16 ET.  Honorable Spencer Abraham, U.S. Secretary of Energy, will address the 23rd Alliance Annual Meeting of the Alaska Support Industry Alliance, 6-9:30 p.m.    *    Bill Wicker, Communications Director, Senate Energy Committee Energy provided us last night with an agenda bill conferees will work on today in the Conference meeting beginning at 9:30 a.m. in 2123 Rayburn.  We urge NGP readers to tune in on the webcast which will become active at 9:15 a.m. ET.  You may link through: http://energycommerce.house.gov/107/markups/09122002Markup715.htm  

 Agenda:

1. Resolution of Tier II Issues: Senator Campbell amendment on Indian Energy; Clean Coal (H 2401, 5000-5008; S 1232); Pipeline provisions other than safety (H 701; S 701-715 (other than 710)); Energy efficiency (H 123, 125, 132, 142; S 903, 918, 920, 922, 925, 928); Personnel and training (S 1501-1507);  Renewable energy (other than RPS) (H 141A, 161; S 265, 1701); Rural and remote (electricity construction) (S 941-950); Resolution of Tier I Issues; Pipeline Safety (S 741-783; no comparable House provisions); Price-Anderson and miscellaneous nuclear matters (S 501-509, 511, 521; H 301, 304, 308-309); CAFE (H 201-203, 205-207; S 801-806, 811)

3.  Discussion (Only) of Remaining Tier I Issues: Climate (S 1001-1032, 1101-1111, 1301-1385; no comparable House provisions); Ethanol (H 501-504, 603-604; S 820-820B, 831-840); ANWR (H 6501-6512; no comparable Senate provisions); Renewable Portfolio Standard (S 264; no comparable House provision); Finish electricity (S 101-102, 201-259, 263-264, 271-272, 531, 1503, 1703; no comparable House provisions)

 Oil & Gas Journal, WASHINGTON, DC, Sept. 11 -- US House and Senate lawmakers resume negotiations Sept. 12 on sweeping energy reform legislation.  Conference Chairman Billy Tauzin (R-La.), chairman of the House Energy and Commerce Committee, has tried to beat back growing pessimism that consensus can't be reached before the congressional calendar ends for the year. Votes are anticipated soon on relatively noncontroversial items, such as pipeline safety legislation and energy efficiency. During this latest energy bill markup, members will be allowed to comment on the other more prominent pieces in the bill, such as industry access to the Arctic National Wildlife Refuge coastal plain, clean fuel guidelines, and energy tax proposals.   …  The Independent Petroleum Association of America, for example, stressed that irrespective of ANWR, there is a plethora of items of interest to their members.  IPAA Chairman Diemer True acknowledged that some important issues, such as land access, will always be the target of litigation. Nevertheless, he argued that at a minimum for national security reasons Congress and the White House should pursue policies that encourage more domestic production.  True said he anticipates that a 2003 update of the 1999 National Petroleum Council study on natural gas supply and demand would further highlight the need for energy legislation designed to encourage domestic supply.  …  One issue expected to be resolved sooner rather than later is pending pipeline safety legislation.  Both the House and Senate passed legislation reauthorizing pipeline safety rules. Pipeline companies prefer the House version, (which is separate, stand-alone legislation and is not technically in the House energy bill (OGJ Online, July 25, 2002).  That bill includes what industry views as more flexible inspection timeframes and streamlined permitting option.  In the Senate version, companies support the adoption of a modified provision regarding community right-to-know, which industry says has been adjusted to shield security-sensitive information from public release.  Pipeline companies also called on lawmakers to support a new Alaska gas pipeline that would transport North Slope gas to the Lower 48.The Interstate Natural Gas Association of America also endorsed the "southern" route along the Alaska Highway that has been sought by key congressional lawmakers, arguing that such a route will have the best chance of being built, despite opposition from the Canadian government and some North Slope producers, who do not want to be told where to build the line.  The Senate bill includes incentives such as a loan guarantee and a floor price to encourage the construction of the line, but its potential cost could be a stumbling block.

9-11-02, Updates: 12:00, 00:01, 11:50, 12:36, 13:53, 14:00 ET.  This is a hallowed anniversary date, never to be wisely forgotten.

