Alaskan Natural Gas Pipeline
Encyclopedia
The Alaska gas pipeline is a proposal to transport natural gas from the Alaska North Slope
natural gas reserves to the U.S. Midwest. The project is developed by TransCanada Corp.
and ExxonMobil
. TransCanada has secured state seed money and a license from the state of Alaska to build and operate a pipeline, but does not yet have federal approvals needed to start construction. On June 11, 2009 TransCanada announced it had formed an agreement with ExxonMobil
to work together in bringing the gas to market.
and several companies came out in favor of large pipeline projects. Canadian Arctic Gas Pipeline, Ltd.—a consortium
of large oil companies including Shell
, Exxon
, and TransCanada—proposed a route from Alaska's Prudhoe Bay across northern Yukon
to the Mackenzie Delta, and then south through the Mackenzie Valley to Alberta
. In addition, the Foothills
Pipeline consortium pursued a competing Mackenzie Valley Pipeline
, starting at the Mackenzie Delta and also running along the river valley to Alberta. Either proposal required the approval of the Canadian government, which named Thomas Berger
to lead an inquiry into the proposals. Berger's inquiry resulted in a recommendation for a ten year moratorium on development of the pipeline to deal with issues such as Aboriginal land claims and setting aside of conservation areas
.
In the United States, three competing applications were filed with the Federal Power Commission
to construct a natural gas pipeline from Prudhoe Bay. A proposal sponsored by El Paso Corporation routed the pipeline to Valdez along the oil pipeline route with LNG tankers then transporting the gas to terminals on the west coast. The other two proposals would cross Canada on a route parallel to the Alaska Highway. The Federal Power Commission conducted lengthy hearings on the relative merits of the three plans, and under the Natural Gas Act the Commission had the legal right to select the final route. Following the 1976 elections where John McMillian, CEO of Northwest Pipeline was a major supporter of Jimmy Carter
, President Carter proposed special legislation to transfer the task of selecting a project from the Federal Power Commission to the President. Congress adopted the Alaska Natural Gas Transportation Act of 1977, and Carter selected the project sponsored by Northwest to the exclusion of the other two projects. The Commission then proceeded to conduct further proceedings to issue certificates of public convenience and necessity to authorize construction of pipelines from Prudhoe Bay and extending to San Francisco and Chicago, and the United States and Canada entered into an agreement regarding having the gas pipeline follow the Alaskan Highway route.
Ultimately, Northwest's consortium could not finance the project, and instead decided to "prebuild" the segments from Alberta to San Francisco and Chicago. Northwest justified the prebuild on the theory that using Canadian gas to depreciate the pipeline for a period of years would make the transportation of Alaskan gas more economic at a later date. The prebuild system went into service under the names Pacific Gas Transmission
and Northern Border Pipeline
. Subsequently, an affiliate of TransCanada Pipeline acquired Pacific Gas Transmission and 50% of Northern Border. Northwest was acquired by the Williams Companies
. As a result, Northwest was no longer willing to pursue the full project to Prudhoe Bay.
Following Alaska's decision to contribute $500 million to fund startup costs of an overland route, the AGPA is now advocating a "Y" route which would first go to Valdez and later build a second fork toward Canada.
announced that the State of Alaska was ready to receive applications to build a pipeline within the framework of the Alaska Gasline Inducement Act (AGIA). On January 4, 2008, a proposal by TransCanada was selected. Four other proposals were submitted: By Sinopec
, AEnergia, the AGPA, which proposed a liquefied natural gas project, and the Alaska Natural Gas Development Authority.
On January 5, 2008, Palin announced that the Canadian company TransCanada Corp.
, was the sole AGIA-compliant applicant. On August 27, 2008, Palin signed a bill into law giving the state of Alaska authority to award TransCanada Corp.
500 million dollars in seed money and a license to build and operate the $26-billion pipeline to transport natural gas from the North Slope
to the Lower 48, through Canada.
The license is not a construction contract, and federal energy regulators must approve the project before it can go forward.
On December 5, 2008, the AGIA license, jointly awarded to Foothills Pipe Lines Ltd. and TransCanada Alaska, LLC, was signed in Fairbanks.
The pipeline proposed by TransCanada would run 1715 miles (2,760 km) from the North Slope to Calgary
in Alberta. It is expected to cost US$26 billion and to be operational by 2018.
and BP
. ExxonMobil
was invited to participate in the project. Also Enbridge
, Royal Dutch Shell
and Gazprom
had shown interest to join this project. However, on 17 May 2011 Denali announced that it ends developing the project due lack of interest from potential costumers.
The project foresaw a pipeline with a capacity of 41 billion cubic meter (bcm) of natural gas per year down the Alaska Highway across Alaska, through the Yukon
and British Columbia
into Alberta. It also consisted of a gas treatment plant on North Slope. The project was estimated to cost US$35 billion.
