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Northern Gas Pipelines, (Alaska Gas Pipeline, Denali - The Alaska Gas Pipeline, Mackenzie Valley Gas Pipeline, Alaska Highway Gas Pipeline, Northern Route Gas Pipeline, Arctic Gas, LNG, GTL) is your public service, objective, unbiased 1-stop-shop for Arctic gas pipeline projects and people, informal and rich with new information, updated 30 times weekly and best Northern Oil & Gas Industry Links on the Internet.  Find AAGPC, AAGSC, ANGTL, ANNGTC,  ANGDA, ANS, APG, APWG, ANGTA, ANGTS, AGPPT, ANWR, ARC, CARC, CAGPL, CAGSL, FPC, FERC, GTL, IAEE, LNG, NEB, NPA, TAGS, TAPS, NARUC, IOGCC, CONSUMER ENERGY ALLIANCE, AOGA,AOGCC, RCA and more...

2009 LINKS: FERC Reports to Congress, 1, 2, 3, 4, 5, 6, 7....; USGS Arctic Gas Estimates; MMS hearings: RDC, Our NGP, AJOC, DH, ADN, KTUU; Enstar Bullet Line: Map and News Links; ANGDA; Alaska Energy Forum; Prosperity Alaska

2008 LINKS: Shell Alaska OCS Study; Mackenzie Gas Project EIS; Join the Alaska Gas Pipeline Blog Discussion; Governor Sarah Palin's AGIA Links; 2007 ACES tax bill links; Department of Revenue 2007 ACES tax documents;  2007 ACES tax Presentations; 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











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 ( and the JPO TAPS Renewal web site  ( 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 Northernaabill1crop.png 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 SheetDownload 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: 

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

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 BillSee 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.... 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)  (email)



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