Tomorrow, the energy bill Conference will resume negotiations to produce compromise legislation from Senate and House versions of H.R. 4.  While we wish the Members success, we are concerned that the Herculean task of producing order from chaos (i.e. a reasonable bill)  within the stated end-of-month deadline is more than human endeavor can accomplish, given other Congressional priorities.  But with all that is stake a courageous, cooperative and diplomatic effort is justified.  On this special day, we recall that others have risen to higher challenges.  -dh   Last night, NGP friends at the Alaska Public Radio Network provided NGP readers with this Washington report (AUDIO CLIP BELOW)-US House and Senate negotiators meet again later this week in hopes of working toward agreement on a comprehensive national energy plan by the end of the month.  In the Thursday meeting, they may take up some non-controversial measures related to the proposed Alaska natural gas pipeline. Meanwhile, gas line supporters continue to negotiate possible alternatives to a price floor and tax credit incentive Senator Frank Murkowski pushed through the Senate early this year.  Top Bush administration economic and energy officials oppose that, arguing it will distort gas markets.  The North Slope producers continue to look for alternatives that will provide some cushion from gas price fluctuations.  Gas line issues were front and center for Canadian Natural Resources Minister Herb Dhaliwal during meetings with lawmakers and Bush administration officials yesterday and today.  Speaking to reporters this morning, Dhaliwal said anything like the Senate-passed Alaska gas incentives would be unacceptable to the Canadian federal government.  (Listen) …  And Dhaliwal says the Canadian federal government has not backed down from its opposition to House and Senate measures that mandate a southern-or Alaska Highway-route for the pipeline.  …  Dhaliwal says it's too early to tell whether Canada would hold up regulatory approval for a pipeline along the southern route.  But he says that could change if the Bush administration changes its 'route-neutral' position.  … Dhaliwal met with White House economic advisor Lawrence Lindsey,  House Energy and Commerce chairman Billy Tauzin of Louisiana,  and Senate Energy and Natural Resources Chairman Jeff Bingaman of New Mexico.  Earlier, related story links.     *   We have urged US trade officials for a year to consider the gas pipeline big picture, which includes trade policy with Canada.  -dh  OTTAWA (CP by Sandra Cordon) - Two days of lobbying in Washington left Natural Resources Minister Herb Dhaliwal "not really optimistic" that the softwood lumber dispute with the United States will be resolved anytime soon. After meeting U.S. administration officials, trade advisers, senators and congressmen, Dhaliwal said Tuesday a deal to resolve the multibillion dollar trade war still seems a long way off.     *     Northern News Services, Inuvik Drum, Editorial Comment by Terry Halifax-It seems despite the attempts of the Gwich'in Development Corp. to research the best deal for the Gwich'in people in the proposed pipeline project, there are still some dissenters within the ranks.   James Firth says the Mackenzie Gas Project doesn't provide enough benefits to the aboriginal people and the ARC plan guarantees aboriginal ownership.   As Chief of the Inuvik Native Band and also as president of the Northern Route Gas Pipeline Corporation, James Firth has a fine line to walk. On the other side of the issue is Nellie Cournoyea, who is chair and CEO of the Inuvialuit Regional Corporation and chair of the Aboriginal Pipeline Group.   …  Without producer support in a pipe, there will be no shipping contracts, without the shipping contracts, there can be no bonds issued and without the sale of bonds, there will be no pipeline construction.   Should the ARC plan ever get to the sale of bonds, the real owners of the pipe would be the bond holders, so the issue of ownership is a moot one -- with either plan the aboriginal groups have to go into debt.   So, unsatisfied with the GDC report, now the Inuvik Native Band is having its own study done.   With money from ArctiGas, the band has commissioned a study that will no doubt give them the answer the want to hear.   …  Granted, the two pipelines are not like comparing apples to apples, but I think we all know that an "independent study" is generally dependent on finding the answers sought by the one paying for the study.   … This infighting is not making for good relations and certainly isn't inspiring the producers to think that even 25 years after Berger, the North is now open for business.    *     Northern News Services, Comment by Thorunn Howatt-  … The race to build a line carrying Arctic natural gas southward to American markets is tightening -- with no clear winner in sight. … Alaska is anxious to sell its energy and power up its nearly one million strong population. Alaskan politicians want a pipeline to follow the Alaska Highway. … Their reasoning is simple. They need to tap into the line, drawing energy to power up industry along the route. They would also benefit more from pipeline construction, royalties on a line running through the middle of the state. And the state is in a bad financial situation these days -- it needs the cash.  Right now, American politicians are wheeling and dealing to firm up an energy policy that could include subsidies supporting construction of the Alaskan path. Their deadline for a final strategy is at the end of the month.   The NWT, and the Inuvialuit in particular, are desperate to get their gas out. More than 25 years ago, a Northern energy boom went bust after Judge Thomas Berger said No to pipeline activity for 10 years.   … But talk of building both lines -- the $17 billion Alaskan and the $3.3 billion Mackenzie Valley project - is welcome. And it's justified. Gas consumption in Canada and the U.S. is projected to use up energy from both lines -- no problem.   TransCanada Pipelines, a candidate to construct the project, said if both lines go then the Mackenzie route would be the first up and running.   In about two weeks, when the American energy conference releases its energy policy bill, the picture will be much clearer.   That's the day when the pipeline race will become much closer or -- if American subsidies are trashed -- Mackenzie line proponents will continue to make progress.   (Please see our latest editorial.)

