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

2008 LINKS: Shell Alaska OCS Study; Mackenzie Gas Project EIS; Join the Alaska Gas Pipeline Blog Discussion; Governor Sarah Palin's AGIA Links; 2007 ACES tax bill links; Department of Revenue 2007 ACES tax documents;  2007 ACES tax Presentations; 2007 ACES tax news; Alaska Gas Pipeline Training and Jobs; Gas Pipeline and Economic Development; Andrew Halcro; Bjørn Lomborg; FERC's Natural Gas Website Links

WASHINGTON: Alaska Natural Gas Pipeline Act; History of H.R. 4; DOE Energy Bill Position, 6-02; Daschle-Bingaman Energy Bill (Alaska, Sec. 1236 & tax credit, Sec. 2503 & H.R. 4 Conferees), Tax Credit; See amendments, "Energy Policy Act of 2002";  "Alaska Natural Gas Pipeline Act of 2001 (Draft)" & Background Paper, 8-9-01;Alaska Legislature Joint Committee position; Governor's position; Governor's 10-Point Plan; Anadarko Analysis; U.S. Senate Energy Committee Testimony, 10-2-01 - text version;  U.S. Senate Energy Committee Testimony, 9-14-00; Report on the Alaska Natural Gas Transportation Act of 1971, prepared by staff of the Federal Energy Regulatory Commission, 1-18-01

ALASKA: 1-23-03, Governor Frank Murkowski's State of the State Speech; 2002 DRAFT Recommendations to 2003 Legislature; '02 Alaska Legislation; Alaska Highway Natural Gas Pipeline Policy Council; Joint Legislative Gas Pipeline Committee; 9-01 Alaska Models: Canadian Routes, LNG, GTL; HR 4 Story; Cook Inlet Supply-Demand Report: AEDC; Commonwealth North Investigation & Our Article; Report: Backbone; Legislature Contacts; State Gas Pipeline Financing Study; 5-02 Alaska Producer Update; Kenai: "Oil & Gas Industry Issues and Activities Report, 11-02"; Alaska Oil & Gas Tax Structure; 2-27-02 Royalty Sale Background; Alaska Gas Pipeline Office opens, 7-01, and closes, 5-02; Betty Galbraith's 1997-1998 Chronology.  Our copy.

CANADA: 1-10-03, "Arctic Gas Pipeline Construction Impacts On Northern Transp."-Transport Canada-PROLOG Canada Inc.-The Van Horne Institute;Hill Times Reports, 8-30-02; 9-30-02, Cons. Info. Requirements; CBC Archives, Berger Commission; GNWT Economic Impact Study, 5-13-02; GNWT-Purvin & Gertz Study, 5-8-02; Alberta-Alaska MOU 6-02; Draft Pan- Northern Protocol for Oil and Gas Development; Yukon Government Economic Effects: 4-02 & PPT; Gas Pipeline Cooperation Plan Draft & Mackenzie Valley Environmental Impact Review Board;  Mackenzie Valley Pipeline MOU Draft, 6-01; FirstEnergy Analysis: 10-19-01; Integrated Delta Studies; National Post on Mackenzie Pipeline, 1-02;Northern Pipeline Act;  Haida Nation v. British Columbia; Indian Claims Commission; Skeena Cellulose decision -- aboriginal consultations required, 12-02; Misc. Pipeline Studies '02

COMPANIES: Alaska Gas Producers Pipeline Team Newsletter, 7-27-01; APG Newsletter: 5-02, 7-02 & 9-02; ArctiGas NEB PIP Filing Background; NRGPC Newsletter: Fall-02;  4-02 ArctiGas Reduces Field Work; BP's Natural Gas Page; Enbridge Perspective; Foothills Perspective; Williams Perspective; YPC Perspective, 7-02

 MEDIA REFERENCE: Alaska Journal of Commerce; Alaska Inc. Magazine; Anchorage Daily News; Canadian Broadcasting Corporation; Fairbanks Daily News Miner, Juneau Empire; Northern News Services; Oil & Gas Reporter; Petroleum News Alaska; Whitehorse Star, etc.

EXTENDED CONFERENCE NEWS: Alaska Support Industry Alliance, Anchorage Chamber of Commerce,  Canadian Institute, Insight Information, Inuvik Petroleum Shows, International Association of Energy Economists, Resource Development Council for Alaska, Ziff Energy Group

LEST WE FORGET!

