9/29-30 (Weekend):  WASHINGTON -- Alaska Sen. Frank Murkowski (Photo), in a letter Wednesday to Canada's U.S. Ambassador to Washington Michael Kergin, said he was troubled by the comments of Canada's Minister of Environment David Anderson.  On September 25, Anderson was quoted by a wire service (Reuters) as saying he hopes the United States will not make a "hasty and ill-considered" decision to allow oil exploration on Alaska's Arctic coastal plain in light of the attacks on New York and Washington, D.C.    "(Canadian) leasing was undertaken with no more 'hasty and ill-considered' a decision-making process than that applied to current proposals to develop ANWR.  In view of the fact that ANWR development proposals would provide" significant environmental safeguards, "I must register my strong protest to your government's position as articulated by Mr. Anderson," Murkowski wrote.  Murkowski, during a speech on the Senate floor Wednesday, noted that Canada has previously explored for oil in the calving area of the Porcupine herd.   He also noted that Canada, besides building the Dempster Highway directly across the herd's migration route, is permitting oil leasing in the herd's migration area.  He said several companies in Canada have done nearly 600 square miles of seismic testing during the past three years and are planning exploratory wells in the area.  During his floor speech, Murkowski also stated that the Minister's comments ignore the fact that America is proposing to fully protect the Porcupine herd's calving area by restricting any surface disruption on the coastal plain to just 2,000 acres out of the 19-million-acres of ANWR.  The proposal also includes seasonal drilling restrictions to prevent disturbance during the short calving season.  "I have no objection to Canada's oil exploration efforts to the east of Alaska. Nor do I feel I have a license to object. Indeed, I have great respect for the manner in which such efforts have been conducted.      *       Northern News Services by Derek Neary, Fort Simpson - Acho Dene Koe sub-chief Jim Duntra is worried about jobs lost to delays in a proposed seismic project near Fort Liard.   Canadian Forest Oil's application for a land-use permit was referred to environmental assessment, a lengthy and comprehensive process carried out by the Mackenzie Valley Environmental Review Board.  The Liidli Kue First Nation (LKFN) had expressed concerns over cumulative effects -- the overall impact of all development projects on the ecosystem -- and possible impacts on moose habitat as its primary concerns over the seismic activity. Although the LKFN was not the only organization to cite that concern, Acho Dene Koe Chief Judy Kotchea sent a strongly-worded letter to the LKFN expressing her disappointment in its objections.  Kotchea was not available for comment. Sub-chief Jim Duntra, who is also president of Beaver Enterprises, an oil and gas service sector company owned by the band, said there are people in his community who are counting on the seismic project for an income. ... Ken Mitchell, senior geophysical specialist with Canadian Forest Oil, said the proposed seismic program would create 80 to 100 seasonal jobs. Generally, 40 to 55 per cent of related jobs are filled by Northerners, he said. The environmental assessment has put things behind schedule and may result in a lost winter season, he said. ... LKFN Chief Rita Cli said her band routinely writes letters of concern over every proposed development upstream....     *     Financial Post by Carol Howes and Claudia Cattaneo, CALGARY - Oil and gas producers hoping to build a pipeline down the Mackenzie River valley said yesterday the poor economics threatening a rival project in Alaska would not deter their efforts to develop reserves and see their project completed.  (See 9-28-01 Marushack remarks below for latest status. -dh)  Hart Searle, spokesman for Imperial Oil Ltd., which is leading a feasibility study for owners of natural gas reserves in Canada's Arctic, said his group has been aware the Alaska competitors were coming to the conclusion that their project might not be viable, but would decide whether to develop Canada's basin based on its own merits. ... "Our feasibility study doesn't include gas from Alaska," Mr. Searle said. "We are studying the feasibility of developing onshore Mackenzie Delta natural gas only. That has been our focus. We are continuing with that study."  ExxonMobil, British Petroleum and Phillips Petroleum have come to the preliminary conclusion that under current conditions, the development of Alaska natural gas is not economic at this time.  Those conclusions, while not final, found that costs would be too high, at US$15.1-billion if a pipeline runs north through the Arctic Ocean to the Mackenzie River Delta, or US$17.2-billion if the pipeline is routed along the Alaska Highway through the Yukon to the continental United States.  The Alaska producers stressed yesterday they are continuing to study the project and looking at ways to cut costs. But they are nevertheless looking for concessions, such as the opportunity to pick between two routes, one of which is favoured by the Alaska government and another -- the "over-the-top route" that would see gas pumped under the Beaufort Sea then into a Mackenzie Valley line -- that is cheaper. A final decision on whether they will move ahead will be made at the end of the year.  Northwest Territories government leaders said the early findings on the Alaska project, and the political fallout likely to result, bodes well for the Canadian project.  "We know the Alaskan politicians are posturing and offering tax concessions and other things," said Stephen Kakfwi, premier of the Northwest Territories. "Governments are starting to intrude in the free market."  "It puts the (Canadian) project in a good light, but it's not a slam dunk," added Wilf Blonde, a negotiator for the Aboriginal Pipeline Group, a backer of the Mackenzie project.  Mr. Searle said the priority of the Canadian project has been to bring native groups on side. The Mackenzie producer group is not looking for government concessions.  "Certainly economics are important, and we have not come to conclusions as to where we are on economics, but I can say that the way we have been looking at this is that the economics on a potential development of this type are not so much dependent on today's [commodity] price, but on what prices will be in the longer term, ten to 20 years from now."  The Canadian project would be smaller in scale, at a cost of about $3-billion for the pipeline, not including the the cost of field facilities.  It would transport about 800 million to one billion cubic feet of gas a day, compared to up to four billion cubic feet a day for the Alaska plan.  While the Canadian project appeared to be losing ground this summer because of native demands, Mr. Kakfwi said a lot of progress has been made since and the project will go ahead regardless.  "We don't need every aboriginal group in the territory to sign on for the pipeline to go. The aboriginal groups see it and should see it strictly as a business deal. Those that want to own a piece of the pipe should sign on."  Robbie Schilhab, Alaska gas development manager for Exxon Mobil, based in Houston, said costs of the Alaska project would have to be substantially lower than current levels for the project to be viable, but the project is not dead.  "Under current conditions, current preliminary numbers, we do not see an economic project at this point in time," he said.  "We do see places we want to focus on to lower the cost ... and try to reduce the risk in some other areas," he said, such as speeding up the resolution of any disputes and permitting processes.  Laurie Stretch, a spokesperson for Petro-Canada, said neither pipeline option is certain.  The firm, together with Anderson Exploration Ltd., is leading an exploration rush in Canada's Arctic to find new reserves.  "Our focus is the Mackenzie Delta and we remain confident in its long-term future, but specific timing is difficult to predict," she said.  Martin Molyneaux, director of institutional research at FirstEnergy Capital Corp., said even if development of the Alaska basin doesn't move ahead, it will not impact current energy markets because the project was long term.  "I don't think it changes anybody's view one way or another. We're talking about a gas supply that's eight years away at best," he said.....     *       CBC-...a Calgary energy consultant says there may be hope for a Mackenzie Valley pipeline, without the undersea branch from Alaska.  Roland George, from Purvin and Gertz, says the Mackenzie route would be smaller, and less of a financial risk for project developers. He says the all-Canadian pipeline route would still face some hurdles, including some aboriginal opposition.  Canadian oil and gas producers are in the middle their own multi-million dollar study on the proposed pipeline routes.     *     JOINT PIPELINE OFFICE, Weekly Report 8/28/01 - 9/27/01, contact: Rhea DoBosh, (907) 271-433, JPO Oversight of TAPS: This year's planned annual maintenance shutdown on TAPS was Saturday, September 22.       *     State Pipeline Ownership and Tax Structure subcommittee of the Alaska Highway Natural Gas Policy Council will be from 9 a.m. to 5 p.m. on Wednesday, October 3, Chairman: Bill Corbus.

9/28: ANCHORAGE, by Northern Gas Pipelines-Addressing the International Association for Energy Economists yesterday, state Department of Revenue Tax Division Economist, Dr. Charles Logsdon  (Photo) reviewed OPEC volume quotas, pricing policies and results of this week’s OPEC meeting on Alaska revenues.  His PowerPoint presentation (i.e. obtain here) provides an outstanding primer for readers interested in the effects of OPEC policies—current and historical—on revenues experienced by non-OPEC producing areas in the U.S. and Canada.  Logsdon said that under projected gas prices, an Alaska gas pipeline project could be expected to produce $200-300 million/year in "additional state revenues" to the Alaska treasury for a 2.5 BCFD project and $400-500 million annually for a 4.0 BCFD project.  He also said that due to diminished Prudhoe Bay production Alaska can expect to have depleted its budget reserves by 2005-06 and face a structural deficit assuming a flat budget with no inflation adjustment averaging over $1.2 billion a year between 2006 and 2010.  Asked about the effect of current political momentum in the state to support no gas project if a preferred project is not built, Logsdon said that, “Any of the gas pipeline alternatives would replace a significant percent of Alaska’s deficit revenue, still leaving a problem.  No pipeline at all would make the challenge that much more daunting.  New revenue from any project,” he said, “is an easier solution than raising money via traditional sources: budget cuts, increased taxes and tapping the state’s Permanent Fund.  In 2005-06, every alternative for enhancing state revenue will be on the table.”  (Note: See our related story, Rep. Lisa Murkowski.   Rep. Fred Dyson, the interim chair of the "Crouching Grouches Caucus", told the Legislature's Fiscal Policy Caucus this last week that Alaskans would more likely accept new taxes or the use of Permanent Fund Earnings to support the cost of State Government if it was accompanied by a significant reduction in the money spent on Government.  Dyson suggested reducing executive salaries, lowering overhead, shortening the Legislative session, implementing appropriate portions of the recommendations of the Privatization Task Force, and revising the threshold for people receiving state aid.  Dyson also praised the concept, proposed by former Governor Jay Hammond, to have a "tripwire" that would automatically institute new taxes or revenues when some preordained threshold was crossed.  Hammond had suggested that some minimum balance in the Constitutional Budget Reserve should be the tripwire or trigger.  Dyson suggested that the tripwire be some minimum level of State income from natural resource extraction.  Dyson said "Hammond has wisely foreseen the difficulty for elected officials to make unpopular decisions and stay elected.  This should make it easier for them and encourage the fainthearted.")     *     WASHINGTON-Northern Gas Pipelines has obtained the following list of witnesses, scheduled to testify before the Senate Energy Committee here next Tuesday; we will update you with changes we may receive: Alaska Gov. Tony Knowles; Alaska State Sen. John Torgerson, chairman, Joint Committee on Natural Gas Pipelines; Department of Energy representative; Drue Pearce, Secretary's Alaska Advisor, Department of the Interior; Pat Woods III, chairman, Federal Energy Regulatory Commission; K.T. "Terry" Koonce, president, Exxon Mobil Production Co.; Robert Malone, regional president, BP America Inc.; Joseph Marushack, vice president, ANS Gas Commercialization, Phillips AK Inc.; William Sullivan; executive vice president, Exploration and Production, Anadarko Petroleum Co.; D. Michael G. Stewart with Dennis McConaghy, co-chief executive officers, Foothills Pipe Lines Ltd. Mark Aron, vice chairman, CSX, Inc.; Forrest Hoglund, president and chief executive officer, Arctic Resources Co.; Keith Bailey, chairman and chief executive officer, Williams Companies; Patricio Silva, Natural Resources Development Council.     *     ANCHORAGE, by Northern Gas Pipelines-Appearing at an Alliance meeting yesterday, Joe Marushack (Photo-9-19-01), referring to Wednesday's gas price of $1.92/MCF, said, "We are price takers and not price makers."  He told members that, "We do not yet have an economic project.  That doesn't mean we are giving up.  It means we have more work to do.  At the end of the day," he said, "we are only going to build a project which Alaska and Canada support.  We won't build an uneconomic project," he added.  Marushack is Phillips Alaska's vice president for Alaska North Slope Gas Commercialization and a member of the joint, Alaska Gas Producers Pipeline Team.  Reducing costs, improving technology and lowering risks are the group's principal focus now, he said.     *      National Post, by Claudia Cattaneo and Carol Howes, CALGARY-...In the last couple of weeks, there have been growing indications that the Alaska pipeline project was coming off the rails.... (See Marushack remarks above for latest status. -dh)     *     CALGARY, CBC  - Several oil companies now say building a natural gas pipeline from Alaska's Prudhoe Bay, in the Beaufort Sea, to the rest of the U.S., would cost too much.  A preliminary analysis of the project was done by Exxon Mobil, BP and Phillips Petroleum. It found the project would give them about a 10% to 11% return on any investment.     *     Congressional Quarterly, WASHINGTON--GOP KEEPS HEAT ON DASCHLE FOR VOTE THIS YEAR ON ENERGY BILL: Senate Republicans yesterday kept the pressure on Majority Leader Tom Daschle, S.D., to act on energy legislation before Congress adjourns this year. GOP Policy Committee Chairman Larry E. Craig, Idaho, joined business and labor groups in urging Daschle to make such a commitment. The House passed an energy bill (HR 4) on Aug. 1. Craig and business and labor leaders called for legislation that would authorize drilling in part of Alaska's Arctic National Wildlife Refuge. They predicted that a majority of the Senate would support such drilling.     *     Yellowknife, N.W.T., CBC - The Bank of Canada had some good news and some bad news for Yellowknife business leaders Monday.  The upside is the continuing boom in the Northwest Territories. The downside is the faltering national economy.     *     Yellowknife, N.W.T., CBC - Chief Rita Cli says she doesn't agree with part of a resolution passed at a special assembly on a Mackenzie Valley pipeline held in Wrigley last month.  The resolution effectively puts the pipeline on hold until the Deh Cho Process is complete. It sets a number of conditions for the federal government and gas producers to meet before the Deh Cho First Nations will give approval to a pipeline.   Cli says she has problem with the condition that says the Deh Cho First Nations won't support pipeline construction unless hunters and trappers along the pipeline corridor are in favour of it.  "I had a problem as a leader that the harvesters can stop development on all the lands," she says. "So when I brought this thing back and highlighted that, they were in agreement with it, so it was decided that from this council, we will all review this resolution and reword it if we have to."