9-10-02 Updates:  01:55, 02:47, 03:10, 03:40, 12:20, 12:55, 14:46, 17:36 ET.  Steve Marshall (NGP Photo, 9-9-02), president of BP Exploration Alaska, Inc. addressed the Anchorage Chamber yesterday (See our Chamber page).  Saying his message mirrored a North Sea message BP Treasurer, Tony Hayward, delivered in June to the International Association of Energy Economists, Marshall pinpointed some of Alaska's key challenges: the need for regulatory and fiscal certainty and support for maximizing production from mature fields.  (Note: BP and other gas producers have consistently emphasized fiscal certainty as a pre-condition for construction of an Alaska gas pipeline.  He said the company was offering public officials in Alaska and Canada specific proposals for obtaining such certainty.  -dh)  He dismissed a myth that BP was diminishing activity in Alaska, saying this year's capital budget would hit $700 million.   "The 7 billion barrels of oil and gas resources in BP’s Alaskan portfolio – about a third of it proven and the rest of it still uncommercial – are the largest single source of already-discovered oil and gas in our entire global portfolio," Marshall said.  "We have high hopes for future satellite and viscous oil development on the North Slope. We’re investing hundreds of millions of dollars annually to transform that belief into new barrels, and with a stable tax climate, we’ll continue to invest aggressively in it."  He said the company would continue to increase community support activity and support local procurement programs.   The $5 million Alaska contributions budget will be the company's second highest.   Readers are welcome to download a copy of the presentation here.  Relates stories: Reuters.       -dh          *        NGP reader James Maxim (NGP Photo-r, 6-02, Inuvik) advised us that today, Robert G. Marshall, P.Eng. (NGP Photo-l, 4-02, Houston), Government of the Northwest Territories (GNWT), is addressing the Alberta Geomatics Group in Calgary.  Tomorrow he will repeat the presentation at the Edmonton Petroleum Club.  (For NGP readers who will be in Edmonton tomorrow, 9-11, the EPC is located at 11110 108 Street Edmonton and Marshall’s presentation will begin at 11:30.  The speech is entitled  "Canada's Pipeline----Benefits & Opportunities for Alberta".  In the speech, Marshall says Alberta’s gas demand will rise from about 3.1Bcf/d in 2000 to 4.5Bcf/d in 2010.  Less than half of that demand comes from residential and power generation customers in the industrialized province.  Of current Alaska gas price guarantees pending in Congress, Marshall said, “The subsidy would distort the North American gas market and encourage over-investment in the Alaska gas market at the expense of higher value activities.”   Marshall referred to a study completed in May for the GNWT by Purvin and Gertz, indicating U.S. taxpayers could be impacted by between $1.1 and $2.9 billion/year.  He then emphasized benefits of the proposed Mackenzie Valley Pipeline.  Readers may obtain Marshall’s presentation here. Reference: related statements by Hal Kvisle, president and CEO of TransCanada Pipelines and yesterday's report featuring other viewpoints.