Northern Gas Pipelines: Relevant Canadian Institute & American Conference Institute Proceedings: 2001

2001 Page

Northern Gas Pipelines: Relevant Canadian Institute & American Conference Institute Proceedings

2002 Activity

(While the author endeavors to produce accurate reports from meeting notes, he encourages all persons and offices named in this and other articles and readers-at-large to provide additions/corrections to ensure validity of the historical record.  -dh   ...Draft Revision: 12-11-01)

11-29/30-01: The last week in November was another significant week in the life of Arctic gas pipeline discourse:  Arctic Gas Symposium Participants, 11/29-30, Houston: Judy Brady, Executive Director, Alaska Oil & Gas Association--Matt Janisch, Managing Director, BMO Nesbitt Burns Inc.-Ministers Jim Antoine (Northwest Territories), Scott Kent (Yukon Territory), and Murray Smith (Alberta)-Corry Woolington, Land Manager-Alaska, Chevron U.S.A. Inc.-Robert Purgason, Vice President, Hydrocarbon Development, Williams-John Burdek, Chairperson, Ta'an Kwach'an Council-Marty Cheyne, President & Chief Executive Officer, Devlan Exploration-Dave Harbour, Publisher, Northern Gas Pipe

lines-David McClement, Former President, NANA-Colt/Colt Engineering-Forrest E. Hoglund, Chair & Chief Executive Officer, Arctic Resources Inc.-Stephen J. Wuori, Group Vice President, Planning & Development, Enbridge Inc.-Marty Heeg, Vice President, Business Development, Foothills Pipe Lines Ltd.-Jim Moore, Senior vice President, Williams Gas Pipeline-Bob Reid, Executive Director, Mackenzie Valley Initiative, TransCanada PipeLines Limited- Graeme G. Phipps, Vice President of Exploration and International, Petro-Canada Oil and Gas-Brian Fraser, Business Manager, Shehtah Drilling Limited, Kerry Wilson, Operations Manager, Shehtah Drilling Limited-Roland George, Principal, Purvin & Gertz, Inc.-Jeff Bigger Business Development Manager, Syntroleum Corporation (Event managed by Margaret Bryce and associates, Canadian Institute). SEE OUR ORIGINAL REPORTS BELOW.  -dh

See the Arctic Gas Symposium Photo Gallery here.

The original presentations are available for your review here.

11-29-01, FIRST DAY: Arctic Gas Symposium, Houston.  Co-chairing this exceptional and timely two-day event were: Judy Brady, Executive Director of the Alaska Oil and Gas Association and Matt Janisch, Managing Director of BMO Nesbitt Burns Inc.

On this first day, Co chair Judy Brady welcomed participants and—setting a positive but realistic goal for the Symposium--said that last year the economy was looking stronger, gas prices were up and the Alaska gas producers had launched a $100 million feasibility study.  She said that now, a year later, gas prices and demand are down, the economy is weaker in the wake of 9-11 and no gas pipeline route has yet to be deemed economic.  She said, “We are at an odd time, past the excitement of $10 gas, facing recession, recognizing that not all stakeholders will obtain their gas pipeline routing of choice.  Because it is an emotional issue,” she said, “there is opportunity to sever relationships forever.  That would not be a good thing…,” which she said could add to the tragedy of good projects gone bad.  She said by the time another Arctic gas symposium is convened, perhaps a year from now, routing decisions could have been made, open seasons held with a project going forward.  She closed by urging maintenance of positive relationships among stakeholders.

Brady introduced as keynote speakers, leaders of the Northwest Territories, the Yukon Territory and Alberta, who have particular gas pipeline responsibilities (Photo of "The Three Ministers", left to right-Ministers Murray Smith, Scott Kent and Jim Antoine.)

Northwest Territories (NWT) Deputy Premier Jim Antoine (i.e. also Minister of Aboriginal Affairs) represented Premier Stephen Kakfwi who by coincidence was in Dallas with Prime Minister Chrétien on the Team Canada West trade mission we reported earlier.  He later signaled support for industry and other relationships but began by restating the NWT vision of developing, “…a long-term, stable oil and gas sector as Alberta, Texas and Oklahoma have done, beginning with the construction of a Mackenzie Valley Pipeline. “  The NWT economy is growing by double digits, he said, partly as a function of population and resources with an area twice as big as Texas and a little smaller than Alaska with, “…extensive reserves of gold, diamonds, and oil and gas…,” the entire population could fit into Houston’s Enron stadium without filling it.

Comparing oil and gas areas, he said studies have shown, “The Louisiana basin yields about 1.3 Tcf of natural gas per year. It is conceivable that the Mackenzie Delta will reach, or exceed, this prolific production level.”