9/27:  We obtained the following, dramatic announcement from a newswire; please also see comments of State Oil and Gas Division Director below.  HOUSTON, Sept.  26 /PRNewswire/ -- Escopeta Oil & Gas and BBI, Inc. of Houston, Texas, today announced new seismic reprocessing results that show estimated recoverable reserves of 12 trillion cubic feet (Tcf) of natural gas near the East Forelands area of Alaska's Cook Inlet Basin, at depths of 18,000 to 21,000 ft.  Known producing horizons in the same structural trend would likely recover 1.35 billion barrels of oil and an additional 6.1 Tcf of gas.  ...  The estimated recoverable reserves are considerably more than the current remaining reserves of 2.56 Tcf in the Cook Inlet Basin and may total more than the cumulative recovery throughout the entire history of natural gas production in Alaska (about 10 Tcf).  ... The first exploratory well is slated for year-end 2002.  Current natural gas production in the Cook Inlet Basin is 0.5 to 0.6 Bcf per day, with one third going to LNG exports, one quarter to local ammonia/urea production, and the balance to regional gas utilities and electric power generation.  Success at the Escopeta-BBI prospective area opens the possibility for expanded Alaska LNG exports for local industry, as well as long term indigenous natural gas supply for Anchorage, the state's largest city.  Escopeta Oil and Gas has been conducting business in Alaska since 1993 and is currently the third largest leaseholder in the Cook Inlet Basin with over 120,000 acres under lease....  *******  According to Mark D. Meyers (Photo, 9-21-01), Director of Alaska's Division of Oil and Gas, "Escopeta apparently sees a good structure in terms of thickness and area from the seismic data they have developed.  I would classify the structure as representing 'undiscovered resource potential'," Meyers said.  "  Exploration would be required to prove the reserve quantity, if there is any gas at all."       *      Inuvik, N.W.T. , CBC-An oil and gas analyst says exploration in the Beaufort Delta may slow down this winter because of a sag in resource prices. The price of natural gas in Canada has fallen by 20 per cent since last week. However, one company doing most of the drilling in the Arctic says its programs will continue as planned.  The analyst, Brian Prokop, says he's already hearing from developers that a drop in natural gas and crude oil may impact the amount of exploration they do.  ... Rob Hunt of Akita Drilling in Calgary says they will be drilling for natural gas in the Delta this winter, even though the price of gas has gone down....      *       WASHINGTON -- Yesterday, U.S. Senator Frank Murkowski (Photo) said that "when the Senate Energy and Natural Resources Committee takes up the gasline at its October 2nd hearing, we've asked the producers to be prepared to indicate the various economic incentives that might be required to develop the natural gas pipeline.  Further, the producers should be prepared to respond to the Governor's '10 Points' (Obtain copy in left column) as well as to the various proposals that are circulating in the Legislature.  "We've also sent a letter to the Governor asking that the Governor and/or the appropriate Legislative representation be prepared to comment on what incentives, if any, the State might consider," Murkowski said.  "The bottom line here is:  what is it going to take to build the pipeline?"   Alaska Gov. Tony Knowles, members of the Alaska Legislature, and representatives of the gas producers are all scheduled to testify at the hearing Oct. 2 in Washington.  "If we can get Alaska gas to market, we can further meet our growing energy demands with supplies from home," Murkowski said.  "This nation is growing ever more dependent on foreign sources for its energy needs.  Recent events have shown some of these sources to be increasingly unstable, and in some cases, unfriendly.   Our national security demands that we take appropriate steps to decrease that dependence on foreign sources of energy.  "The nation continues to look north to provide for its energy needs," Murkowski said.  "An Alaska pipeline will be a great compliment to the efforts here in Congress to open ANWR (Arctic National Wildlife Refuge).  Through this hearing we intend to move along the process by further identifying the specific ways the federal government can make this project an economic reality."  Murkowski is the ranking Republican on the Energy and Natural Resources Committee.   Alaskans continue to strongly support oil and gas development on the Arctic coastal plain, construction of an anti-ballistic missile defense base in Alaska, as well as extending the Alaska Railroad to Canada. Those are just some of the results from Murkowski's annual straw polls conducted at this summer's fairs throughout Alaska, received yesterday by Northern Gas Pipelines.     *     Northern Gas Pipelines learned today that Senator Murkowski has arranged for the Williams Companies to be represented at the October 2 Senate Energy Committee hearing.  Chairman and CEO Keith Bailey (Photo-left) will testify.         *     Today, Gas Producers' “Status Update”, Joe Marushack,  Alliance, 7 a.m. Anchorage Petroleum Club.  Also today: IAEE, Anadarko Petroleum’s Mark Hanley,  (Speaker change: Dr. Charles Logsdon, State Petroleum Economist, report tomorrow). These and earlier reports on Policy Council (See Anchorage Daily News review) and Commonwealth North Gas Commercialization study scheduled for later today, tomorrow and the weekend (Photo: Commonwealth North Executive Director Duane Heyman introduced the program Tuesday to a full ballroom at Anchorage's Captain Cook Hotel).    ...more....

9/26:  Governor Tony Knowles’ Alaska Highway Natural Gas Policy Council is met yesterday at the Hilton Anchorage Hotel, voting to approve the Governor's 10-point-plan (obtain column left); agenda included: Access to In-State Gas Subcommittee; Alaska Hire Subcommittee; Environmental Considerations Subcommittee; Federal Legislation/Congressional Update; Alaska Natural Gas Producers Pipeline Team update; Briefing from David Hall, Deputy Land Director Texas General Land Office (Photo-right); Briefing on Alaska NGLs and Petrochemicals by Cavan Carlton, Williams Companies. (Report summary scheduled for tomorrow.)      *       Inuvik, N.W.T., CBC - Unemployment numbers may be rising across the country, but jobs are going begging in the Beaufort Delta. Oil and gas companies say there aren't enough qualified people in the region to fill the positions available.       *       Northern News Services, by Richard Gleeson, Fort Laird (Sep 24/01) - Though microscopic by comparison, a pipeline proposed for the Deh Cho will serve as an indication of how well two of the groups that would be at the centre of an environmental review of a Mackenzie Valley pipeline can work together.  "It's the first time we have worked together in this way, so in some ways I suppose it is a test of something that might happen in the future," said National Energy Board (NEB) official Bonnie Gray, emphasizing the difference between this project and a Mackenzie Valley pipeline (Photo, Gray attending 5-15-01 IOGCC meeting in Anchorage).  The 15-kilometre stretch of the 12-inch (29.5 centimetre) pipeline and a gathering system would link 11 existing Cameron Hills wells and another nine the company hopes to develop there to the Bistcho gas plant, 55 kilometres northeast of Zama, Alta.      *      Whitehorse Star, by Chuck Tobin-“We have briefed Premier Duncan, as we have other government officials, as we have progressed in the study,” Curtis Thayer said in an interview Monday on behalf of ExxonMobil, Phillips and BP....With what they know to date, however, the producers maintain a pipeline is not viable along either of the two routes, Thayer reiterated in an interview last week.  The producers are researching the Alaska Highway corridor as one route option, as well as the option of going offshore across the Beaufort Sea from Prudhoe Bay to the Mackenzie Delta, and then south down the Mackenzie River Valley....Thayer said the producers have not only kept the Yukon government up to speed on work in progress, but have also made an effort to keep the Northwest Territories, Ottawa and Washington, D.C. up to speed.

9/25:Governor Tony Knowles’ Alaska Highway Natural Gas Policy Council is meeting today at the Hilton Anchorage Hotel; agenda includes: Access to In-State Gas Subcommittee; Alaska Hire Subcommittee; Environmental Considerations Subcommittee; Federal Legislation/Congressional Update; Alaska Natural Gas Producers Pipeline Team update; Briefing from David Hall, Deputy Land Director Texas General Land Office; Briefing on Alaska NGLs and Petrochemicals by Cavan Carlton, Williams Pipelines.     *     Calgary, AB, CBC - Yukon's Premier Pat Duncan has served notice to Canadian politicians that she wants an answer about a northern pipeline.  ... "My direct public request has been made in this address, and now it's incumbent upon me to follow up with those such as Minister Pettigrew and Minister Manley, in writing," she says. "(I'll) give them a copy of my speech and say 'It's a simple question, what is your response?'"     *     Richard Barnes and Chancellor Lee Gorsuch will present the findings of the report, "Bringing Alaska's North Slope Gas to Market:  Framing the Issues" at a Forum scheduled 7 a.m. this morning in the ballroom at the Hotel Captain Cook. (Report to follow.)     *     Bloomberg Business News, N.Y. -- Natural gas futures plunged 9 percent Monday, dropping below $2 per per thousand cubic feet for the first time since April 1999 amid concerns that a recession would curb demand from steel makers and other users.

