Natural Gas Pipelines Big and Small

Gov. Palin held press conference today to discuss her Alaska in-state natural gas pipeline, or “bullet line” as it has been called. (You can listen to the audio of the presser here.) Our very own Sinistar has provided some excellent background info on this bullet line.

Reuters reports:

Alaska Governor Sarah Palin on Tuesday unveiled a plan to encourage development of a $4 billion in-state natural gas pipeline that would precede the massive project that state officials hope will deliver North Slope natural gas to North American markets.

“We’ve got to do this project. We’ve got to see it come to fruition, or our state will be a state that imports natural gas despite the fact that Alaska is sitting on some of the world’s richest reserves of gas,” Palin said at a news conference in Juneau.

An in-state natural gas pipeline, or “bullet line,” has been discussed for decades. There is no specific proposal pending before regulators.

Palin said her efforts, including her appointment of a state project manager, will encourage the development of an in-state pipeline that would precede construction of a 1,700-mile pipeline to Alberta that would send natural gas to the much bigger North American markets.

The in-state line the governor envisions would run 800 miles from the North Slope to the population centers along southern Alaska’s Cook Inlet, said Harry Noah, Palin’s appointee as the project manager.

It would be 24 inches in diameter and ship 500 million cubic feet a day starting in 2015, Noah said.

But for the in-state project to be economically viable, Noah said, Alaska’s tiny in-state market must be much expanded beyond what exists in the cities along the urban corridor running between Fairbanks and the Kenai Peninsula.

“We need to have some big users utilize this gas to make it viable,” Noah said. “If it’s just the residential gas network in (urban) Alaska, it’s pretty difficult to make this project work from an economic standpoint.”

Such big users might include a revived Agrium Inc fertilizer plant in Kenai, Noah said. Agrium closed the plant in 2007 for lack of natural gas feedstock.

Palin has introduced two bills that she said would provide regulatory flexibility needed for the project.

One would expand the mission of the Alaska Natural Gas Development Authority, a state agency that currently has a mandate of promoting a liquefied natural gas project that would deliver to a tidewater port, and the other would make changes to state right-of-way rules.

Radio Kenai notes:

[Harry] Noah said much of the preliminary work for an in-state line has now been completed with the help of the Alaska Natural Gas Development Authority and Enstar. Noah said both identified pipeline routing, looked at permitting, and have an engineering estimate for a project. Noah said, now, a potentially feasible project has been created. The second phase involves five tasks that need to be completed. He said these tasks include obtaining a gas supply, getting commitments for buying the gas from major players, defining the tariff for the pipeline, obtaining permits, and turning this project over to a pipe builder. Noah said the intent is to have this pipeline privately owned.

Meanwhile, CTV reports on the Arctic Gas Symposium in Calgary this week, at which the three big dueling pipeline projects are making their separate cases heard:

Alaska gas pipelines are being wooed by Calgary-based TransCanada and Denali. Both companies are positioning themselves to build a 28 hundred kilometre line from Alaska to Calgary.

With the backing of Alaska’s state legislature, TransCanada has put forward a proposal of 26 billion USD.

“We’re prepared to take a haircut on our initial return if we over cost,” said Tony Palmer of TransCanada.

Denali is partnering up with BP and Conoco-Phillips and already controls much of the state’s natural gas reserves.

“Financing a project of this magnitude, plus or minus $30 billion is going to be an enormous undertaking, it’s going to take strong financial backing to do that,” said Bud Fackrell, Denali’s president.

For 30 years, energy companies have been exploring the idea of a pipeline to get Alaska’s gas to the market.

Even though the Alaska project is still a decade away, Yukon Premier Dennis Fentie remains optimistic.

“I can tell you we’ve made great progress over the last half dozen years and there’s no reason to believe that won’t continue.”

(Here’s CTV’s video for this story.)

As if the dueling Denali and TransCanada projects weren’t enough, we also have the old Mackenzie Valley Pipeline Project which will be discussed at the conference tomorrow.

The Byzantine strategies and negotiations involved in these competing pipelines are as complex and contentious as peace accords.

Once again I’m reminded of the fact that it took an act of Congress to get the Trans-Alaska Pipeline built in the 1970s. That pipeline was one of the greatest engineering feats of the 20th century, but Gov. Palin’s big natural gas pipeline is more than twice its size!

The Trans-Alaska Pipeline is 800 miles long. The proposed TransCanada natural gas pipeline will be 1,700 miles long. And Palin’s Alaska in-state natural gas bullet line will be 800 miles long.

So, basically Sarah Palin is working on an in-state pipeline equal in size to the Trans-Alaska Pipeline, as well as an international pipeline over twice the size of the Trans-Alaska Pipeline. And she’s going forward with both projects full throttle!

The in-state bullet line is security for Alaska in the event that the big pipeline is delayed. And why would it be delayed? Well, because it seems impossible for all three of these competing big pipeline projects (Denali, TransCanada, and MacKenzie) to happen at the same time. Is there enough material and expert welders for all three projects? Can the market accommodate all three projects?

Which project will win? That’s what we all want to know.

Stay tuned for “As the Gas Pipeline Turns”…

Pointless aside: check out these cool flyover videos of Alaska.

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