In the Mackenzie Delta and Liard areas exploration is increasing, and he said that “American energy companies have been keen to obtain large land holdings in that region, as evidenced by the recent takeovers of Canadian energy companies, such as Anderson and Gulf, by Devon Energy Corporation and Conoco, respectively. These two companies join a number of American companies already active in the region including Anadarko, Burlington, Chevron, E-O-G and Exxon/Mobil.”

According to Antoine, “The recent decline in natural gas prices has not affected the economic viability of constructing a Mackenzie Valley gas pipeline to transport natural gas from the Mackenzie Delta south to continental markets,” as future market prices are projected in the $3 range.  Referring to a Northern Route project for Alaska gas, he said, “In contrast to moving Alaskan gas, no additional infrastructure is required in southern Canada and the United States.  The existing pipeline systems can handle the additional volume from our gas fields.  Moving our gas through the Alberta systems will help keep these systems full and also keep costs down for consumers. 

He said that, “the only commercially viable Arctic gas reserves today are those in the Canadian Mackenzie Delta and Liard regions…and expenditures for oil and gas exploration and development activity in the Mackenzie Delta will exceed $750 million dollars over the next four years.”

Contributing to the momentum, he said that six weeks ago, “…Mackenzie Delta Gas Producers signed an agreement with the Aboriginal Pipeline Group for up to one third Aboriginal ownership in a Mackenzie Valley gas pipeline.  By signing this agreement, we believe the producers have sent a strong signal that a Mackenzie Valley gas pipeline application is imminent.”

Referring again to Alaska interests, he said that the NWT, “continues to be vitally interested in the movement of Alaskan gas to market.”  He said a decision gas pipeline routing

 should be based on commercial and not political considerations.  “As the gas farthest from market,” he said,  “Alaskan gas carries the highest price risk, and…we simply encourage the Alaskan producers to consider the long-term economic efficiencies associated with combining Alaskan gas flow with Mackenzie Delta gas, for the benefit of all parties….  There should be no political interference in a market decision.  The role of government is to facilitate investment decisions, not dictate them.” 

He emphasized the latter point by saying that, “the private sector is in the best position to make the final decision on an Arctic pipeline route. We believe there are significant benefits to both Alaska and the Northwest Territories in combining our gas for transportation to market. Given the lower capital costs and the economies of scale, it will maximize resource development in both regions.”

On internal challenges, Antoine said that, “settling land claim and self-government agreements are critical to creating a stable political environment….  I am pleased to report that steady progress is being made on settling land claims.  The Inuvialuit, the Gwich’in and the Sahtu land claim agreements are completed.  The Dogrib Nation is in the final stages of completing land claim and self-government agreements and negotiations are proceeding on all remaining claims.”

On pipeline support, he said the government is working with the Deh Cho region which he represents on the Legislative Assembly.  He recalled Grand Chief, Michael Nadli’s support for the development of a Mackenzie Valley pipeline, “as long as certain conditions are met.  Both our government and the federal government have publicly stated our commitment to resolve all outstanding land claim negotiations by the time a Mackenzie Valley gas pipeline is completed, including the Deh Cho.  We want to see all regions prosper and will not allow one region to constrain the economic prospects of another or the rest of the Northwest Territories.”

Antoine said that construction of a Mackenzie Valley pipeline will create 13,000 person years of employment in the Northwest Territories and that labor unions are a part of the discussion.  “We are working with communities to prepare for this development and address the social issues it will bring,” he said.

In closing, Antoine again referred to Alaska.  “We are aware that Alaskan Governor Tony Knowles has a 10-point plan for the Alaska Highway route that includes tax breaks,” he said.  "Our government’s one-point plan is to promote a Mackenzie Valley gas pipeline, which has the lowest price tag for transporting Arctic natural gas to market."

The Yukon Territory's Minister of Economic Development, Scott Kent (Photo), followed Antoine and said the Alaska Highway Pipeline Project is progressing with initial reconstitution of the Alaska Natural Gas Transportation System (ANGTS) consortium, plans that it submit a proposal to Alaskan gas producers by year-end and an agreement with the Kaska nation through which the pipeline would pass.

“No one can predict how the events of September 11^th will continue to impact the North American and global economies or the future of northern natural gas”, he began, “but, we do know that the natural gas industry has become a critical element of the North American economy.  We also know that since September 11^th, energy security has become in a real sense, a national security issue for the United

States.  Responding to energy needs, Kent recognized the major competing projects.  "I’m convinced that northern projects like the Alaska Highway Pipeline Project, the Mackenzie Valley Project, and LNG projects in Alaska," he said, "have the potential to complement one another, because taken together these projects can contribute to stable, sustained, long term growth in North American and international energy markets."

