Foothills study shows two-pipeline option is cheaper

Sep 20, 2001 02:00 AM

A Calgary pipeline company says it would be cheaper, safer and less risky to build two pipelines to carry Arctic gas than construct one undersea line from Alaska to the Mackenzie Valley.
"In a nutshell, it is Foothills Pipe Lines' opinion, based on 50,000 person-hours of study both internally and externally, that the northern or over-the-top route is slightly more expensive than the two-pipeline option -- the stand-alone Alaska Highway and Mackenzie Valley pipelines," Foothills representative Rocco Ciancio after circulating the company report.

Foothills Pipe Lines has a big interest in seeing Alaska gas shipped south along the Alaska Highway to northern BC and Alberta instead of undersea to northern Canada. The company is the odds-on favourite to build the Canadian portion of the Alaska Highway route, and would lose out if the undersea option was chosen. It holds most of the permits needed to build the line. Those are some of the reasons why the government of the Northwest Territories finds the report suspect.
"The report is also not consistent with other studies, including ones by Alaska producers, which suggest that the over-the-top route is far cheaper than going down the Alaska Highway," said Doug Matthews, the territories' director of minerals, oil, and gas. "It doesn't surprise me to hear a pipeline company advocating for the construction of two pipelines instead of one. It might be argued that this report is motivated, in part, by self-interest."

The territorial government favours an undersea route because it would pick up Mackenzie Valley gas along the way. An Alaska Highway pipeline could stall development of a standalone pipeline down the Mackenzie Valley because there's not enough manpower, equipment and pipe to build two pipelines at the same time.
Matthews appears to have the backing of Alaska producers. The Alaska Gas Producers Pipeline team, which is spending $ 100 mm to see which route is best for shipping Alaska gas south, says neither of the two options it's considering is economical at this stage. But in looking for ways to make pipeline construction economical, the team believes the undersea route to be shorter and cheaper to build.
That's why it has threatened to withdraw its plans unless the Alaska legislature eases up on its opposition to the undersea route. The Foothills report suggests there are a number of serious and critical constraints associated with a sub sea portion of a pipeline.

It suggests that limited open water time will significantly limit construction time to less than two months of the year. Limited open water and moving ice could also result in a pipeline shutdown of several months in cases of emergency if the pipeline is not twinned.
The Foothills report also suggests that the undersea route may not clear regulatory hurdles and environmental laws designed to protect birds, whales, polar bears and other animals. In comparing the routes, Foothills concluded that building two pipelines would cost just slightly less than the $ 13 bnneeded to build the undersea line to northern Canada and then down to Alberta.
It further states there could be as many as 33 serious technical and environmental challenges which would either add to the cost of the pipeline or stop it from going ahead. The company report foresees only four such challenges facing a two-pipeline approach.

A Canadian consortium, which includes Imperial Oil, Conoco Canada, Shell Canada and Mobil Oil Canada, is looking at building a pipeline from northern Alberta to the Mackenzie delta. Philips, British Petroleum-Amoco and Exxon-Mobil are considering the possibility of either a gas pipeline down the Alaska Highway or one which would go undersea to the Mackenzie delta and then down to Alberta. Both consortiums have indicated that they will make a decision by year's end.

Source: Vancouver Sun
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