9/24: Please review weekend news below, 9/22-23.  This week's ARCTIC GAS SYMPOSIUM in Houston is cancelled...."I haven't had the opportunity to pass on my sympathies to you and your fellow Alaskans regarding the tragedy of Sept 11.  Like all strong nations I'm sure that you will be able to overcome this horror and emerge stronger than you were before. History can show you this.  Thank you for continuing to send me your columns. I am really enjoying the fact that I can watch first hand the Alaska and Yukon relationship grow and flourish. It is a model many other Canadian/American jurisdictions can learn from. Take care."  Scott Kent, Minister of Economic Development, Yukon
     *      The State Pipeline Ownership and Tax Structure Subcommittee of the Alaska Highway Natural Gas Pipeline Policy Council met Friday in Anchorage under Chairman Bill Corbus’ (Photo-left) leadership, to hear testimony from government and industry experts.  Consultant William S. Garner, Jr. of Petrie Parkman & Co., responsible for assisting the Department in a portion of its SB 158 analysis re: state ownership, told members that of the many companies he has approached, “not one…objects to state equity or financial participation”.  He added that some seem puzzled at the state’s interest as such ownership would be “unprecedented”.  They believe the state should view the ownership issue purely as an investment, the state should not invest just to have a seat at the table, state participation will not impact risk factors and that state ownership could pose real or perceived conflicts of interest.  Member Dave Rose (former Alaska Permanent Fund executive director, photo-right) asked if the companies Garner spoke with had stated any expected rate of return.  Garner said (SEE ENTIRE STORY ON COUNCIL PAGE, HERE)     *     ANCHORAGE--Phillips Alaska Inc. Gas Commercialization Vice President Joe Marushack will provide a “Status Update” at the 9-27-01 Alliance meeting on the $100 million feasibility effort scheduled for completion this winter.     *     Financial Post, by Claudia Cattaneo, CALGARY - Canadian oil and gas companies are slashing capital spending and drilling plans for the remainder of this year and next, setting the stage for price increases down the road when natural gas inventories are used up, observers said.     *     EDMONTON, CBC  - The current low price for natural gas is raising doubts about whether a northern gas pipeline can be built.  At this time last year, the price was $8(U.S.)/1,000 cubic feet; Thursday, it was only $2.11.  Harvie Andre, head of Arctigas Resources of Calgary, says his group is proposing a pipeline from Alaska's Prudhoe Bay, under the Beaufort Sea, down the Mackenzie Valley to Alberta.   Andre says no pipeline is viable unless gas prices firm up.  "Neither pipeline proposal, over the top, our route, nor the Alaska Highway route, makes economic sense today," says Andre.  "And the Alaska Highway route is really way, way out of whack. It's very high, very costly, and would not be built given the kinds of pricing scenarios people anticipate for the next few years."   Andre expects gas prices will rise enough to make the Arctigas pipeline proposal economically feasible.   He says a price of about $3(U.S.)/1,000 cu.ft. is needed.      *    YELLOWKNIFE, CBC - "Our pipeline will be built," Minister of Education, Culture and Employment Jake Ootes told delegates at the Far North Oil and Gas Conference in Calgary this morning.  Speaking on behalf of NWT Premier Stephen Kakfwi, Ootes told delegates that recent findings by the Alaska Gas Producer's Team have concluded that it is not feasible to transport Alaska gas to market.  "It should now be clear to everyone that the only commercially viable Arctic Gas reserves are those in the NWT's Mackenzie Delta region," he said.  With the NWT on the brink of great economic growth, the GNWT has already invested heavily in preparing its work force for resource development but is still waiting for federal investment in the NWT.  "It means thousands of jobs for Canadians and large contracts to Canadian businesses and steel mills," Ootes said.  "Ottawa stands to gain billions of dollars in tax and royalty payments but has yet to assist with desperately needed infrastructure development and direct training assistance."  In recent meetings with Deh Cho leaders Premier Kakfwi has confirmed that while the Deh Cho interim measures agreement will be honoured, resource revenue sharing and devolution will be negotiated through the Intergovernmental Forum and existing regulatory regimes will be used to ratify construction of a Mackenzie Valley gas pipeline.  Oil and gas producers, pipeline specialists, financial analysts, energy managers and other industry professionals are attending the two-day conference.  Ootes delivered the keynote address this morning in place of the NWT Premier who must appear before the NWT Legislative Assembly's Special Committee on Conflict Process.      *      WASHINGTON -- Alaska Senator Frank Murkowski (Photo-right) said today that when the Senate considers national energy security legislation, he will work to ensure the measure includes a provision allowing for exploration in the Arctic National Wildlife Refuge (See his gas pipeline views here).  "There is no doubt that at this time of national emergency, an expedited energy-security bill must be considered. Opening ANWR will be a central element in finally reducing this country's dangerous over dependence on unstable foreign sources of energy," said Murkowski.   He spoke after an energy planning session with the Secretaries of Energy and Interior, White House representatives and other legislators this morning.  Murkowski also met with Energy Committee Chairman Jeff Bingaman (Photo-left). He and Bingaman agreed to work to produce a bipartisan energy bill, with a markup possible as early as next week. Murkowski said such a package must include legislation to open a small part of the Arctic coastal plain to environmentally sensitive oil and gas development.  "I think the significance of ANWR at this time is two-fold. It is symbolic in that it sends a message to the Middle East that we are serious about significantly reducing our dependence on energy from that part of the world.  "And obviously ANWR will produce a significant amount of energy -- up to 16 billion barrels. If the half-way estimate of 10 billion barrels is found, it would produce one million barrels a day -- what we import today from Saddam Hussein. I think we have an issue here whose time has come," said Murkowski.  Murkowski said that because we are at war with terrorism, a national energy security bill should also include provisions to tighten security for the nation's fuel pipelines, including the trans-Alaska oil pipeline, electric transmission lines and dams and energy generating plants. He said it also should include incentives to conserve energy and promote renewable energy.      "I think we all have a responsibility in a bipartisan manner to try to reduce our dependence on imported sources of energy and these proposals will be a very significant way to do it," said Murkowski.        *        Staff Report on the Alaska Natural Gas Transportation Act, prepared by staff of the Federal Energy Regulatory Commission, 1-18-01     *          Pac Com, the Pacific Rim Oil, Gas and Mining Show and Conference: 2/19-20/01. This year's event will feature a large Canadian presence, as well as invited guests from the Russian Far East and Southeast Asia. WTCAK members are encouraged to offer program suggestions for this year's conference by contacting info@wtcak.org. General information on the conference can be made to rada@sourdough.net or robin@wtcak.org. 

9/22-23 Weekend (Please scroll down for long report of significant developments): On Friday Northern Gas Pipelines asked U.S. Senator Ted Stevens to evaluate the Washington atmosphere for ANWR and gas pipeline issues following the tragic 9-11 events (Photo-right; also, see our 8-14, 15, 16 reports).  "I sense there is a softening, if not a change in position with regard to energy supplies.  Several Members of Congress have said that they are looking at the ANWR proposal in a different light, and I think we'll see a change of position," Stevens said.         *     The chairman of the U.S. Senate Energy Committee Friday invited Sen. John Torgerson, as chairman of the Joint Committee on Natural Gas Pipelines, to present the Alaska Legislature's position on federal gas line legislation at a hearing in Washington D.C. on Oct. 2.  Torgerson plans to report to Senator Jeff Bingaman (See our 9-11 report on Bingaman's position) and the rest of the committee, including ranking Republican member Sen. Frank Murkowski (See our 8-25 report), that the Legislature supports the Alaska Natural Gas Transportation Act (ANGTA) of 1977, which authorizes expedited construction of a pipeline taking North Slope gas to market via a southern route.  Torgerson will propose a package of amendments to ANGTA, which would explicitly ban an "over-the-top" route; allow access to the pipeline by future gas producers; set pipeline tariffs to encourage future in-state gas exploration and development; ensure in-state access to gas for consumer use and economic development; establish financial incentives pertaining to accelerated depreciation schedules; and encourage the use of Alaska workers and businesses on the job.    *     ANCHORAGE DAILY NEWS, by David Reaume--Preliminary estimates circulating today suggest that the southern gas pipeline route along the Alaska Highway may cost the state of Alaska $300 million per year more than would the northern route. A rough comparison of the two projects' post-construction employment impacts suggests that in-state use of natural gas would need to generate up to 5,000 year-round full-time jobs to offset the added costs of constructing the southern route.  See related economist Arlon Tussing's related comment.    *          *     Reuters News Service, OTTAWA -- Canada said Friday that despite the Sept. 11 attacks and the United States' energy-supply concerns, it still opposed U.S. plans to open the Arctic National Wildlife Refuge in Alaska to oil drilling.   Natural Resources Minister Ralph Goodale told reporters there were plenty of other energy resources available….     *     Report on Last Week’s Third Annual Conference, Far North Oil and Gas, Calgary (Copies of some presentations available here)— Kaska First Nation Chief Negotiator, Dave Porter, spoke on behalf of Tribal Chief Hammond Dick, telling conferees that the “…Kaska Traditional Territory includes portions of British Columbia, the Yukon and the NWT….”    The, Kaska, he said, views itself and governs itself as one nation in spite of the provincial and territorial borders it overlaps.  While the Kaska support economic development, he said that, “…no oil and gas development will be allowed without Kaska agreement.”  He said completion of land claim agreements could result in creation of $100-200 million in exploration work and that the Kaska look forward to establishing business relationships with other Alaska, Yukon, BC and NWT aboriginal groups.  He emphasized the importance of cooperation.  “In the midst of our great sadness, anger and confusion over the tragic events of September 11,” he said, “we are also understanding that there are implications for our future that at the moment we can’t begin to know or understand.  It is clear, however that the vast reserves of oil and gas in the north have taken on a new and perhaps urgent importance.  Indirectly referring to a gas pipeline from Alaska and other oil and gas development, Porter said, “…final agreements are the real key to unlocking…economic potential…,” of the region.     *     Enbridge, Inc. President and CEO, Patrick D. Daniel (Photo-left), addressed the “big picture”, first reviewing study efforts.  “Producers looking at getting their gas to market are still studying their options. The Alaska producers group has undertaken a $100 million assessment, and the Mackenzie producers have also undertaken an extensive feasibility study. The studies must be complete before any decisions can be made on the economics of the pipeline, though indications at current prices are that a financially rock-solid project has not yet emerged from the number-crunching,” he said.  While remaining neutral on the projects, Daniel did observe that one would have to proceed first.  Also, he said, “Enbridge is here to tell you, as an experienced pipeline designer, builder and operator, that the subsea route can be built and that it is feasible and safe. Successful pipelines are currently operating in similar arctic conditions off the coasts of Finland and Russia.”  He emphasized the importance of any project having participation by qualified pipeline operating companies.  “Enbridge operates in more than 20 jurisdictions around the world, and we offer our assistance to helping accomplish this critical piece of the big picture,” Daniel said.  He then cautioned the audience that another outcome is possible: “And there is the other alternative I alluded to earlier -- if stakeholders’ are unable to see their way clear to tempering their positions. It is a seldom-talked about alternative, which we ignore at our peril: no Northern gas pipeline at all, at least in the near term. Let’s not forget: a similar development has failed before.”     *     YELLOWKNIFE, CBC - "Our pipeline will be built," Minister of Education, Culture and Employment Jake Ootes told delegates at the Far North Oil and Gas Conference in Calgary this morning.  Speaking on behalf of NWT Premier Stephen Kakfwi, Ootes told delegates that recent findings by the Alaska Gas Producer's Team have concluded that it is not feasible to transport Alaska gas to market.  "It should now be clear to everyone that the only commercially viable Arctic gas reserves are those in the NWT's Mackenzie Delta region," he said.  With the NWT on the brink of great economic growth, the GNWT has already invested heavily in preparing its work force for resource development but is still waiting for federal investment in the NWT.  "It means thousands of jobs for Canadians and large contracts to Canadian businesses and steel mills," Ootes said.  "Ottawa stands to gain billions of dollars in tax and royalty payments but has yet to assist with desperately needed infrastructure development and direct training assistance."  In recent meetings with Deh Cho leaders Premier Kakfwi has confirmed that while the Deh Cho interim measures agreement will be honoured, resource revenue sharing and devolution will be negotiated through the Intergovernmental Forum and existing regulatory regimes will be used to ratify construction of a Mackenzie Valley gas pipeline.  Oil and gas producers, pipeline specialists, financial analysts, energy managers and other industry professionals are attending the two-day conference.  Ootes delivered the keynote address this morning in place of the NWT Premier who must appear before the NWT Legislative Assembly's Special Committee on Conflict Process.