9-9-02 Updates: 00:06. 01:14, 13:56 ET.   CBC, Yellowknife, N.W.T. - The Aboriginal Pipeline Group has hired a former Alberta premier to sell its business plan to Ottawa.  Peter Lougheed's job is to help the group get $70 million from the federal government. The money represents the Group's share of costs for the first phase of a pipeline down the Mackenzie Valley.  This phase includes developing an application for the pipeline and getting regulatory approval.  Wilf Blonde of the Aboriginal Pipeline Group says Lougheed was chosen because of his stature and credibility with the federal government. Blonde wouldn't say how much Lougheed is being paid, or for how long.   The aboriginal pipeline group is funded by the territorial and federal governments.  The other two-thirds of the cost of the pipeline's development phase is being paid by the Mackenzie Delta gas producers.    *    Vancouver Sun by Scott Kent (NGP Photo, 11-02, Calgary)-Thousands of B.C. jobs are being put at risk by the actions and words of Herb Dhaliwal, the federal natural resources minister and MP for Vancouver South-Burnaby....  This pipeline would be the largest private sector project ever built, with an estimated cost of $20 billion. Along the way, it would create about 375,000 person years of employment, 67,000 of which would be in B.C., and add about $30 billion to Canada's GDP....  (Note: this weekend, Iraq rhetoric and 9-11 memorial activity increased.  We earlier predicted that such unrelated matters of national priority will work against the Congress' September deadline for finishing complex negotiations and work on a national energy bill.  Yukon's MP will be carrying this message to Washington, too. -dh)     *     Globe & Mail, By DUGALD CARMICHAEL, Kingston, Ont. -- Major construction projects create vast amounts of greenhouse gases. Building a Mackenzie Valley gas pipeline would surely sabotage any sincere Canadian effort to comply with the Kyoto Protocol. Thus it is blatant hypocrisy for Prime Minister Jean Chrétien to oppose U.S. tax incentives for an Alaskan gas pipeline (PM Enters Northern Gas Fray), while simultaneously planning to ratify Kyoto this year.  Let the U.S. subsidize the burning of Alaskan gas at today's low prices, and let our children have the option of bringing Mackenzie Delta gas on line when the price, inevitably, will be very much higher.  (See Kyoto reference below.)     *     This year's CANADA GALA will take place on Friday 11 October at the Seattle Westin Hotel. Tickets are now on sale. $75 per person; $700 table of 10; $65 for CAS 2002 dues members (2 ticket maximum). Those desiring to stay at the Westin, the hotel is offering a Canada Gala rate of $139 - call toll free 888-627-8513.  (Anchorage Gala)

9-7/8 Weekend News.  Steve Marshall (NGP Photo, 6-02), president of BP Exploration Alaska, Inc. will address the Anchorage Chamber regarding BP’s activities in Alaska: Monday, noon, 4th Ave. Theater.   Pre-pay and reserve via the Web at www.anchoragechamber.org,    *      Northern News Services by Terry Halifax-Inuvik - A recent study commissioned by the Gwich'in Development Corporation came out in favour of the Mackenzie Gas Project over the proposed ArctiGas "over the top" route. (Note: see our earlier stories and study downloads.)         *    ADN by Weslie Loy-Opening the Arctic National Wildlife Refuge to oil development could pump $540 million to almost $1.3 billion a year into Alaska coffers, an economic consultant said Friday.  (Note: see our story below, 9-6, and download your copy of the study.)     