He then moved to support for his Territory's goal.  "The proposed Alaska Highway pipeline alone would carry about 4.0 bcf per day, the energy equivalent of 820,000 barrels of crude oil. It could substitute for imports from regions like the Middle East. You’ll recall that in July 2001, the United States imported an average of 697,000 barrels of crude oil per day from Iraq," he said.  Then his followed with reasoning for support of ANGTS:

• It is the route designated in a treaty between Canada and the United States.

• The wells have already been drilled and are producing natural gas, which is largely re-injected into the ground.

• The rights-of-way already have been secured by Foothills in the Yukon and parts of Alaska.

• The permits have been issued.

• Outstanding native claims are being resolved. In fact we just recently completed another final land claim agreement with the Ta’an Kwachan, a First Nation close to Whitehorse.

• The environmental studies have been done and demonstrate the least damage to the North American environment.

• The project requires no new transportation corridors,  no new construction access highways, no LNG liquefaction or re-gasification plants, and construction can begin simultaneously from twenty or more facings along the existing highway.

"Let me conclude today by saying that Yukon people and Yukon businesses are hard at work supporting exploration and development in the Yukon, the Mackenzie Delta, and elsewhere", Kent said. "Over the last year our government hosted many producers, pipeline companies, and service and supply companies interested in investing in the Yukon. We will continue to make development of our oil and gas industry a priority. We will continue to make land available for exploration and ensure a positive investment climate."  (See our related report here.)

Minister Murray Smith provided a concise gas market analysis after his opening remarks.  "Natural gas consumption in North America grew from 57 billion cubic feet per day in 1990 to more than 68 billion cubic feet per day in 2000," he reported.  "That’s cumulative growth of 20 percent."  He said that natural gas production from the Western Canadian Sedimentary Basin (WCSB), which is centered in Alberta, has grown from 9.8 billion cubic feet per day in 1990 to 16.8 billion cubic feet per day in 2000, an increase of 71 percent.

He said Alberta provided the best 'hub' for delivering natural gas to markets and described the role hubs play in satisfying market demand and balance.  It currently serves markets in the Northeast, the Midwest, the Pacific Northwest, California, Central Canada, Atlantic Canada and Alberta.   "A hub is a system of routing," he said, " in which a particular area coordinates the production, processing, inventory, shipment, trading and delivery of a product or range of products. A hub serves as a physical point of exchange, creating a market for buyers, sellers and traders. A hub creates price discovery and liquidity."  He said that an effective hub requires three essential elements: physical attributes, transactional attributes and substitutional attributes.  "Physical attributes", he said, "include an efficient system of collecting products from various sources, the ability to process and store products, and an efficient system, including excess capacity, to reliably ship products to key markets.  Transactional attributes include an efficient and financially liquid trading point and a transparent pricing mechanism.  Substitutional attributes include the opportunity to exchange products for other uses or to transform them into value-added products. Like turning natural gas into electricity, extracting natural gas liquids for petro-chemical manufacture, employing gas as fuel or diluent for oilsands development, and placing gas in storage for future uses."

Smith said Alberta's Natural Gas Hub could handle the 5 Bcf per day of new deliverability that will come from Alaska and the Mackenzie Delta owing to its expandability, storage capacity, local manufacturing uses for gas liquids and market reach.  "The Alberta Natural Gas Hub is a strategic asset that is key to unlocking the full potential of Arctic gas", Smith concluded. "Integrating one or more Arctic pipelines into the Alberta Natural Gas Hub will maximize the benefits for all market participants, including Arctic gas producers."

In the Q&A period, Smith commented: "we want to create a warm investment climate.  A critical element is stability.  We do what we say we are going to do."  He then recounted the importance of low tax rates, transparency of the regulatory process and "high, robust environmental standards".

Co Chair Brady then called for an update on Alaska's energy industry from Corry Woolington (Left), Land  Manager - Alaska for Chevron U.S.A., Inc. and Robert Purgason (Right), Vice President, Hydrocarbon  Development, Williams.  She also asked the author, in attendance, for an update on public information status of the various projects.

Woolington began by outlining Chevron's strategy for seeking stand-alone projects in the 200 million barrel range, pursuing smaller economic fields with access to existing infrastructure, developing
satellite opportunities from in core areas of mature fields and positioning the company early in emerging areas such as for gas exploration in the Foothills region of Alaska's North Slope.