“The Attack on America: The Lesson of Unity” 

            Against the backdrop of calm skies and a nation at work, four flashes of horror on September 11 changed the landscape, future and innocence of free nations for generations to come.  As the distance of time separates us from this historical event, more subtle changes will emerge, some of them in resource-rich Alaska and western Canada..

            A profound change affecting America, Canada and the world is the way we look at security.  We now know that such freedom to live, travel and work as we have known will be modified with the now certain knowledge that those wishing us harm have the means and power to execute their plans.

            The top priority of North American leaders is now national security.  The first manifestations of that security are war plans and protection of political leaders, institutions and the aviation industry.  In coming weeks, we should see more diligent security efforts undertaken by industry, education, state, provincial and municipal governments.

            An exceptional level of cooperation and unity has also emerged.  Parochial and provincial matters of great concern before September 11 pale in the hierarchy of values now and are forgotten as citizens and leaders focus on survival.

            Other foundations of civilization’s survival include the uninterrupted flow of energy.  Accordingly, officials may now be expected to look upon energy issues such as gas pipelines and ANWR development as components of national security as opposed to political and socio-economic debate topics. 

            Opponents of ANWR will find it difficult to defend their prior position that developing 2,000 acres within the borders of an area the size of North Carolina is an attack on the “Serengeti of the North”.  But the knife cuts both ways.  Proponents of any single pipeline route will now find credibility in arguments largly as they apply to national security.  This is so for a number of reasons:

·        Congress and Parliament will appropriately be focused on security and defense issues for the foreseeable future; and

·        North Americans in general will have less patience with self-serving advocacies in wake of both the loss of life and the exclusive need to focus on defense of world democracy. 

It would credit our state, provincial and territorial leaders to observe the bipartisan unity demonstrated since September 11 and strive cooperatively with national leaders to develop both ANWR and an Arctic gas transportation project which conform to defense requirements.  -dh editorial  (See our earlier, related editorial: "The Attack on America: Effect on Northern Resources")     *     Northern News Services, by Malcolm Gorrill-Inuvik residents have been paying homage to those who perished…; as part of a national day of mourning, a three-minute moment of silence was observed at the IDC Building last Friday.  Nellie Cournoyea (Photo), chair of the Inuvialuit Regional Corp. (also chair of the Aboriginal Pipeline Group), thanked those who turned out.   "Most of us, I suppose, we sit and wonder why," Cournoyea said.  "The fundamental issue is that so much hatred can be living within this world, to be brought to such a tragic end for so many people."   

9/21:  DUKE ENERGY: NEW PLAYER IN ARCTIC GAS CHALLENGE-The Financial Times reports Duke Energy, the third-largest US utility group, will acquire Westcoast Energy of Canada for $8.5bn in cash, stock and the assumption of debt.  Westcoast Energy owns half of Foothills PipeLines, Ltd., promoter of the Alaska Natural Gas Transportation System (ANGTS) project ('southern route'); TransCanada PipeLines, Ltd.;  owns the other half.  CBC story.   The Toronto Globe and Mail reports that, "...Duke officials also said that the company was attracted by Westcoast's interest in Foothills Pipeline Ltd., which is proposing to construct a multibillion dollar pipeline from Alaska."    *     The State Pipeline Ownership and Tax Structure Subcommittee of the Alaska Highway Natural Gas Pipeline Policy Council will hold a meeting in Anchorage, TODAY, at the Atwood Building, 550 West 7th Ave., Suite 1730.  The meeting begins at 9:00 a.m. and will run to 3:30 p.m. (Report this weekend)   *   We are honored that yesterday the Yukon government linked to Northern Gas Pipelines on its website.

Northern Gas Pipelines report on Wednesday's meeting of the  Alaska Legislature's Joint Gas Pipeline Committee: 

Wednesday, after taking testimony from several witnesses, the Joint Committee moved passage of amendments to gas pipeline legislation (Alaska Natural Gas Pipeline Act of 2001, {ANGPA} the measure recommended by Alaska gas producers) for U.S. Senate Energy Committee consideration (More on these later).  This follows a recent announcement Governor Tony Knowles made concerning amendments he is proposing for U.S. Senate Consideration (See our  9-12-01 story).  Committee Chairman John Torgerson noted that Legislative opinion was necessary insofar as he may provide testimony to the Senate Energy Committee, tentatively on October 2.  He commented on the lack of coordination between the Legislature and Governor’s office on this matter.  In later testimony, Alaska’s Washington representative John Katz offered a “personal observation” that during Congressional action on the Alaska National Interest Lands Conservation Act, state interests were not uniform at first and that as the state became more unified the state’s influence grew.  He said he would do his best to assist in coordinating the Administration’s position with the Legislature’s in this case.  Committee consultant, Patrick Coughlin (Photo-right, with Rep. Mike Chenault listening) provided a section analysis of the proposed ANGPA, explaining relevance of the sections and points where it deviates from the Alaska Natural Gas Pipeline Act of 1976 {ANGTA; Click here for the analysis}.  Rep. Scott Ogan observed that passage of the act could supercede the Alaska legislature’s passage of SB 164 that banned the Northern Route.  (SEE ENTIRE STORY ON LEGISLATURE PAGE, HERE)

9/20: 9/20-21, Far North Oil and Gas, Calgary     *     Today, Resource Development Council for Alaska heard the theme, "ANWR to Glacier Bay", from Drue Pearce, Senior Advisor to the Interior Secretary for Alaska Affairs (Photo-right), and Cam Toohey, Special Assistant to the Secretary for Alaska (Photo-left).  Both are Alaska citizens and extremely knowledgeable about Alaska issues.   In response to questioning by Northern Gas Pipelines, Pearce said she was not sure, in light of the attack, what schedule the Congress will adopt for gas pipeline and ANWR legislation, but her personal opinion was that, "...the President's energy package will be a priority.  Even with the tragedy,"  she said, "the Vice President and Interior Secretary will continue to 'soldier on' and make sure energy plans remain on the front burner."  She also said that as Congressional calendars are rescheduled, "I expect energy to be a priority and Alaska to have a prominent role."  Toohey discussed the Department's commitment to a new 5-year leasing plan draft now underway, covering the 2002-2007 time frame.  The sales will cover a number of Alaska oil provinces, including the Beaufort Sea, Cook Inlet and Norton sound.      *     ANCHORAGE - Saying Congress has already established the legal framework for an Alaska-Lower 48 natural gas pipeline, the Joint Committee on Natural Gas Pipelines yesterday rejected federal pipeline legislation proposed by North Slope producers in favor of the 1977 Alaska Natural Gas Transportation Act mandating a southern route.  "A southern route obviously provides the greatest benefit to Alaska and the nation, and Congress realized that when it made ANGTA the vehicle for bringing Alaska gas to market," said Sen. John Torgerson (Photo, Torgerson-below right, Rep. John Davies-left), chairman of the joint pipeline committee.  He will convey the Legislature's support for ANGTA, and propose the amendments, on Oct. 2 at a U.S. Senate Energy Committee hearing on the gasline in Washington D.C.  "The joint committee is responsible for representing the Legislature's position to Congress," said Rep. Joe Green (Photo, middle), vice chair of the committee.   "I feel the proposals we discussed and approved represent Alaska's views on what we'd like to see in any final federal pipeline legislation."   (See Ben Spiess' Anchorage Daily News story: "The state's big oil companies say they will not build any natural gas pipeline that Alaskans don't want, including a northern pipeline along the state's Arctic coastline.")         *     Yellowknife, N.W.T., CBC - Aboriginal groups in the Northwest Territories haven't taken the money Arctic Resources Corporation is offering to study its pipeline proposal.  The company is prepared to give each of the six regions up to $50,000 to look at its plan for a 100 per cent, aboriginal-owned, debt-financed deal.  Harvey Andre, head of Arctic Resources in Canada, says the offer was made last week. It includes another $50,000 if a region decides to sign on with Arctic Resources.  Five regions have already signed another pipeline-ownership agreement.  The Aboriginal Pipeline Group negotiated a memorandum of understanding with the Mackenzie Delta Gas Producers. It will give them up to one-third ownership in a stand-alone Mackenzie Valley pipeline, if producers decide to build one.  The deal between the Aboriginal Pipeline Group and the producers forbids them to sign with anyone else.  No one from the aboriginal pipeline group is available to comment on Arctic Resources' offer of money to study its proposal.  But the group has said in the past it looked at the proposal before deciding to go with the Mackenzie Delta producers.  The Deh Cho, who haven't signed a deal with anyone, say they'll discuss Arctic Resource's offer in October.          *     Yellowknife, N.W.T., CBC - The Deh Cho First Nations are working to dispel the impression they're against resource development.  That feeling comes from a special assembly on pipeline-ownership three weeks ago, when Deh Cho leaders rejected all pipeline project proposals. They said they wanted self-government and land claims negotiations settled first. Negotiations on an interim resource development agreement begin next week in Fort Providence. The Deh Cho chiefs want an agreement that'll give them control of resource development in their region.  They also want a share of the revenue Ottawa will collect from developments like the pipeline. They want those rights and benefits in place as soon as possible. Deh Cho leaders say they don't want to wait five to seven years for a final agreement on the Deh Cho process.  But the Deh Cho's chief negotiator, Chris Reid, doesn't expect negotiations with Ottawa to be easy.  "One of their most troublesome policies is that they will not change existing legislation in anything other than a final agreement," he says. "If they take a hard line position on that, it tends to drag out negotiations."  Reid says negotiations could take up to a year. He says the timing depends on how flexible the federal government is prepared to be.  The federal negotiator says the same thing about the Deh Cho.       *       Houston Chronicle, by Michael Davis-Pipeline companies say they have been paying closer attention to security...      *     9-27-01, International Association of Energy Economists,  Anadarko Petroleum’s Mark Hanley addresses Plans for Oil and Gas Exploration. Anadarko is the largest independent oil and gas exploration and production company in the world, and has been a major player in the Alaska Oil and Gas sector since 1993. Currently, it holds over 400,000 on-shore and offshore acres of state lands in the Beaufort Sea, North Slope, and Cook Inlet. Anadarko and its partner Alberta Energy Company picked up 36 new leases representing an estimated additional 207,000 jointly held acres in the North Slope Foothills Areawide lease sale in May 2001.  Prior to joining Anadarko, Hanley served in the Alaska House of Representatives. During his eight years in the legislature, he held various positions and served on numerous committees. In his last two terms, he served as Co-Chairman of the House Finance Committee, where he focused on the development and implementation of a 5-year plan to deal with the state’s growing fiscal gap, while promoting economic development and a stable economy for Alaska.  Hanley currently serves as President of the Alaska Oil and Gas Association, and is on the boards of directors for the Resource Development Council for Alaska, the Anchorage Chamber of Commerce, the Alaska State Chamber of Commerce, and the Food Bank of Alaska.  (In testimony provided yesterday to the Joint Gas Pipeline Committee, Hanley (Photo, right) provided a 14 page analysis of proposed legislation concerning an Alaska gas pipeline. In that paper and in verbal testimony he expressed tariff concerns of north slope gas producers and lease holders who may be downstream from the gas conditioning plant.  That testimony contributed to later committee action recommending that the Congress direct FERC oversight of tariffs to assure 'fairness' to such producers in establishment of transportation costs. -dh)     *     Anchorage Daily News, by Liz Ruskin, Washington -- The fight over drilling in the Arctic National Wildlife Refuge, until last week one of the hottest issues facing Congress this year, is now publicly discussed with great caution on Capitol Hill.     *       10/20-21, Far North Oil and Gas, Calgary. Keynote speakers include Pat Duncan, Premier of the Yukon; Stephen Kakfwi, Premier of the Northwest Territories.  10-16-01, Mackenzie Delta Oil and Gas Development Strategies, Calgary.

