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Oil companies say Alaska line not viable

Dave Sullivan
Northern News Services

Yellowknife (Sep 07/01) - 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.

A spokesperson for the Alaska producers' group said publicly last week that both the Alaska Highway and "over the top" routes are too expensive, at between $15 and $20 billion each.

The second option would take American gas under the Beaufort Sea and south through NWT's Mackenzie Valley.

A Mackenzie Valley pipeline by itself, without linking to Alaska gas, is a bargain by comparison, at between $4 and $6 billion. But it would carry much less gas for energy-hungry Americans.

"Unless somebody is willing to take the risk that gas is going to stabilize at a price higher that is currently projected, then it's really a big risk with low return for Alaskan producers to go ahead with any Alaska pipeline right now," Handley said.

"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."

Proposals don't compete

Wilfe Blonde, Chief Financial Officer of Inuvialuit Regional Corporation, 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, who is also a member of the Aboriginal Pipeline Group, a consortium to move just the Canadian gas that includes Imperial Oil, Conoco and Shell.

Heart Searle, a spokesperson for lead AGG partner Imperial, said a decision has not yet been made whether to submit a pipeline proposal to the territorial government.