He argued persuasively for a "more predictable permitting environment", observing that Alaska's  permitting process was less effective and predictable than those the company experiences in the Lower 48.  He specifically cited the State's Seasonal Drilling Restriction, which wasn't made known until the winter of 2000, adversely effecting that season's drilling program by effectively changing a state permit ruling which reduces the number of wells that can be drilled from a single ice road, dramatically
increasing the costs per well.  He also revealed background on a North Slope ice road island project last year which ended in failure owing to deficient permitting processes.

Purgason's arguably represents the most diversified energy company in Alaska, if not North America.  Williams' Alaska interests include: 200 Mbpd topping refinery, 730 Mbpd Anchorage Terminal Storage, minority interest in the Trans-Alaska Oil Pipeline, purchaser of State royalty oil, convenience stores in major areas of the State, over 500 employees and was former project director for the Alaska portion of the Alaska Natural Gas Transportation System (ANGTS).

Williams also has a major presence in Canada, with $545 million in fixed assets alone.

In the Spring, the company embarked on a study to determine the feasibility of creating a petrochemical industry for Interior Alaska (i.e. Fairbanks area) in concert with possible construction of an Alaska Highway gas pipeline routing.  He said that positive economics were possible for Alaska gas petrochemical use either in Alaska or Canada.  He said there are capital cost differences and a construction cost differential.  Middle east competition is increasing with lower labor cost trends.  A Petrochemical industry for Alaska, he said, is not a 'slam dunk' decision for Alaska or Alberta.  Williams, he said, is looking for value added solutions, and to engage large petrochemical end-user manufacturers.  The final outcome for Alaska, Purgason suggested, would depend on Alaskan stakeholders working together to create value added solutions.  He said that timing was an issue and emphasized that petrochemical industry in Alaska could be "...an opportunity to create a new energy legacy."

Your author (Photo-Author Dave Harbour with Bob Reid-Left, Executive Director-Mackenzie Valley Initiative), upon introduction, briefly touched on Arctic gas pipeline history, beginning with the pre-1971 'Gas Arctic' informal studies by producers investigating routes and modes for moving enormous potential gas reserves of the North Slope to market.  He covered the creation of the Arctic Gas Project (i.e. Canadian Arctic Gas Study, Ltd., and Alaskan Arctic Gas Study Company) by North Slope and Mackenzie Delta producers and the major North American gas pipelines.  After briefing the Symposium on FPC and NEB actions leading to certification of the Alcan project to build the Alaska Natural Gas Transportation System (ANGTS), Harbour described several differences between 1970s-era and current competitive issues: increased number of projects, nearly completed settlement of Canadian Aboriginal land claims.  He also spoke of the relatively 'plush' financial condition of Alaska compared to the present day, with a fiscal crisis now looming and no solution in sight.  He briefed attendees on Alaska motivations for various political positions including a  depleting Cook Inlet gas supply, balanced with the current and optimistic flurry of exploration activity.  He concluded by briefing the audience on the October 2 Senate Energy and Natural Resources Committee hearing; current status of the Alaska gas producer feasibility study as reported here; progress for the ANGTS project in attracting support of previously withdrawn partners and an agreement with the Kaska First Nation along a Canadian portion of its intended route; and similar progress by producer and Aboriginal Pipeline Group parties in their effort to assess feasibility of and then develop a viable Mackenzie Valley Pipeline project.  Asked about lessons learned from the pipeline debates of the 1970s, he observed that the arena is more complex today with more parties and more projects.  He suggested that the importance of maintaining decorum and good-will in a charged political atmosphere is critical to accomplishment of any project.   He was surprised some Alaskan politicians seemed so mistrustful of and even discourteous to an industry which sustained the state, especially when royalty/tax revenue issues are so closely aligned to company profit motives.  "Some elected leaders forget that how they treat human beings and companies today can be reflected in future corporate decisions," he advised. 