9/19:  Alaska Legislature Joint Gas Pipeline Committee today, Anchorage Legislative Information Office.   Alaska Highway Natural Gas Pipeline Policy Council meetings: Full Council, 9/25, Anchorage Hilton; State Ownership Committee, 9/21.  Alliance, 9/21, Steven Jones, Director, Right-of-Way Renewal Project, Alyeska Pipeline Service Company (See margin right for schedule).     *     Whitehorse, Yukon, CBC - Staff at northern airports are beginning to tighten up security. The federal government is sending out directives to airport managers across the country... who aren't talking much about their orders.     *     WHITEHORSE STAR, by Chuck Tobin-A study by Foothills Pipe Lines Ltd. shows it would cost less to build two natural gas pipelines than one that includes an offshore Beaufort Sea link to the Mackenzie Delta.  Constructing a stand-alone pipeline from Alaska’s north coast to Alberta, along the Alaska Highway through the Yukon, as well as a stand-alone line down the Mackenzie Valley, would cost an estimated $12.8 billion, says the study, released publicly on Monday.  The cost of building the over-the-top option from Prudhoe Bay to the Mackenzie Delta, and then down the Mackenzie Valley, would cost an estimated $13 billion, indicates the study, which the company says took 50,000 person-hours over the last year to complete.  Brian Love, Foothills’ manager of northern affairs, said while the company is just now releasing its findings publicly, it has already met directly with industry and government in both Canada and United States to share its conclusions....     *     Opinion column:

A Closeted Consensus? By Dr. Arlon Tussing (Photo). As counterpoint to the disarray that this news source recently described among Arctic pipeline advocates in Canada, it is worth taking note of an important opinion column, “Fairbanks gas route has problems,” by David Reaume in the August 26 Anchorage Daily News. Reaume’s article, which argued the merits of a Northern route for Alaskans, may have been the first open expression of a view that is directly at odds with the avowed position of every elected official and organized “stakeholder” group in Alaska. What is most notable about Mr. Reaume’s opinion is that it is quietly shared by a remarkably large number of Alaskans close to the oil-and-gas industry or otherwise knowledgeable about the State’s economy.  

As an early advocate and organizer of the Alaska Highway project during the 1970s, I have not formed a strong opinion on the relative merits of the alternative proposals under present conditions. On the basis of recent conversations, it nevertheless seems that Alaska insiders---other than elected officials and special-interest pleaders---tend to agree with Reaume on at least some of the following propositions: 

·          Because a Northern route would be shorter and cheaper to build, and would also carry more gas, it can’t help but result in a substantially higher netback value per unit for North Slope gas. “Wellhead value is, after all, the industry’s sole incentive for supporting any pipeline plan. It is the basis of producer profits, gas-production revenues received by the State, and future Permanent Fund dividends for Alaska citizens;” [from a petroleum engineer] 

·          The expected benefits to Alaskans of bringing North Slope natural-gas to Fairbanks or Cook Inlet are likely to be miniscule, given the other energy-supply options the Railbelt already enjoys, and compared to the penalty a costlier pipeline would impose on wellhead value of gas delivered to markets outside of Alaska; 

·          The gas producers will adamantly resist bearing the cost of subsidies to local beneficiaries in the form of pipeline route and design features that reduce netback revenues from sales of North Slope gas. The companies have been surprisingly restrained in asserting this determination and (at least until a few days ago) have thereby misled the Governor and Legislature into underestimating the recklessness of their attempts to foreclose any consideration of a Northern Route, GTL [the “gas-to-liquids” alternative, which would use spare capacity in TAPS instead of building any new pipeline], or LNG, 

·          The prospective fiscal benefits of the Northern Route to the key stakeholders as a group, including the North Slope Borough as well as the gas producers, the Alaska Treasury and future PFD recipients, may be very great. If so, these benefits justify investing at least some effort and political capital in discovering an environmentally and politically acceptable route compromise---for example, a land right-of-way just south of the ANWR coastal plain in place of an underwater route---as opposed to recent maneuvers creating legislative obstacles to a Northern alternative. 

·          September cash prices (both pre- and post-9/11) for natural gas at Henry Hub have been a shade over two dollars, and Alberta prices at the AECO well below two [U.S.] dollars per million Btu, despite crude-oil prices holding firm and soaring gasoline prices. “With numbers like these, GTL begins to look awfully good in competition with either the Highway or LNG.” [from a petroleum economist] 

·          Whatever design and route is the most promising, the economics and financeability of any gas pipeline to the Lower 48 are now doubtful enough that a “my way or no way” posture by the State’s political establishment threatens to become a self-fulfilling demand. “The State Government doesn’t have the power to make a politically preferred route financible or profitable, but it can and probably will kill any project that doesn’t please the right special interests.” [from leader of an Alaska industrial development advocacy group] 

While such widely-held views have received little publicity, the reasons Alaskans express for their near-unanimous hesitation to speak out are varied but not surprising. There has been doubt all along as to whether the producers can reasonably conclude that any new Alaska pipeline is financially feasible. Such skepticism has been deepening this Spring and Summer, as Alberta and Henry Hub gas prices have been heading back toward the basement in which they spent most of the 1980s and 1990s.  

More than one observer was uncomfortable with “ . . . the extent to which Governor Tony Knowles has tied his credibility and political future to success of the Alaska Highway route.” Supporters and friends are reluctant to embarrass the Governor, while others express concern that expression of politically incorrect views might provoke retaliation from legislators or State agencies 

Perhaps the most widespread rationale I encountered for not getting involved in a public debate now is a belief that such controversy is premature at best and probably pointless, because State action will have little influence on the ultimate decision. “Why plunge yourself and your company into that nastiness, now? Alaskans would rather kill the bearers of unpleasant truths than reward them.” [from an Anchorage lawyer] 

When and if the Big Three do agree on a project, more than one insider predicted that Ted Stevens, Dick Cheney, and/or the [petroleum-industry] service companies such as Veco would discreetly deliver the message to unhappy Alaska politicians that, This is the Big One---Our Only Chance for another generation. Get with it! “Eagerness for contracts, jobs and royalties will turn the rest of Alaska around over night. That’s the way it worked last time.” [. . . in 1977, that is, when President Carter chose the “Alcan” project of Foothills and Northwest Pipelines in preference to both the better-financed and nationally better-connected Arctic Gas scheme for a Mackenzie pipeline, and the El Paso LNG proposal, which was then the favorite of Alaska’s political establishment.]  

Incidentally, none of the three projects, including the politically victorious Alcan scheme, ultimately turned out to be economically viable.

9/18: ANCHORAGE -  This morning, Congressional Quarterly's Ted Monoson told Northern Gas Pipelines that both ANWR and gas pipeline legislation may have become new victims of the September 11 attack on America.  "Members of Congress have no stomach for the fight ANWR would involve," Monoson said.  "Their intent now seems to be focused on rolling appropriation bills together for quick passage and getting out of town.  None wants to be seen as engaging in a partisan fight; any who does is lost." Monoson said that with two more Senate Energy Committee democrats moving toward support of ANWR and one republican moving against it, there are sufficient committee votes to move ANWR to the floor, but there would be a fight and fighting doesn't conform to the current desire for unity.  According to Monoson, Committee Chairman Jeff Bingaman (Photo) would likely support gas pipeline legislation, however, depending on the level of controversy involved.  "He is personally 'route neutral'," Monoson said, "but if the Senate votes to stipulate a route and adds sufficient incentives to make a chosen project economic, the Chairman's attitude is 'so be it'.  My best guess is that the Congress won't move gas pipeline and ANWR legislation until 2002."      *     Please recall that the Senate Energy Committee cancelled last Thursday's scheduled business meeting, "To continue consideration of energy policy legislation, and other pending calendar business."  -dh     *      The Joint Committee on Natural Gas Pipelines will hold a public hearing on Wednesday, Sept. 19, to review proposed federal gas pipeline legislation submitted by the Alaska Gas Producers Pipeline Team, a consortium comprised of BP Exploration, ExxonMobil and Phillips.  "We are going to conduct a section by section analysis of this proposed legislation and hear testimony from the producers' team, Foothills Pipe Lines, Ltd., Anadarko/Alberta Energy, and the Alaska Gasline Port Authority," said Sen. John Torgerson, chair of the committee.  "Then we will be able to develop the committee's position on this legislation."  (Full release here.)   *      The Alaska Support Industry Alliance Annual Membership Meeting has been rescheduled for Tuesday, October 23, 2001.   Keynote Speaker: Andrew Lundquist, Executive Director, National Energy Policy Development Group. RSVP:  907-563-2226     *     9/10-11, Fairbanks, 2nd Rail Connection Conference in Fairbanks.     *     COMMONWEALTH NORTH TO UNVEIL GAS REPORT: "Bringing Alaska's North Slope Gas to Market: Framing the Issues"; Dick Barnes and Lee Gorsuch led a Study Group to conclusions for twenty-five meetings to produce this report.  It will be officially released as the October Forum, 9-25-01, 7 a.m. Hotel Capt. Cook, (907) 258-9520.  (Photo: Gorsuch-L, with study group member George Findling, 4-2001)

9/17:  Natural Gas Prices, Henry Hub: 9/14, $2.39; year ago, $5.11.  Governor Tony Knowles has canceled a Washington D.C. trip this week, earlier arranged to build support for his proposed, "Alaska National Interest Natural Gas Development Act." (See 9/12 report below of 9/10 speech.)      *     Northern News Services-On Friday, people around the NWT joined millions around the world in a Day of Mourning and Remembrance for America's victims.     *     Whitehorse Star-Anglican Rev. Desmond Carroll led the memorial service in the foyer of the Yukon’s legislature building this morning for those killed in the attacks on New York City and Washington, D.C.
 

The Attack on America: Effect on Northern Resources

“Lest We Forget.”  How many times have we said it…in different ways and following different aggressions:  “Remember the Alamo, “ “Remember the Maine”, “Pearl Harbor”, “Iraq Invades Kuwait 8/2/90; Desert Storm Unleashed: 1/17/91”.

We’ve all seen the nature videos of the African herds coming to a jungle or desert oasis.  A pride of patient lions, or lurking crocodile strikes out and brings one down.  The herd briefly retreats then returns to drink.  And the cycle repeats.

On September 11, 2001 twisted aggressors targeted two towers of corporate strength and America’s Pentagon.  The lurking enemy had probed the towers a decade earlier.  The towers remained and memories dimmed.  One survivor of both assaults said, “I didn’t think it would happen again.”

The herd now hypnotically focuses on New York and Washington and apprehending perpetrators.  What other symbols and realities of civilization offer appetizing targets to wealthy aggressors with worldwide capabilities and which of these may be in the natural resource rich western and northern areas of our continent?  Or, is it our belief that, “It can’t happen here?”