9-6-02 Updates: 01:22, 02:10, 03:26, 04:13, 04:40, 16:00, 16:08 ET.   Whitehorse Star-Yukon MP Larry Bagnell (Photo-l, with author, 3-02) will travel this week to Washington, D.C. to meet with Michael Kergin, Canada’s ambassador to the U.S., as well as other embassy officials.  The meetings will be important, Bagnell said in a statement today. They will enable him to explain the benefits of several Yukon developments, such as the Alaska Highway pipeline project, the proposed Canada/Alaska railway project, and protection of the Arctic National Wildlife Refuge.  Note: Alaska and the Yukon are united on gas pipeline policy, divided on ANWR.  Both issues come together in the energy bill being negotiated this month.  See ANWR report below, released 16:00 ET today-dh    *   Anchorage-A new report published today forecasts an end to Alaska’s fiscal woes if the ANWR coastal plain is opened to oil development.  Using federal government figures the report calculates that an average future price of $24.00 per barrel would realize state income of up to $1.3 billion a year from ANWR crude, plus the creation of 38,000 jobs.  The study was conducted by the McDowell Group, an independent economic consulting firm in Alaska.  “This would have a profound positive impact on the State of Alaska’s future”, said Curtis Thayer (NGP Photo, 5-01), Executive Director of Supporting Alaska Free Enterprise (SAFE).  “I don’t think anybody has realized how beneficial ANWR development would be to the state”.  “It is outrageous that environmentalists are preventing Alaska from developing its resources and solving its fiscal problems”.  Jerry Hood  head of the Teamsters Union Local 959 in Alaska (NGP Photo below-Hood-r with Roger Herrera-l, 5-01) commented that the report is a very conservative assessment and probably underestimates the number of high paying jobs that would be created by development.  “Teamsters and other Alaskan workers are well qualified to build the oil fields in an exemplary environmental fashion”, he said.  “Our children and grandchildren could look forward to career employment in Alaska for many decades.  It is madness not to open ANWR.”  Roger Herrera, longtime Alaskan geologist and expert on Alaskan oil production, said, “The study is serious, comprehensive and conservative. It draws on existing credible government data and information....” .    Supporting Alaska Free Enterprise (SAFE) says it commissioned the study because all the previous focus of ANWR was on the national impact.  SAFE said Alaskans should be exposed to the real, close at hand benefits from projects such as ANWR.  SAFE was incorporated in 2002 and is a 501 (c) 4 non-profit corporation whose principle purpose is to educate and inform Alaskans about the importance of economic opportunity, resource development, jobs and free enterprise.  (NGP readers may download the study here.)    *      CBC, CALGARY - Canada's Minister of Natural Resources met with a group of Alberta's oil executives in Calgary Wednesday. … Dhaliwal told members of the Canadian Association of Petroleum Producers (CAPP) to stop comparing Kyoto to the National Energy Program. … Pierre Alvarez (NGP Photo, 6-02, Inuvik), president of CAPP, says he was somewhat reassured. But he's still not convinced the government can meet its deadline. "I think the time frame is highly ambitious. I won't say impossible, but highly ambitious when you consider what's at stake. I'm not sure how the provinces are going to respond to a plan they won't receive until mid to late October."    (See Realtime News {Reuters} story)*     Anchorage Daily News by Ben Spiess-Democratic governor candidate Fran Ulmer (NGP Photo) called for new taxes to fill the state's budget gap when the state's cash reserves fall short.  (Please note our coverage of the fiscal crisis over the past year and its relationship to gas pipeline policy.)     *     Author provides gas pipeline articles to various publications in the U.S. and Canada.  Some are opinion pieces.  The latest is a commentary prepared for the Anchorage Chronicle newspaper (Photo).  You may download the 8-29-02 piece here: "Let's Lay Our Cards On The Table." -dh. (Chronicle subscriptions: 907-348-2425).     *    Soldotna, Ak.--Over 100 citizens attended the hearing held here last night regarding the draft environmental impact statement for the Unocal right of way permit application for new natural gas exploration in two new satellite prospects in the Kenai National Wildlife Refuge. We asked the Kenai Peninsula Borough's Oil & Gas Liaison Bill Popp (Photo) for a report, and he kindly obliged.  Northern Gas Pipelines is concerned about gas supply for Southcentral Alaska even though experts claim it has greater per capita reserves available to it than does Houston.  However, finite reserves in a remote area are a principle argument on gas line routing, coming under the category of, "in state use of Alaska North Slope natural gas".  Thus, it is an important motivator of Alaska's Congressional delegation and other elected leaders.  -dh  Popp's report:  Representatives from the U.S. Fish and Wildlife Service and the Army Corps of Engineers listened to nearly two hours of public testimony that was almost unanimously in support of granting the permits with reasonable and economic stipulations.  Participants included representatives from Unocal, Marathon Oil Company, Cook Inlet Region Inc., the Resource Development Council, the Alaska Support Industry Alliance, Peak Oilfield Service Company, the Kenai Peninsula Borough, the City of Soldotna, local state legislators, Cook Inlet Keeper, the Wilderness Society, the Alaska Center for the Environment and numerous local citizens.  Testimony covered a broad range of opinions including the long history of oil & gas exploration in Cook Inlet with no long term effects on local wildlife or the environment, the need for new gas exploration because of declining reserves in Cook Inlet, the positive economic benefits the oil and gas industry has had on the Kenai Peninsula, and the fact that with out the original discovery of oil and gas in the Swanson River field in 1957, Alaska likely would not be celebrating its 43rd year of statehood. The environmental organizations raised numerous concerns about impact on wilderness areas, the need to keep the refuge pristine, and concerns about pollution from oil and gas exploration causing mutated frogs in the refuge that were missing limbs.  Letters and resolutions of support have been submitted to the USFWS by the Kenai Peninsula Borough, the City of Kenai, the City of Soldotna, local chambers of commerce and other organizations supporting the permits.  Efforts are  continuing to build support from other communities and organizations in the Cook Inlet area that all have an interest in a continued supply of affordable natural gas for heating and power generation.  Partners in the project application included Marathon Oil Company and Cook Inlet Region Incorporated (CIRI). Because of the mineral rights owned by CIRI and their relationship to provisions in ANCSA, the USFWS must grant the right of way permits for this project. However, there are serious concerns that the permits may be burdened with unreasonable stipulations that may make the project economically non-viable because of proposed findings in the draft environmental impact statement currently under consideration.  A second and final public hearing will be held on September 17th at USFWS headquarters in Arlington, VA. (Download here: SWANSON RIVER SATELLITES PROJECT)     