Co Chair Brady, referring to the importance of dealing with First Nations for any northern pipeline route in Canada, introduced John Burdek (Photo), Chairperson of the Ta'an Kwach'an Council.  Speaking on behalf of Ed Schultz, the Grand Chief of the Council of Yukon First Nations, Burdek said, "Ta’an First nation has been re-established, and is recognized as a government with ownership and law-making authority over our Settlement Lands that amount to more than 300 square miles in the Whitehorse area."  Without issuing final decisions regarding right of way for the Alaska Highway Project, Burdek said, "The present route of the proposed Alaska Highway pipeline would cross the traditional territories of six of our members, including the White River First Nation, Kluane First Nation, Champagne/Aishihik, Teslin Tlingit Council, Carcross/Tagish First Nation and Ta’an Kwach’an Council. Four of these six members have reached final land claim agreements.  It would also cross the territories of three other Yukon First Nations - the KDFN, Liard First Nation and Ross River Dena Council - who are not members of the CYFN at this time...."  He said that while his people appreciate the need for economic development they have seen other large projects like the Klondike gold rush and construction of the Alaska Highway come and go without benefiting Aboriginal people.  Such projects had also left negative impacts.  He said that "boom and bust" economies were not desired, but rather, an "...economy that is concerned about the well being of our communities and provides skills and employment to our citizens and long-term benefits to our communities."  Then Burdek made a forceful announcement: "We are not stakeholders," he said.  "We are not special interest groups.  We are not non-governmental  organizations.  We are governments. We have established the foundation of partnerships with the federal and territorial governments in our constitutionally protected land claim agreements.  We have also established an inter-governmental forum in which our chiefs and the territorial Cabinet meet bi-annually to discuss matters.  However, there remains much more work to fully establish a meaningful and substantive partnership with the federal and territorial governments."  He said, "We want to be part of the planning, assessment and regulation of projects in the Yukon Territory."

Graeme Phipps, Petro-Canada's Vice President-Exploration & International addressed "Prospects for the Canadian North".  He set the stage by outlining the hydrocarbon potential of northern basins, emphasizing Mackenzie Delta reserves and potential, and discussed industry exploration activity and plans, and activity is increasing.  In 2000, he said, the Inuvialuit Regional Corporation conducted a lease sale; ten Federal land parcels were nominated and 9 were awarded-4 offshore and 5 onshore.  Petro-Canada/Devon (formerly Anderson) were the first to drill an exploration gas well in the Mackenzie Delta in more than a decade.  Petro-Canada's aggressive exploration and possible development plans for the Delta anticipate government approval of a pipeline by mid-04 with pipeline operations commencing by 2008.  He said an MOU was signed Oct 15, 2001 between the Mackenzie Valley Aboriginal Pipeline Group (APG) and the Mackenzie Delta Producers Group (See our report). "Pipeline access for additional gas would be provided to other producers at commercial rates and terms that are subject to NEB review and approval."  Then, he said, "From a Canadian and Petro-Canada perspective, 'over the top and down' is the best option for potential future Arctic Islands development and to bring our existing reserves in the Colville Hills on stream."  Phipps then inventoried the significant list of challenges to Arctic pipeline planners, including: exploration, environmental, technical, operational, regulatory and community relations. "Responsible development", he said, "will lead to increased prosperity for all stakeholders especially the people of the north - it is a good news story for all concerned."

"The window of opportunity for a gas pipeline has been opened by economics; let's see that it's not shut by politics."

Marty Cheyne, President & CEO of Devlan Enterprises summed up the opinions of many attending the Symposium with the above statement.  He began his presentation reviewing Devlan's experience and stake in regions north of the 60th parallel and described the prolific oil and gas seepages in the area which have signaled a prospective hydrocarbon area for generations.  He reviewed the company's acreage, drilling program and opportunities focusing special attention on exploration in the vicinity of Tsiigehtchic.  He pointed out that northerners made up 80% of Devlan's project labor work force, described the importance of respecting Aboriginal culture and understanding that an earlier generation of exploration activity was not sufficiently sensitive to local communities and the environment.  After coordinating with Gwich'in landowners a benefits plan and access agreement, he said a project permitting process could be accomplished in 63 days, as applications proceeded from land and administration access to the Gwich'in land and water approval to final NEB well license and approval to drill.  Cheyne's presentation underscored the importance of 21st century explorationists developing positive local community and business relationships.

On a similar theme, David McClement, former president of NANA/Colt Engineering LLC, described the benefits to be achieved through developing joint venture relationships, the importance of working closely with Native and Aboriginal peoples.  "They are good people to work with, and honest," he said.  He also underscored the serious challenges posed in the Arctic by special logistical problems. " We are dealing with a very remote area", he said.  "Anchorage is over three hours by air north of Seattle; Deadhorse, Alaska, is 1 hour, 40  minutes north of Anchorage.  The distance by road from Edmonton, AB, Canada to Fairbanks, AK is just less than 1900 miles and the distance along the TAPS haul road from Fairbanks to Prudhoe Bay is another 500 miles."  He described furious weather conditions, difficult logistics and a critical need for environmental oversight of projects.  He summarized the development of Alaska's Regional Native Corporations and their success.  McClement believes the experience of Alaska Natives of finding wealth in contracting with resource projects is a lesson Canadian Aboriginal groups will find helpful.  "In Canada, the situation is quite different", he said.  "Canada’s aboriginal community has unsettled land ownership issues, many don’t have the business models and the substantial experience that Alaska’s natives have had through their regional corporations and their expressed interests in any proposed gas pipeline seems to lie in the area of equity participation, rather than as the provider of services."  He then offered what seemed sage advice to his devoted audience, following his successful experience with NANA Development Corp. and others: "I think that any company that is considering engineering and construction opportunities in Alaska should seriously consider connecting with an Alaskan partner.  In doing so however, he should be aware that his partner, especially if a Native corporation, may have objectives and a mission that goes beyond profit."  He also described "key principals" of a successful alliance and offered other useful tips to companies seeking northern opportunity.