If we wish not to forget, what can we do?  Unlike animal herds, humans have the ability to remember and to extrapolate.

·         Companies are well advised to amass greater physical and electronic security measures designed to protect life and property.  Never can security be taken for granted as an “optional overhead expense”, to be cut or compromised following a period of relative calm.

·         Every northern hunter, hiker, fisherman, surveyor, geologist, pilot—and, indeed, every citizen--should no longer assume “all is well”, reporting all suspicious persons and activities to proper authorities.

In this way, Northerners may have the luxury of learning from the horrific experience of others and avoiding a personal lesson in disaster.  Such vigilance could also be yet another act of honor to the many who did not die in vain.  -dh  (Photo: MSNBC)

9/15-16 (Weekend):  Fort Simpson, Northern News Services - The federal government won't negotiate the terms of a Mackenzie Valley pipeline with the Deh Cho First Nations, federal negotiator Robin Aitken said Monday.  "On the pipeline issue, they want to get this and they want to get that, we're not proceeding in that way," Aitken said. "I don't know if their expectation is for us to roll over and agree with everything they say - it isn't going to happen. The pipeline isn't in the back of my mind. It's more (on) the long-term Deh Cho Process."  The DCFN had passed a resolution in Wrigley two weeks ago declaring that they want to arrange pipeline terms with the federal government. In response to Aitken, DCFN chief negotiator Chris Reid said the Deh Cho doesn't expect to negotiate every project with Canada, but feels the pipeline is an exception.       *        Yellowknife, N.W.T. - Tuesday's terrorist attack in the United States may have long-term repercussions for the Northwest Territories.  The resources minister says the attack may favour the Alaska route over the Mackenzie Valley.  Joe Handley (Photo) … says the events on Tuesday may add a political dimension to the pipeline debate.   "Right now we don't know what the reaction is from American companies. I don't know," he said. "They may decide even though the Alaskan pipeline isn't economically viable, they may decide to go ahead with it anyway just in order to maximize their self-sufficiency. We may find that new challenge back on the table again."   Handley says he doesn't know when his questions will be answered.   Both Mackenzie Delta producers and Alaskan producers are studying pipeline routes. Their conclusions are expected by the end of the year.       *      Edmonton, CBC-The chair of Calgary's Arctic Gas Resources says the terrorist attacks on U.S. soil may convince the American government it needs a more secure energy supply.  Harvey Andre says his company is promoting a pipeline from Alaska's Prudhoe Bay, under the Beaufort Sea to the Mackenzie Delta, and then south through Alberta.     *       Whitehorse, Yukon, CBC - Staff at northern airports are beginning to tighten up security. The federal government is sending out directives to airport managers across the country... who aren't talking much about their orders.  BARTLESVILLE, Okla., Sept. 14, 2001 --- Phillips Petroleum Company announced today that it will contribute $3 million to assist the victims of Tuesday's terrorist attacks and their families.  The company plans to contribute to relief efforts under way in New York City, Washington, D.C., and Pennsylvania.        *     Inuvik, Northern News Services - A suspicious bag at the Inuvik airport led to an evacuation Tuesday, in the midst of heightened security across the continent due to terrorist activity in the United States.   *  Yellowknife, NNS-one young resident decided to call the city together to remember those who lost their lives in New York, Washington, D.C., and Pennsylvania last Tuesday, and reflect upon the significance the date Sept. 11 will carry from now on.  "Even though we're very far away, I want them to know that our hearts go out to them and support them," said Nancy MacNeil, a 17-year-old Sir John Franklin high school graduate.

As with other airports in the United States and Canada, all scheduled flights had been cancelled.

9/14:  ANCHORAGE-The next meeting of the Alaska Highway Natural Gas Pipeline Policy Council will be on Tuesday September 25.  The September 17 meeting has been canceled.  We will keep you informed.       *       OTTAWA, CBC - A memorial service will be held on Parliament Hill at noon Friday to honor Americans killed and injured in terrorist attacks earlier in the week.       *     Congressional Quarterly-President Bush is declaring (today) a day of "prayer and remembrance" in a national expression of sorrow after this week's terrorist attacks, the White House said today.

9/13:  The Alaska Legislature's Joint Pipeline Committee has released the agenda of its 9-19 meeting (noted, margin right): Patrick Coughlin, Special Consultant to the Senate Resources Committee; Alaska Gas Producer’s Pipeline Team; Foothills Pipe Lines, Ltd.; Anadarko Petroleum Company; Alberta Energy Corp.; Alaska Gasline Port Authority    *       Anchorage Daily News, by Ben Spiess (Photo)--Many speculated that the sense of vulnerability in the wake of the attack and possible connections to oil producing nations of the Middle East may strengthen arguments for domestic energy security, including drilling in more of the nation's waters and lands, such as the Arctic National Wildlife Refuge.     *     Alberta Energy Corporation published an advertisement in this morning's Anchorage Daily News announcing Andrew Popko as Vice-President, Aboriginal Affairs.  The appointment reflects AEC's increased interest in Alaska North Slope and Mackenzie Delta gas activity and the need for professional development of relationships with Alaska Regional Native Corporations and Canadian First Nations regardless of which route(s) gas transmission lines take to market.     *       ANCHORAGE (From Joint Committee Release) - Responding to published threats that natural gas producers would abandon their pipeline feasibility studies if government ruled any route off-limits, the chairman of the Joint Committee on Natural Gas Pipelines on Monday strongly restated the Legislature's opposition to an "over-the-top" route that would deny Alaska the greatest benefits of North Slope gas development.  "The 'over-the-top' line is just not going to happen," said Sen. John Torgerson, chairman of the joint pipeline committee.  "The Legislature passed a law against it last session, Rep. Don Young inserted language in the energy bill the House passed opposing it, Senators Ted Stevens and Frank Murkowski oppose it in the Senate, the North Slope Borough opposes it, the Eskimo whalers oppose it and folks all over Alaska oppose it.  How much clearer do we have to be?"  "Bringing North Slope gas through a southern pipeline is our best chance to fuel Alaska's economy into the 21st century," said Rep. Joe Green, vice chairman of the joint pipeline committee.  "It means more construction and operations jobs for Alaskans, a reliable source of power for countless Alaska communities, and a source of hydrocarbon feed stock that could nurture a home-grown petrochemical industry in the North."  (Click 'Maps' on left for copies.)     *     Houston Chronicle, By MICHAEL DAVIS-Terrorist attacks Tuesday put the energy industry on red alert, with tighter security at Strategic Petroleum Reserve sites, evacuations of oil company offices and searches of cars entering some plants.     *     NNS, Yellowknife - The bells of Trinity Anglican Church tolled nine times at 11:45 a.m. in a city-wide call to prayer as Yellowknife residents tried to go about their daily routine after the news of a wide-scale terrorist attack on the United States hit them with their morning coffee.      *     CBC-Prime Minister Jean Chrétien says President George W. Bush is right to consider Tuesday's events as an act of war.  … Ottawa lifted a ban on air travel through Canadian skies Wednesday afternoon.      *      ANCHORAGE- Due to the national tragedies that occurred September 11 and related travel restrictions, the TAPS Renewal EIS public scoping meetings in Barrow (originally scheduled for September 12) and Fairbanks (originally scheduled for September 13) have been temporarily postponed.     *     BARTLESVILLE, Okla.-- Phillips Petroleum Company has put a hold on branded gasoline prices in response to yesterday's terrorist actions against the United States.  Phillips' branded gasoline prices are at levels set on Monday, Sept. 10.  "We are deeply saddened and shocked by yesterday's events; all of our employees feel great sorrow for the victims and their families," said chief executive officer Jim Mulva.

9/12: Washington (Platts)--US interstate gas pipelines were put on high alert for terrorist activity in the wake of disastrous events in New York and Washington Tuesday morning.       *     Governor Tony Knowles on Monday (Photo-right) told the Anchorage Chamber of Commerce Monday that, "The time is right for Congress to enact an Alaska National Interest Natural Gas Development Act."  Transmitting the proposal this week to Senate Energy Committee Chairman, Jeff Bingaman and Alaska's Senator Frank Murkowski, he said it includes:

• "Accelerated depreciation, at a 7-year depreciation rate rather than the currently allowed 15-year rate.

• An investment tax credit.  Ten percent has been provided on other past projects and that alone would save as much as $1.5 billion on a $15 billion project.

• A gas tax credit.  This would provide investor confidence by allowing a tax credit when gas drops below an established floor price.

Knowles said the American Petroleum Institute estimates the Alaska gas project would create about 7 million "job years" over its 50 year life, averaging 160,000 jobs/year.  Affected industries would be pipe manufacturing (2,400 jobs), pipeline construction (9,000 jobs), and 15,000-18,000 support service jobs.  He said the gas project would contribute $300 billion over its life to the Gross Domestic Product, including $174 billion in wages.

Knowles said he has spoken in recent days to a number of steel company CEOs.  After the speech he met with Alaska gas producers and by the end of the week will have met with potential large participants representing El Paso, Duke, Foothills, Enron, Williams and other gas transportation companies.

(While the East Coast terrorism yesterday has dramatically affected many lives, schedules and projects, of this we may be sure: the heightened sense of security argues for greater North American energy independence, not less. -dh  Download Governor Knowles' speech from the presentations page.)

Platts-- ...Cavan Carlton, director of business development for Williams Gas Pipeline, said his firm is more confident than ever that demand will reach 30 Tcf by 2010 or 2011 despite recent demand losses and a major economic slowdown. Carlton projected demand will rise from 23.2 Tcf this year to 27 Tcf in 2006 and 30.1 Tcf in 2011, driven largely by the booming power-generation market. "We are a 30-Tcf believer," he proclaimed. But Steven Salato, vice president of Conoco Gas and Power Marketing, said he doubts that domestic gas consumption would even surpass 26 Tcf by 2015 -- 3 Tcf less than the producer was predicting just a year ago.

9/11:  ANOTHER DAY IN INFAMY: Terrorists attack the United States.   

PIPELINE NEWS      *      Governor Tony Knowles announced a major gas pipeline Washington initiative yesterday; report follows.     *       Whitehorse, Yukon, CBC - … Last week the former Yukon premier (Willard Phelps) offered some unsolicited advice to the government. He said the so-called 'over the top' pipeline route would be the best for Yukoners, in terms of jobs and economic spin-offs.  Government oil and gas expert Don Dempster, however, disagrees. He says the 'over the top' route is a dream that will never be built. …The Mackenzie route would force a 350 kilometer underwater pipeline in silty, shallow water regularly scraped by ice.  "I know he means well," Dempster says of Phelps, "But he should have done a bit more homework on technical aspects of what's going on in the Beaufort."  Dempster says Mackenzie Delta and North Yukon gas will eventually be marketed, but it will go south through separate pipelines down the Mackenzie Valley and the Alaska Highway.