9-5-02 Updates: 01:04, 12:04, 12:31, 13:08, 13:21 ET.  Reader Peter Jalkotzy of Inuvialuit Environmental & Geotechnical Inc. (IEG) sends us this "fall colors" photo, taken yesterday near Inuvik.  Farther south in Anchorage, the birch turned yellow then brown in late summer, due to a killing attack of 'leaf miners'.  Millions of acres of northern spruce have already been decimated by the spruce bark beetle while environmental extremists opposed defensive logging over the last decade.  Will the once verdant north be denuded by this combined infestation, leaving billions of upright rotting logs where forests once blanketed our lands?  We are rightfully concerned when a quart of oil spills onto a gravel drilling pad; where is our environmental concern when a major portion of the world's photosynthesis and oxygen generation is threatened?  -dh         * Lynchburg-Cavan Carlton (NGP Photo, 7-18-01, testifying before Joint Legislative Natural Gas Pipeline Committee.), former director of The Williams Companies' Alaska Gas Pipeline Project, has settled in Lynchburg.  He serves as an independent natural gas consultant along with long-time business associate, Andrew Miles.  Among other projects, they are marketing Detechtion Technologies’ (www.detechtion.com) natural gas compressor optimization and fleet management program called “Enalysis” to customers throughout the U.S..  Carlton, who worked and traveled extensively throughout Alaska and Canada, would like to maintain contact with former associates and can be reached here: ccarlton@detechtion.com.”    *       HOUSTON --- ConocoPhillips [NYSE:COP] yesterday named 16 directors to its board. The new company received final approval from all regulatory authorities and completed all necessary closing formalities late last week.  (See our report.)   *   CBC, Yellowknife - Yellowknife, N.W.T. - Despite increased costs, plans to build a bridge across the Mackenzie River at Fort Providence are moving ahead.      *     Whitehorse Star by Chuck Tobin-Premier Pat Duncan (NGP Photo, Calgary, 3-02) disagrees with Prime Minister Jean Chrétien.  The premier said today she hopes to meet with Chrétien during a trip to Ottawa later this month to argue her belief that provisions contained in the proposed U.S. Senate energy bill do not amount to subsidies for construction of the Alaska Highway gas pipeline.  “I disagree with the prime minister on the issues surrounding the energy bills,” she said in an interview, referring to the contents of a recent letter Chrétien sent to Alaska Gov. Tony Knowles (NGP Photo, 1-02, Anchorage), a letter which she has seen.  (See our recent reports and download the correspondence.)  ... Prince Edward Island Premier Pat Binns has told her the natural gas pipeline to Sable Island would never have been built if not for government assistance.  “And so as the Americans develop legislation on their own, Canada has to be extremely cautious as to what we criticize them for,” she said. “... And the fact of the matter is that Canada, and the U.S., and worldwide, it’s a fact of life that public policy and incentives have been used for every energy project.”  Duncan said ...  the U.S. tax credit being proposed for the Alaska Highway pipeline proposal is not different than the provisions that made Hibernia possible, the Sable Island pipeline, the Alberta Tar Sands, or the diamond mines in the Northwest Territories. ...The prime minister wrote Knowles in early July to explain his concern about what he described as “subsidies” contained in the proposed U.S. energy bill, in response to the letter Knowles wrote him in May.  Knowles was inquiring about comments made by federal Natural Resources Minister Herb Dhaliwal (Photo). ... Those who favour the construction of a Mackenzie Valley pipeline before an Alaska Highway line fear that if a highway pipeline goes first, it would flood market demand and subsequently strand Mackenzie Valley reserves of natural gas. Provisions of the U.S. bill unfairly subsidize the highway proposal to the detriment of the free-market conditions that surround the Mackenzie proposal, they argue.  Producers of the huge reserves of natural gas on Alaska’s North Slope have indicated the estimated $20-billion cost of the highway proposal is too expensive, but could be made workable if provisions that provide financial and regulatory certainty are achieved in things like the U.S. energy bill. ... Chrétien said the federal government has grave concerns over the proposed U.S. energy legislation and its impact on open natural gas market. ... Chrétien wrote in his letter that he is in support of the development of Alaska’s natural resources, though he went on to say: “The Government of Canada is concerned, however, that the U.S. Senate energy legislation includes provisions that could significantly distort the dynamics of our integrated North American natural gas market.” ... The premier said she’s not sure what impact Chrétien' s letter will have in the overall scheme of things.  ... Yukon Energy Minister Scott Kent (NGP Photo, 11-02, Calgary) declined to comment on the Chrétien letter ... But he was adamant that comments by Dhaliwal, suggesting Canada may implement regulatory sanctions of the provision of the U.S. energy bill are allowed to stand, were unacceptable, he reiterated.  Kent said the time is now to seize the opportunity to push ahead with pipeline development through the north, for both the Alaska Highway and the Mackenzie projects. ...The minister said the pipeline construction industry is in support of the two projects, and he’s asked that the companies parleé that support in Ottawa.