11-29-01, SECOND DAY: Arctic Gas Symposium, Houston.  Co chairman Matt Janisch (Photo) welcomed the assembly and introduced the moderator for the morning panel: Dave Harbour, Publisher, Northern Gas Pipelines.  Harbour introduced the panel topic, "Bringing Arctic Gas to Market", by briefing the audience on little discussed issues affecting the dialogue: satisfying gas demand on Cook Inlet's depleting reserves, and satisfying the growing demand for Arctic gas reserves in the processing of Canadian oil sands regions (i.e. Bitumen).  He said the routing arguments continue moving in multiple dimensions: among routes, modes, advocates, national governments, local governments and local community interests with environmental and labor influence as well.  "All project proponents have earned our respect," he said, "and today you will hear distinguished men describe an untold mountain of diligent effort."

Then he pointed out the confusion which develops when credible professionals differ.  "When  proponents like this appear before bodies such as the Senate Energy and Natural Resources Committee or this forum," he said, "one says 'the highway's my way'; another says 'over the top'; another says 'let science guide us'; another says 'Alaska first'; while another says, 'Delta gas first', and still another says, 'my claims come first'.  How is a Senator to know who is right?  How are you to know?  Our public service website, Northern Gas Pipelines, seeks to assist in helping you reach your own conclusion, as will our distinguished panel presenters today."

Harbour introduced the panel members and the first to rise was Forrest Hoglund, (Photo) Chair & Chief Executive Officer of Arctic Resources Company.  He called an Arctic gas pipeline the most important energy project in North America, freeing 44Tcf of stranded northern reserves.  He said that while there were two major competing projects now, as in 1975 (if one omits El Paso), the politics of today, "...make Florida in November look like child's play", referring to the presidential election.  After making capital cost and line mileage comparisons, Hoglund projected the wellhead netback to be $.75 - .90Mcf for ARC vs. $.20Mcf for ANGTS and $.10Mcf for a companion Mackenzie Valley Pipeline.  He candidly discussed Alaska's position opposing his project and the state law prohibiting the northern route.  Then he described flaws in Alaska's reasoning, including a $100 million annual cost difference to the state.  He said Canadian federal and Aboriginal interests would favor a northern route.

"The Great Pipeline Debate" was the topic for Stephen J. Wuori, Group Vice President, Planning & Development, Enbridge Inc.  For not being an active project proponent, this leader of a highly experienced Arctic pipeline and resources company had firm opinions.  Wuori first reviewed the company's significant pipeline interests throughout North America then addressed "the bottom line" of Northern Pipeline Development.  He said that, "Project economics must be positive and robust - The Core Producers will direct the development - Political / Social issues must be resolved - Either pipeline route can be effectively constructed and operated - Only one pipeline route will be developed in the near term."  He then discussed North American gas supply reserves and locations, projecting demand and flow through 2010.  While stating that Enbridge is 'route neutral', he did point out cost and toll differentials of the two major competing routes, labeling them both as "constructible" and "operable".  Then he described Enbridge's legendary northern experience and described a submarine pipe installation technique which could be employed for a northern route.  He then suggested a concept for future study and consideration: two 36" pipes rather than one 48" (or 52") line.  Compared with a 48" line, he said dual 36" pipelines would: "cost about 7% more, reduce project risk, provide socio-economic benefits, improve the schedule for moving first gas to market and provide pipeline capacity better matched to market need."  To be successful, he said, an Arctic gas project would require: continental decision-making, good project economics, producer support, a common understanding and cooperation of stakeholders.  (Note: The author cannot help but observe by this time in the program, consensus for a solid decision making process is growing.  -dh)

Williams Gas Pipeline’s Senior Vice President, Jim Moore (Photo), articulated the company’s view of the project’s importance and routing: it is necessary to meet demand growth; Canadian and Alaskan value added opportunity requires more analysis; the Alaska Highway route is the best option; a consortium is the best option to advance a project; and a stand-alone Mackenzie Valley Pipeline will be needed.  