9/10: Anchorage-J. Curtis Moffatt (Photo-right), an attorney representing Foothills Pipe Lines Ltd. with the Washington firm, Van Ness Feldman, said Friday, "Foothills' position is that no additional Federal legislation is needed to construct the Alaska Natural Gas Transportation System (ANGTS)."  He urged members of the Governor's Alaska Highway Natural Gas Pipeline Policy Council and other leaders to "Do no harm to the ANGTA regime (Alaska Natural Gas Transportation Act of 1976)...."  (Complete meeting report available soon.  -dh)     *       Today at the Anchorage Chamber of Commerce, Governor Tony Knowles will announce a comprehensive proposal he is submitting to the U.S. Senate to clear the way for construction of the Alaska Highway natural gas pipeline. The governor will detail proposals he is making for federal legislation, including economic incentives to make the pipeline project feasible, provisions for a project labor agreement, Alaska-hire and use of American industry such as steel, and increased competition by opening the door for new pipeline participants. (See Governor Knowles' '10 Point Plan', left column, Quick Reference.)     *       Houston Chronicle/New York Times, by James Brooke, Inuvik-To meet American demand, the next great producing area is expected to be the Arctic -- with as much as 100 trillion cubic feet in the Prudhoe Bay area of Alaska, about 300 miles west of here, and about 12 trillion cubic feet offshore here, in the Canadian waters of the Beaufort Sea.     *     Dave Sullivan, Northern News Services, Yellowknife - Oil companies have told Finance Minister Joe Handley that an Alaska pipeline would be a bad investment.  "At today's oil and gas prices, neither Alaska route is economically viable. Those producers and the Alaskan representatives have admitted that to us," Handley said Tuesday. …  "There's a lot of thinking and rethinking of these scenarios by the producers. The one that does make economic sense right now is the Mackenzie Valley pipeline."   … Wilf Blonde, (Vice-President and CFO for Inuvialuit Regional Corporation and secretary to the Aboriginal Pipeline Group), said that due to the price difference between Canadian and U.S. pipeline proposals, it's a myth that they are competing. He says $15 billion has to be spent transporting U.S. gas south no matter which route is chosen, because there's so much of it compared to Canadian reserves. Existing pipeline connections to the U.S. would need upgrading.  "The Alberta (pipeline) grid can't absorb the natural gas from Alaska," said Blonde….  Heart Searle, a spokesperson for … Imperial, said a decision has not yet been made whether to submit a pipeline proposal to the territorial government.     *     Northern News Services, Yellowknife - The Deh Cho First Nations are setting their own terms, many of them political, before agreeing to a Mackenzie Valley pipeline.  At a special assembly in Wrigley last week, the elders made a statement demanding that industry treat the DCFN as if it were a regional government, which it aspires to be.  "It's our way or no way at all. We're not asking for too much," elder Leo Norwegian said afterwards.  "We can wait. We've gone without (a pipeline) for thousands of years. Even today, there's no pipeline but we still eat and sleep."  … "We need more time to analyze these options," Pehdzeh Ki Chief David Moses said.  Liidli Kue Chief Rita Cli and Tthek'ehdeli Chief Stan Sanguez agreed that careful consideration is needed to "get the best deal for our kids.  We don't want to repeat what the Norman Wells (pipeline) did for us, because it did nothing," Sanguez said.  Chris Reid, chief negotiator for the DCFN, urged the chiefs to wait, reminding them that the pipeline is the best leverage they have in negotiating a resource revenue sharing agreement with the federal government. … First Nations in the Deh Cho want the following provisions in place for a Mackenzie Valley pipeline: - The pipeline must be negotiated as part of the Deh Cho Process. - A resource revenue sharing agreement must be attained with the federal government. - Consent is required from hunters and trappers along the pipeline corridor. - The Deh Cho must be a full participant in any environmental assessment for the pipeline. - Impact benefits agreements and access fees to the land must be negotiated.

9/8-9 (Weekend): ANCHORAGE DAILY NEWS, by Tim Bradner (Photo-Bradner covering Gas Pipeline Policy Council meeting, Kenai, 5-17-01)--"...the most important thing we can do right now is keep a positive attitude and a sense of partnership on this project. Let's look at the route disagreement, if there is one, dispassionately and with facts, not bumper stickers. Let's not let things descend into political bickering.  That, more than anything, could discourage the commitment of up to $20 billion needed to finance this project, whatever shape it takes. A North Slope gas pipeline faces enough economic challenges without adding political ones."  (See our editorials reflecting similar theme, including today's, below.)

"Gas Pipeline Analysis: September 2001"

The ball game moved to the Wrigley, NWT court last week, landing in Deh Cho hands.  Other First Nations, Northwest and Yukon Territories governments, several provinces, the Canadian federal government, U.S. consumers and Alaska stakeholders were all affected by the outcome as the ball now bounces to Washington’s court for a September play-off

The Deh Cho held a meeting last week of members who would be affected by the various pipeline proposals.  At the meeting, they heard from Arctic Resources Corporation (ARC), The Aboriginal Pipeline Group (APG) and the Mackenzie Delta Producers.  (See our Archive reports, 8-31 - 9-3.) No decisions were made, pending additional discussions within Deh Cho communities and more formal meetings scheduled for October.

ARC is a private promoter of the northern route tapping Mackenzie Delta and Prudhoe Bay gas.  It advocates a non-recourse revenue bond approach: 100% debt financed aboriginal ownership of the pipeline “subject to the legal and business constraints of its indenture and long-term tariff agreements,” according to ARC President, Bob Murphy.  ARC could have used Deh Cho endorsement this week to attempt negotiating with Prudhoe Bay and Mackenzie Delta producers who, after all, have the gas, though producer interest in ARC is unclear.  ARC is still optimistic, because it has support from some Sahtu constituencies and hope for eventual Deh Cho support, but there is still talk in Washington of banning the Beaufort concept.

APG’s First Nation landowners have been intent on moving Mackenzie Delta gas regardless of what happens to Prudhoe reserves (35 TCF proven, three times more estimated).  The major producers there hold  5.8 TCF in proven reserves. A consortium led by the Inuvialuit currently sells a small portion of Delta gas to Inuvik.  Much more, possibly 60 TCF, is thought to be available for eventual discovery and production, assuming a transmission system can be built. 

Delta producers, working with APG during the past year, constructed a private operating company concept for the Mackenzie Valley Pipeline involving 33 1/3% ownership for aboriginal stakeholders, including the Inuvialuit, Gwitch’in, Sahtu and Deh Cho through whose lands the route would traverse (MOU available by clicking in left column). The APG has equity investment and throughput requirements.  Observers thought the Delta producers could have completed most of their feasibility work by this fall.  The involvement of the Deh Cho in signing the APG-Producers Group MOU would have helped the process.   According to a CBC report, "This could affect our readiness to move forward to the next phase, which includes the preparation of regulatory applications," says Hart Searle. "But we're going to have to assess, we're going to have to really consider what's come out of this assembly in Wrigley before we decide what we do next."  Searle says that unanimous support may not be necessary, as five of six aboriginal groups support the pipeline. But he also says that producers would prefer it if Deh Cho leaders are on board.

Though its profile in Alaska has been low, ARC established a branch of its Houston office in Calgary, vigorously pursuing aboriginal support.  Last spring, of 7 Sahtu landowners (communities divided into 3 District Land Corporations), some expressed support for the ARC concept.  Ernie MacDonald Land Corp., joined by Tulita (Fort Norman) Metis Land Corporation, issued a public notice that their approval would be necessary before any project could cross their lands.  Some Deh Cho, intrigued with the ARC 100% ownership concept or concerned about land negotiations (the Deh Cho Process) and other issues remain uncommitted.

With APG and ARC competitors failing to seal Deh Cho support now, neither the Delta-only or northern route proponents gained ground in Canada, possibly creating delay for both efforts.  More formal Deh Cho October meetings may come after Senate Energy Committee action has occurred.

After the long Labor Day weekend, the spotlight and play action shifts to the U.S. Senate Energy Committee considering the House-passed “Securing America's Future Energy Act of 2001, H.R. 4”.  The bill, sponsored by Chairman Hansen, Energy and Commerce Chairman Tauzin, Transportation Chairman Young, and Energy and Minerals Subcommittee Chairman Cubin would implement parts of President George Bush’s energy policy.   The Senate is likely to produce its own version of the bill, resulting in final decisions via conference committee between the two houses.

The House version has a provision, introduced by Tauzin, banning the northern route.  U.S. Senator Frank Murkowski told Northern Gas Pipelines last month that he had asked the Prudhoe Bay producers, now studying both the southern and northern route alternatives, for draft legislation to assist in moving a gas pipeline forward.  He said that, while not surprising, the draft went farther than he expected, that no member of the Delegation would introduce it, but that portions of it could be considered.  The draft (available for review by clicking in the left column) would expedite construction of a northern pipeline, giving equal weight to southern or northern routes.  Meanwhile, members of Governor Tony Knowles’ Alaska Highway Natural Gas Pipeline Policy Council have strongly advocated providing state endorsed amendments for Senate consideration, as has the Legislature’s Joint Pipeline Committee.  On August 30, Knowles issued a 10-Point Plan (Click for copy, left column) designed for use by the Senate Energy Committee and Alaska's Washington office in support of the Alaska Highway, southern route.  Lastly, Alaska LNG project proponents continue vigorous promotion of an export project while GTL technology appears, with growing cost efficiency, to provide an easier long-term solution--at least for North Slope gas.

With gas prices in early September at the lowest levels since early 1999, current northern gas pipeline projects face the common competitor of falling demand and failing economics (i.e. Henry Hub Gas Prices: 8/31/01, $2.17; Year ago, $4.77).  While unaligned with any route, Northern Gas Pipelines has long counseled a policy of diligence, diplomacy and compromise due to the complexity of projects and stakeholders.  This policy is especially well suited to the current low-price environment.  Failing consensus and approval of some project in the next year, northerners may have to wait for falling gas prices to effect less production and higher prices again sometime in the coming decade.   

While officially favoring the concept of pipelines to move Mackenzie Delta and Alaska gas, the Canadian government has yet to fully enter the arena.  The gloomy economy has affected Canada as well as the U.S.; we should expect Canada's government to become more active this fall in advocating production of Delta gas, which has royalty and tax implications for the country and its northern communities.

Unlike a true ball game, the admission fee, venue, official rules, ball size and type are negotiable and there are no referees or game schedules.   Do northern economies prefer stalemate and delay to compromise?  The players will likely decide before year-end.  -dh

    *      CALGARY, (The Canadian Press via COMTEX) -- Devon Energy, an American oil and gas independent, has agreed to buy Calgary-based Anderson Exploration in a deal worth more than $4 billion US, the companies announced early Tuesday.

9/7:  News-Miner Washington Bureau, By SAM BISHOP, WASHINGTON--Alaska's natural gas producers will shut down their study of a gas line to the Lower 48 if governments end up mandating the route, according to the study group's spokesman.  "The continuation of our study is only justified if a route is not mandated," said Curtis Thayer, spokesman for a consortium of Alaska's three main gas producers--Exxon Mobil, BP Exploration (Alaska) and Phillips Petroleum.  The warning comes as members of the group plan to pitch their proposed federal legislation to members of Congress next week. The producers' proposal, given to Alaska's delegation in mid-July, would create a regulatory framework that could speed construction of a line but does not describe the line's route.     *        Mackenzie Valley Pipeline: See our expanded web page on this project, then go to the 'History-Projects' button on your left to find information about the 1970s competing projects and the 2001 competitors.  We repeat: this record is still incomplete and we don't claim to be the experts.  We do rely upon reader input to assure the most complete and accurate record possible.  Accordingly, project proponents and all others are invited to provide input by simply writing us at any time; we will immediately edit to improve accuracy.     *          See our Northern Gas Pipelines articles this week in the Alaska Oil and Gas Reporter:  1.  About this website and the competing projects: 2.  About the Joint Gas Pipeline legislative committee.   3.  About the Alaska Highway Natural Gas Pipeline Policy Council.        *            The Governor's Alaska Highway Natural Gas Policy Council meets today at the Sheraton Anchorage Hotel.  Information: Erika McConnell, (907) 269-0346.  (Report to follow.)       *      Vancouver, CBC Radio-B. C. Gas says its proposed drop in natural gas prices might be the first of several to come.  Commission Spokesman Bill Grant says rates might drop by 30% by the end of next year.  Rates have been soaring over the past few years, but the market factors which fueled the price escalation have now reversed.     *     WASHINGTON -- In a release from his office, U. S. Senator Frank Murkowski tells of an ANWR setback.  "I am disappointed, but not surprised, that the chairman of the Energy and Natural Resources Committee will not be including in his Chairman's mark an authorization for oil and gas exploration in the Arctic National Wildlife Refuge (ANWR). ... Once again Alaska finds itself in the unfortunate situation where politicians in Washington are attempting to dictate what is best for us.  Unfortunately, this time they have stumbled from issues dealing with resources on federal lands to issues dealing with resources on State lands," said Murkowski.

