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Clock's ticking on pipline

Time running out on effort to subsidize Alaska line

Thorunn Howatt
Northern News Services

Yellowknife (Aug 12/02) - It's like the tortoise and the hare.

On the Canadian side, backers of an all-Canadian $3 billion Mackenzie Valley pipeline have been pushing along, slowly but surely, working toward submitting a permit application.

But Americans are rushing before the end of September, hoping to come up with a new energy bill.

That's the legislation that could decide if the U.S. will subsidize an Alaska Highway pipeline.

"They have agreed amongst themselves to get this done before Oct. 1 when there is an election," said Purvin and Gurtz Inc. pipeline consultant, Roland George.

Now Alaskan proponents are racing against time in hopes of building a pipeline that would carry Arctic natural gas southward. It is generally agreed that a $17 billion Alaska Highway pipeline wouldn't be an economical way to ship natural gas unless it was subsidized.

The Americans are in a hurry to decide a new energy policy because there is an election coming up in their country. Even though it isn't a presidential election year, senators and members of the American House of Representatives (Congress) will be voted in. So the committee building the new energy bill has decided the deadline is the end of September -- before the elections.

The energy bill incorporates suggestions from both the American Senate and the House of Representatives. Both entities are involved in drafting the law.

And even though the Alaska Highway pipeline is an important part of the document, the bill is full of all kinds of other types of energy related matters that have nothing to do with pipeline.

One critical and contentious ingredient in the energy bill is a tax credit that would guarantee rebates to energy companies who would be shipping down the line. If natural gas rates fall below $5 CDN per gigajoule, ($3.25 US per thousand cubic feet) they'd be reimbursed.

In other words they'd get tax money back if the gas price got too low.

The companies would have to repay the credits if gas prices rose to $7.50 per gigajoule.

But not all American politicians agree with the scheme. In June, U.S. secretary of energy Spencer Abraham wrote a letter to the energy committee saying he, as well as the rest of the administration including the president, opposes a floor price subsidy because it would distort markets.

So U.S. senators and house representatives working on an energy policy are spending August trading off and making deals. It remains to be seen if a natural gas floor price subsidy will even be included in the final draft.

On the Northwest Territories front, Mackenzie Valley line supporters, including producers like Imperial Oil and the Aboriginal Pipeline Group (APG), have been continuing with engineering work as well as consultations with aboriginal community residents.

There are challenges on that side as well.

The producers need to make sure there will be enough gas at a price that will make the project profitable and the aboriginal pipeline group needs to find money to finance its one-third of the proposed pipeline.