Foothills Pipe Lines Ltd. Business Development Vice President, Marty Heeg (Photo) said the Alaska Natural Gas Transportation System (ANGTS, the ‘Southern Route’) provides for expedited delivery of Alaskan gas; is the tested and accepted framework; allows for updates; and permits project capacity, pressure and technological modifications. 

Bob Reid, Executive Director of the Mackenzie Valley Initiative recommended a two-pipeline solution: the Southern Route and a stand-alone Mackenzie Valley Pipeline.  The combination, he said, would have the lowest cost and risk and be the environmentally superior routing.

Shehtah Drilling Limited executives, Brian Fraser (Photo-L) and Kerry Wilson (Photo-r) gave first hand advice on “Tackling Logistical Challenges of Drilling in the Arctic” while emphasizing both the importance and advantages of joint venture, Aboriginal businesses.

Purvin & Gertz, Inc. Principal Roland George provided a range of gas pipeline scenarios based on varying assumptions.  He said market demand could result in Alaska gas flowing in 2008 with Delta gas coming on-stream in 2011.  Balanced market supplies require new gas from Alaska and other sources.  Another voice critical of Alaska’s government, he said “No project means no benefits from Arctic gas development.  Alaska politicians haven’t figured this out yet!”  He concluded that, “current market conditions and politics have probably delayed Alaska gas.”

For the many who believe GTL technology could someday free frontier gas now stranded by political stalemate, Jeff Bigger offered encouragement.  Bigger is Business Development Manger for Syntroleum Corporation.  He said that advancing GTL technology could free stranded gas at product prices above $18/bbl; that there is a large liquid fuels market and a tightening of fuel sulphur regulations; that catalysts and reactors have improved while plant costs have declined.

Wrapping up the Symposium, Co-chair Matt Janisch (Photo) revealed in economic terms the gas ‘boom-bust’ phenomenon and an outlook for gas prices reaching historical levels within 2-3 years.  Bullish on natural gas demand in the coming decade and beyond, he identified reasons for the demand including such important demand increments as oil sands gas requirements of over 1Bcf/d by 2010.

As gas conferences go, the Arctic Gas Symposium was one of the best.  The complex array of stakeholders, gas demand expectations, corporate planning, government revenue needs and opportunity cost of no development argue for a rich schedule of such conferences, at least for the next year or two.

(The original presentations are available for your review here.)

***

12-03-01:  MANAGING COMMUNITY CONSULTATIONS & STAKEHOLDER RELATIONS, Calgary: David Savage, President, Savage Management Ltd.-Gerry DeSorcy, Former Chair, Public Safety and Sour Gas Committee-Harry Lillo, Implementation Team Leader for Public Safety & Sour Gas, Alberta Energy & Utilities Board (AEUB)-Richard Neufeld, Partner, Fraser Milner Casgrain-Maureen Payne, Senior Vice President, GPC International-Richard Roberts, President, Praxis-Bill Remmer, ADR Co-ordinator, Alberta Energy & Utilities Board (AEUB)-Ken Shipley, Director, The Fort McKay Industry Relations Corporation-Christine Burton, Manager Regional Consultation, Suncor Energy Inc.-Tom Marr-Laing, Director, Energy Watch Program of the Pembina Institute- Joanne D. Nutter, Socio-economic Manager, Mackenzie Delta Opportunity, Imperial Oil Resources-Jeff Rath, Barrister & Solicitor, Rath & Co.-Chief James Ahnassay, of the Dene Tha' First Nation-R.W. Taylor, Assistant Deputy Minister, Oil Development Division, Alberta Energy, David Luff, Vice President Environment & Operations, Canadian Association of Petroleum Producers (CAPP-Brian Vermeulen, Manager Surface Land & Aboriginal, and Community Relations-Robert Hunt, Senior Vice President, Akita Drilling Ltd.-OD Hansen, Public Affairs Advisor, WesternGeco-Bee Schadeck, consulting for Anadarko Canada and Northstar Energy-Barbara Shumsky, Manager Public Affairs, Syncrude Canada Ltd.- Jane Newlands, Community Relations Manager, BC Hydro.

 (While the author endeavors to produce accurate reports from meeting notes, he encourages all persons and offices named in this and other articles and readers-at-large to provide additions/corrections to ensure validity of the historical record.  -dh   ...Draft Revision: 12-02-01) 

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