Gas firms: Keep route plans open

Industry argues to keep pipeline competitive

Posted: Friday, August 03, 2001

Under pressure to rule out a natural gas pipeline in the Beaufort Sea, a spokesman for the three major North Slope petroleum producers said Thursday that it's too soon to foreclose any options.

During a public hearing in Juneau, Michael Hurley of Phillips Alaska told Gov. Tony Knowles and his Alaska Highway Natural Gas Policy Council that Phillips, BP Exploration (Alaska) Inc. and ExxonMobil will continue to look for the most competitive project, wherever it might be.

Meanwhile, Southeast labor leaders, businessmen and municipal officials urged the governor's council to make sure that the region benefits from pipeline construction along the Alaska Highway, through staging areas at tidewater and possibly a spur pipeline to Haines, with gas for communities in the region.

Knowles supports a nearly 2,000-mile pipeline route that would follow the existing oil pipeline from the North Slope to Fairbanks and then parallel the Alaska Highway to Alberta, where it would tie into the North American grid.

He signed into law a bill barring leases across state land for a gas line that would follow the so-called "over-the-top" route through the Beaufort Sea to the Mackenzie Valley in the Northwest Territories.

A similar prohibition was included in the national energy bill passed this week by the U.S. House of Representatives, although some Canadians have questioned whether free trade agreements permit such a move.

Hurley, speaking for the Alaska Gas Producers Pipeline Team, a working group of about 110 employees from the three companies, said that a recent meeting of top executives didn't result in a route selection. That probably won't come until all of the technical work has been completed, probably by the end of the year, he said.

But Hurley said that with new gas supplies in the Rocky Mountains, the Gulf of Mexico and northeastern Canada, as well as development activity in Alberta, North Slope producers must think competitively.

"At this point, it's premature to be precluding any options," he said. But he said the companies are focused on a pipeline for the American market, which they consider more likely than an all-Alaska pipeline to Valdez, where gas would be chilled into a liquid and exported by tankers to Asia.

Knowles and legislators have opposed the northern route because it would minimize the economic benefits for state companies and residents, as well as the tax revenue for state and local government.

Supporters of the over-the-top route contend that it would be more cost-effective because it's about 300 miles shorter and crosses less mountainous terrain, and it would pick up additional reserves in the Mackenzie Delta.

But a hearing in Barrow on July 19 demonstrated that North Slope residents are "overwhelmingly, profoundly" against the northern route, said Fairbanks North Star Borough Mayor Rhonda Boyles, a member of Knowles' council.

"It got a whole lot more expensive there in Barrow that day," Boyles said.

Knowles said the producers should commit themselves to protecting subsistence activities. Whaling captains on the North Slope have come out against the Beaufort Sea route.

Sue Schrader of Juneau, representing the Alaska Conservation Alliance, an umbrella group for 46 environmental organizations, said the alliance opposes any pipeline route that doesn't follow an existing transportation corridor.

"'Over our dead body' comes to mind," Schrader said, characterizing opposition to the Beaufort Sea proposal. The alliance also opposes routes that would go through the Arctic National Wildlife Refuge or interfere with the migration of the Porcupine caribou herd.

On the assumption that the Alaska Highway route is most likely, Southeast residents made a pitch for getting their share of the economic activity.

"Haines is ready to go to work," said city Mayor Don Otis. With deep-water ports and a newly reconstructed highway linking Lynn Canal with the Alaska Highway, Haines is a prime staging area for pipeline construction, Otis said.

The natural gas council is to report to Knowles on Nov. 30 with recommendations on how to advance the project, including whether to take the state's royalty in gas or money.

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