(More on the Energy Bill in yesterday's report, below.)

9-4-02 Updates: 01:34, 01:51, 03:35, 04:07, 12:27, 13:00, 13:41 ET.  (Commentary below.)   Energy Central by David Kozlowski, senior editor - Meanwhile, the president's once-ballyhooed National Energy Policy Act has faded into the hands of Congressional conferees. Those conferees - 44 representatives and 16 senators - are attempting to create a compromise bill that could bring billions of dollars in tax incentives to facility executives, energy suppliers and technology manufacturers. Unfortunately, the political reality is that the Senate and House passed such different versions of the bill that the odds of seeing those incentives come to fruition are shrinking.     *     Oil & Gas Journal, 9-3-02, Cal Hodge, consultant says, "A US federal ethanol mandate does little for energy, harms the environment, and reinforces an oligopoly. Congress should ban, not expand the use of ethanol in gasoline."       *     Williams Energy News Live-With Congress back in session, work continues within a House-Senate Conference Committee on the first comprehensive energy legislation in a decade. The Independent Petroleum Association of America will hold a news conference (today) in Washington to draw attention to domestic production issues.   *     Energy Central, By Tom Doggett WASHINGTON, (Reuters) - U.S. lawmakers, returning this week from a summer recess, face a tougher task than before of passing a broad energy bill as congressional staff were unable to finalize language on Alaska oil drilling, ethanol use and other key provisions in the legislation during August. ... One of the most controversial issues in the energy bill is whether to open Alaska's Arctic National Wildlife Refuge to oil drilling.

Commenting on September: Time is Short and Stakes are High.

During August when Congress was in recess, Energy Bill Conference staff worked diligently with White House and Energy Department counterparts (and lobbyists) to identify as much agreement as possible, preparing the way for return of their bosses.  One staff professional told Northern Gas Pipelines that most staff effort was devoted to less controversial issues, leaving the more difficult energy bill provisions for Conference resolution.  Among those issues are ANWR, gas pipeline incentives and ethanol (to name only a few).  The South Dakota Senate Majority Leader opposes ANWR, supports gasline incentives and ethanol (note his farming constituency.)  Many Republicans oppose ethanol and support ANWR but a few oppose certain Alaska gas incentives.  The White House supports ANWR, but struggles with ethanol, Alaska gas price floor guarantees and prohibition of the northern route.  Canada's Natural Resources Minister will be visiting Congress this month to lobby against gas pipeline incentives and prohibition of the northern route and, most probably, ANWR (see yesterday's story, below & Hill Times background).  Even as Congress left Washington in early August, we gave passage of the energy bill only an even chance in 2002, recognizing the fundamental and solid disagreements outlined (and perhaps oversimplified) above.  Congress has scheduled September as the month for work on the energy bill and the environment for its passage looks more difficult now than we surmised a month ago, for several reasons.  Detailed formation of the Homeland Security Department is requiring significant effort.  Senate ratification of Presidential appointments is becoming more confrontational.  The unpleasantness with Iraq is coming to a head, making all other issues trivial by comparison.  The November elections and political aspects of all legislation takes a toll on schedules, concentration and the merits of any votes, including those affecting Alaska.  Finally, though 9-11 memorials and meditations were fully anticipated, perhaps not full credit was given the distraction it will require of elected officials trying to meet routine schedules.  Since gas producers and others have not yet identified an 'economically feasible Alaska gas project' we believe the only current window for an Alaska project rests on Congressional incentives...then Alaskan and Canadian 'fiscal certainty' follow up.  If Congress does not take advantage of current momentum and pass a bill, no one can say when the momentum will build again.  Experts giving advice to producers and Alaska, might counsel on the strategic importance of a back up plan.  The reason is this.  Any energy bill passing this year under these circumstances will likely represent the LOWEST COMMON DENOMINATOR, devoid of many controversial issues such as those wished by Alaska.  No player will be very happy with a meaningless Energy Bill.  Thus, odds are a new Congress will inherit energy policy responsibility next January, or critical unresolved provisions.   Based on scenarios of a Democrat House, a Republican Senate or a Congress controlled exclusively by Republicans or Democrats, one would be wise to have at least four action plans in mind (not including the possibility of a new, separate bill/vehicle to carry gas pipeline language) .  Execution of those plans could begin now with candidates and after November with Congress' freshman class-elects.  Execution of any plan should recognize the reality that Canada's Mackenzie Valley Pipeline project is moving steadily ahead and likely in today's world to be built before an Alaska project.  Passage of Alaska provisions of the Energy Bill this month or next year could at least position the state for a North Slope gas project, as the Mackenzie line releases its call on pipeline steel production and skilled pipeline labor.  Absent a bill soon, however, or a decisive but unexpected upward gas price trend, North Slope gas commercialization could be the destiny of a fresh generation.  Offshore LNG, deep water Gulf of Mexico, off-shore Canadian reserves, etc. will strive to satisfy demand in the interim.  Time is short, stakes are high and today's window is closing.  -dh

9-3-02 Updates: 02:34, 02:53, 03:32, 12:15, 14:31, 16:18 ET. 