9/6:  Anchorage Daily News, Liz Ruskin, Washington -- The fate of drilling in the Arctic National Wildlife Refuge rests with the U.S. Senate, but the debate these days is on the airwaves, not in hearing rooms. The Teamsters union, emerging as the most prominent pro-drilling group, is about to launch its own ads to counter a recent anti-drilling advertising campaign, said Alaska Teamster leader Jerry Hood.  (Note: the story says Senate Energy Committee hearings on this issue are scheduled the 3rd week in September.  Gas pipeline amendments could also be debated at that time.)     *       Anchorage Daily News, AP -- Lt. Gov. Fran Ulmer has certified an initiative aimed at creating a state authority to oversee development of the state's natural gas resources. (See our complete story, 9/5, below)          *       Financial Post by Claudia Cattaneo, Calgary Bureau Chief-Ron Brenneman said Petro-Canada became the first large oil and gas company operating in the natural-gas rich area to be blockaded three weeks ago by native bands because of its national profile as one of Canada's largest companies.  … "It can be significant for the industry even if it's just Northeast B.C., but the whole issue could spread beyond Northeast B.C. I think governments really have to stand up and take notice of what is going on up there," he said.   …  "They have some issues that they want resolved and the blockading is just a means of drawing attention. Their intent is not to shut down oil and gas, their intent is to get some attention for the issues they have with respect to the government." … Westcoast Energy Inc. and TransCanada PipeLines Ltd. also recently urged Ottawa to show leadership in resolving native issues in the Northwest Territories, where development of a pipeline has stalled because of opposition from a key native group.  Native opposition stemming from unresolved land claims halted development of huge natural gas reserves in Canada's Arctic two decades ago. … Anadarko Petroleum Corp. of Houston -- one of the world's largest oil and gas independents -- Westcoast Energy and Canadian Natural Resources Ltd. of Calgary have also been targeted in the protest, led by the Halfway River and Doig bands, and supported by others in the Treaty 8 area.          *      Gas Price Volatility Symposium 2000, 10/ 30 - 31/01·Toronto, Ontario--Romney Duffey, Atomic Energy Canada Ltd.-Marie Rounding, Canadian Gas Association-Jim Popowich, Coal Association Of Canada, Norman Miller, Corridor Resources Inc.-Rob Colcleugh, Duke Energy-Steve Letwin, Enbridge Inc.-Michael Carter, Financial Times Energy-Martin Molyneaux, Firstenergy Capital Group-Adel Ali, General Motors Of Canada Ltd.-Peter Fournier, Industrial Gas Users Association-Bob McLeod, Northwest Territories-Paul Vlahos, Ontario Energy Board-Kathy Sendall, Petro-Canada-Frank Kelton, TransCanada Pipelines Limited-Dr. Zak El-Ramly, ZE Power Group Inc.  Contact: IQPC.

9/5:  Lt. Governor Fran Ulmer has certified the Gasline Initiative calling for a State Authority to  acquire North Slope gas, build, maintain, market, ship, and own all or some portion of a LNG gasline to Prince William Sound (Valdez). It also calls for building a spur line from Glenallen to the Sutton area to tie into the existing South-central gas distribution grid.  "Now all we have to do is gather the signatures of about 30,000 registered voters in the next four months. Now is the time for Alaskans to take action and sign the petition,” said Scott Heyworth, Chairperson for the Initiative Campaign.  (Full release here.)       *      YELLOWKNIFE, N.W.T., CBC - Dene Nation leader Bill Erasmus comments on Deh Cho decision at Wrigley meeting.         *     (ANALYSIS OF WRIGLEY MEETINGS BELOW AND IMPLICATIONS FOR THE BIG PICTURE WILL FOLLOW....  WE ARE CHECKING ADDITIONAL FACTS.)       *         Senator Frank Murkowski told Northern Gas Pipelines two weeks ago that he envisioned a 'transportation corridor' featuring a gas pipeline, fiber optic cable and a railroad.  Accordingly, the attached news will interest some readers:  NORTH POLE, Ak - A second major conference exploring the topic of connecting Alaska with the rest of North America by rail will be held in Fairbanks, October 10-11. The conference will follow up on a well-attended meeting on the same topic held in Vancouver, B.C. in January 2000.  An agenda and venue will be finalized over the next few weeks. The conference will cover topics such as identifying potential users, land status, legislation, and the bilateral commission authorized Senator Frank Murkowski's Rails to Resources Act. The format will vary from round-table discussions to formal presentations.  Rep. Jeanette James (Photo-right) said it is important to gather officials from the natural gas, mining, tourism, transportation, First Nations and government sectors in one location to discuss and explore improved infrastructure.  Anyone interested in the conference should contact Rep. James at (907) 488 1546 or (907) 465 3743 or by email at: Connection_Conference@email.com. Information can also be found at: http://www.repjames.org.    *     WHITEHORSE STAR by Jason Small--The Yukon’s premier is not ready to give up on a natural gas pipeline.  Premier Pat Duncan said Monday she is hopeful that Alaskan natural gas producers will still choose to build a pipeline through the Yukon despite the fact the producers are saying the route is too costly.  Curtis Thayer, a spokesman for the Alaska Gas Producers’ Team, which has been exploring two possible routes for shipping natural gas to Chicago, said that at this point in the research, neither route is economically feasible.
 

9/4/01:  WRIGLEY, N.W.T., CBC - Natural gas producers are reacting with caution after Deh Cho leaders failed to endorse the Mackenzie Valley pipeline, while government leaders urged the industry not to change its plans. Joe Handley (photo-left), the territorial finance minister, says investors shouldn't lose their nerve.       *       NOTE THIS NEW ADDITION TO THE 'UPCOMING EVENTS' SCHEDULE IN THE RIGHT COLUMN: 9/12/01, Andrew Lundquist-Executive Director, National Energy Policy Development Group-Alliance Annual Meeting, Sheraton Anchorage Hotel, 907.563.2226     *      Fort St. John, B.C., CBC - The new head of B.C.'s energy regulator is keeping an eye on a native blockade north of Fort St. John.  Derek Doyle says he's encouraging dialogue between the Halfway River First Nation and Petro-Canada, but the commission won't get involved unless asked.  Natives have blocked a Petro-Canada oil field, saying a pipeline project through their territory threatens traditional hunting camps.

9/1-3 (Happy Labor Day Weekend!): SUNDAY NEW YORK TIMES, by James Brooke--Remote Inuvik, which is as far north of Vancouver as Mexico is south, is suddenly feeling the long reach of North America's growing desire for future supplies of natural gas. Emerging as the logistical hub for natural gas exploration and for future pipeline construction in the Canadian Arctic, Inuvik has long been a town where a lone stoplight regulates traffic in front of a Roman Catholic church shaped like an igloo. ... Gas was discovered here in the early 1970's. But it is North America's new energy economics that is fueling the latest boom. With about 90 percent of new power plants relying on natural gas, the United States Department of Energy predicts that American gas consumption will grow 45 percent by 2015. Although the number of American drilling rigs roughly doubled over the last 18 months, to 1,050, production grew just 2 percent in the United States in the last year, not enough to keep up with American demand, which is growing 3 percent a year.  ... Not only are many American gas fields declining, but many undeveloped drilling areas, including large swaths of the Gulf of Mexico, the Rockies and the Great Lakes, are off limits to production. To meet American demand, the next great producing area is expected to be the Arctic — with as much as 100 trillion cubic feet in the Prudhoe Bay area of Alaska, about 300 miles west of here, and about 12 trillion cubic feet offshore here, in the Canadian waters of the Beaufort Sea. ... The Northwest Territories favors a 300-mile undersea line from Prudhoe Bay that would run north of the Alaskan wildlife refuge, pick up Canadian gas off Inuvik in the Beaufort Sea, travel through the Inuvik area, then south along the Mackenzie River to Alberta. ...Alaska is lobbying fiercely for a route that would parallel the state's existing oil pipeline and road south from Prudhoe Bay, then follow existing roads across the Yukon Territory to Alberta. In May, the governor of Alaska, Tony Knowles, whose pipeline slogan is "My Way is the Highway," signed into law a bill that forbids state regulators from allowing an "over the top" route from Prudhoe Bay to Inuvik. ..."We are doing our best to make sure people are ready," said Nellie J. Cournoyea, chairwoman of the Inuvialuit Regional Corporation, a development group (Photo below). A fervent believer that a pipeline will go through here, she added, "most everyone wants to be involved in the pipeline." ....  "Inuvik certainly is booming," Larry Bagnell, the Yukon Territory's lone member of Parliament, said wistfully after a visit here in late July. Referring to his territory's 13 percent unemployment rate, nearly double the national rate, he added, "With our unemployment, Yukoners are going up there to work."  (Note: While articles such as this are very well done, Northern Gas Pipeline readers have the bigger picture.   Ms. Cournoyea is quoted, but her chairing of the Aboriginal Pipeline Group (APG) advocating a third route (Mackenzie Valley Pipeline for Delta gas only) is not mentioned.  Neither are alternative Alaska routes and modes covered or the critical U.S. Senate Energy Committee deliberations this month.  For a general circulation national publications, however, this is a reasonable review.  Its focus on Inuvik impact is especially useful.  -dh)      *      WRIGLEY, N.W.T., CBC - The Deh Cho isn't ready to make a decision about whether a pipeline should run through the Mackenzie Valley. On Thursday night delegates ... decided to use the pipeline to move land claim and self-government talks along instead. But not everyone's happy with that decision. The Deh Cho called the special assembly to come to a decision .... All other aboriginal groups in the territory have endorsed a plan that will make them one third owners....  ...Deh Cho's chief negotiator provided delegates with a scathing critique of the deal, saying they could do better. Then a council of elders recommended against signing the agreement.  Herb Norwegian, the Deh Cho's assistant negotiator...,  "We need to hear from the producers and the multinationals out there that want to do business in the Deh Cho territory that it's the Deh Cho government we need to do business with," he says. "We haven't heard that from anybody."  Doug Cardinal couldn't hide his bitterness about the delegates' decision. He's the former Deh Cho representative on the aboriginal pipeline group. "I wish we'd got the support. The other regions have been supportive," he says. "That's one of the things detrimental to us. We put our people out there and we sacrifice them at times."  Nellie Cournoyea, the co-chair of the aboriginal pipeline group (Photo-right), says she'd still like the Deh Cho as partners-- when they're ready.  (See other Wrigley stories below.  Commentary:  "Gas Pipeline Analysis: September 2001", to be released later this weekend.)     *     Fort St. John, B.C., CBC - The new head of B.C.'s energy regulator is keeping an eye on a native blockade north of Fort St. John.  Derek Doyle says he's encouraging dialogue between the Halfway River First Nation and Petro-Canada, but the commission won't get involved unless asked.  Natives have blocked a Petro-Canada oil field, saying a pipeline project through their territory threatens traditional hunting camps.