25 years ago: On Sept. 3, 1977, The Globe and Mail reported that Canada and U.S. negotiators reached agreement on broad principles of co-operation on the construction of an Alaskan Highway natural-gas pipeline across Canada.

Below, we repeat the Financial Post story on Dhaliwal posted this weekend, adding for your reference these important, related references: 1.  Last Friday's Globe & Mail story describing gas pipeline communication between the Prime Minister of Canada and the Governor of Alaska; and  2.  the actual, scanned correspondence available for your download, mentioning Dhaliwal.    Financial Post, CALGARY - Herb Dhaliwal (Photo), the federal Minister of Natural Resources, will hold discussions with key members of the U.S. Senate and House of Representatives next month to fight for the removal of proposed Alaskan natural gas subsidies from a controversial energy bill.  (Don't forget background tariff issues.  -dh)    *    CBC-EDMONTON - The Alberta government and the petroleum industry are rallying against the federal government after the prime minister announced plans to ratify the Kyoto accord within the year.     *      Author provides gas pipeline articles to various publications in the U.S. and Canada.  Some are opinion pieces.  The latest is a commentary prepared for the Anchorage Chronicle newspaper (Photo).  You may download the 8-22-02 piece here: "Probably 90% of Alaskans including this writer would prefer a trans-Alaska or Alaska Highway gas pipeline, with the construction boom and gas access advantages.  But observing past lessons, I now conclude our most pressing need is revenue." -dh. (Chronicle subscriptions: 907-348-2425)    *    Northern News Services by Paul Bickford, Hay River Reserve - ...Georgina Fabian said there are huge social problems in Northern communities -- alcohol and drug abuse, gambling, fetal alcohol syndrome and school drop-outs. ...Doug Cardinal (NGP Photo-r) of the Aboriginal Pipeline Group, which hopes to have a one-third interest in the project, stressed its positive impacts, especially the many jobs it would bring.  ...  Randy Ottenbreit (NGP Photo-l) of Imperial Oil described the last two years of feasibility study and the current "project definition" stage.  Project definition will take three to four years, and involve engineering studies, environmental field work, public consultation, Northern benefits plans, and regulatory applications and review.  Such a project won't come along every day, he said.

Labor Day Weekend Update.  Herb Dhaliwal story moved to 9-3-02.   HOUSTON --- ConocoPhillips [NYSE:COP] has completed the merger of Conoco Inc. [NYSE:COC] and Phillips Petroleum Company, following clearance by the U.S. Federal Trade Commission (yesterday).  Shareholders of both companies and all U.S. and foreign regulatory authorities cleared the merger earlier this year. (Note:  in a statement last night to Anchorage's NBC affiliate, Channel 2, Phillips Chairman Jim Mulva, Photo-r (President & CEO of the merged company) emphasized the importance of northern assets the two companies possess: oil and gas reserves on Alaska's North Slope, contributed by Phillips, and Mackenzie Delta Gas reserves, contributed by Conoco.  -dh) Anchorage Daily News- ...Alaska, however, will remain an important part of the business, the executives said, suggesting their company might be in a stronger position to fulfill Alaska's long-held dream of a long pipeline to carry the North Slope's huge natural gas stores to Lower 48 markets.  "We're uniquely positioned to make that happen," Dunham said (Archie Dunham, Photo-l is Chairman of the merged company's board of directors). Phillips had a major Alaska presence, he said, while Conoco had interests in western Canada, where another large storehouse of gas resides in the ground at the Mackenzie River delta.  Alaska and its Canadian neighbors have been debating for months a variety of proposed pipeline projects that could connect one or both of the gas fields to markets. Generally, Phillips favored a line down the Alaska Highway and then across Canada toward Chicago, while others want a line from Prudhoe Bay east to Mackenzie and then south.   Regardless of route, Dunham sounded optimistic a project can happen.  "We believe the U.S. market desperately needs natural gas," he said.  (Additional reference: Oil & Gas Journal by Sam Fletcher)