. A shorter alternative route, which was considered in the 1970s, links Prudhoe Bay natural gas through Mackenzie River Valley. The pipeline will be built only if Canadian authorities can strike a deal with First Nations
whose lands are in the pipeline route, who are accusing Palin and other pipeline proponents of treating them with disrespect by not consulting with them.
and the Canadian government. In a letter to the Sen. Domenici, Secretary of Energy Spencer Abraham
wrote, "[The administration] believes market forces should select the route of the pipeline.” He continued, “The administration strongly opposes the price-floor tax credit provision in the Senate energy bill and any similar provisions." Abraham suggested several non-price support tax provisions that could subsidize the construction of the pipeline. Former Canadian Ambassador to the United States Michael Kergin
wrote that Canada is of the opinion that the Alaskan pipeline should be built without subsidies and without the route being determined by legislation.
The late Governor Wally Hickel advocated an "All-Alaskan" route which would go from Prudhoe Bay to Valdez and would bring gas to Fairbanks and Anchorage. He opposed the award of the route to TransCanada which would not result in gas service for Alaska's population centers.
In June 2009 Alaska Governor Sarah Palin
was interviewed on The Today Show by Matt Lauer
. She expressed her support for the pipeline, which was ostensibly the purpose of her appearance on the program.
Alaska North Slope
The Alaska North Slope is the region of the U.S. state of Alaska located on the northern slope of the Brooks Range along the coast of two marginal seas of the Arctic Ocean, the Chukchi Sea being on the western side of Point Barrow, and the Beaufort Sea on the eastern.The region contains the...
natural gas reserves to the U.S. Midwest. The project is developed by TransCanada Corp.
TransCanada Corp.
TransCanada Corporation is a major North American energy company based in Calgary, Alberta, developing and operating energy infrastructure in North America. Its pipeline network includes approximately of pipeline and connects with virtually all major gas supply basins in North America...
and ExxonMobil
ExxonMobil
Exxon Mobil Corporation or ExxonMobil, is an American multinational oil and gas corporation. It is a direct descendant of John D. Rockefeller's Standard Oil company, and was formed on November 30, 1999, by the merger of Exxon and Mobil. Its headquarters are in Irving, Texas...
. TransCanada has secured state seed money and a license from the state of Alaska to build and operate a pipeline, but does not yet have federal approvals needed to start construction. On June 11, 2009 TransCanada announced it had formed an agreement with ExxonMobil
ExxonMobil
Exxon Mobil Corporation or ExxonMobil, is an American multinational oil and gas corporation. It is a direct descendant of John D. Rockefeller's Standard Oil company, and was formed on November 30, 1999, by the merger of Exxon and Mobil. Its headquarters are in Irving, Texas...
to work together in bringing the gas to market.
Initial evaluations
Large natural gas reserves were discovered in Prudhoe Bay in 1967. Talk of a pipeline peaked during the 1973 OPEC oil embargo1973 oil crisis
The 1973 oil crisis started in October 1973, when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC proclaimed an oil embargo. This was "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war. It lasted until March 1974. With the...
and several companies came out in favor of large pipeline projects. Canadian Arctic Gas Pipeline, Ltd.—a consortium
Consortium
A consortium is an association of two or more individuals, companies, organizations or governments with the objective of participating in a common activity or pooling their resources for achieving a common goal....
of large oil companies including Shell
Royal Dutch Shell
Royal Dutch Shell plc , commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world according to a composite measure by Forbes magazine and one of the six...
, Exxon
Exxon
Exxon is a chain of gas stations as well as a brand of motor fuel and related products by ExxonMobil. From 1972 to 1999, Exxon was the corporate name of the company previously known as Standard Oil Company of New Jersey or Jersey Standard....
, and TransCanada—proposed a route from Alaska's Prudhoe Bay across northern Yukon
Yukon
Yukon is the westernmost and smallest of Canada's three federal territories. It was named after the Yukon River. The word Yukon means "Great River" in Gwich’in....
to the Mackenzie Delta, and then south through the Mackenzie Valley to Alberta
Alberta
Alberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces...
. In addition, the Foothills
Foothills
Foothills are geographically defined as gradual increases in elevation at the base of a mountain range. They are a transition zone between plains and low relief hills to the adjacent topographically high mountains.-Examples:...
Pipeline consortium pursued a competing Mackenzie Valley Pipeline
Mackenzie Valley Pipeline
The Mackenzie Valley Pipeline is a proposed project to transport natural gas from the Beaufort Sea through Canada's Northwest Territories to tie into gas pipelines in northern Alberta. The project was first proposed in the early 1970s, but was scrapped following an inquiry conducted by Justice...
, starting at the Mackenzie Delta and also running along the river valley to Alberta. Either proposal required the approval of the Canadian government, which named Thomas Berger
Thomas Berger
Thomas Berger may refer to:* Thomas Berger , American author* Thomas R. Berger , Canadian politician...
to lead an inquiry into the proposals. Berger's inquiry resulted in a recommendation for a ten year moratorium on development of the pipeline to deal with issues such as Aboriginal land claims and setting aside of conservation areas
Conservation ethic
Conservation is an ethic of resource use, allocation, and protection. Its primary focus is upon maintaining the health of the natural world: its, fisheries, habitats, and biological diversity. Secondary focus is on materials conservation and energy conservation, which are seen as important to...
.
In the United States, three competing applications were filed with the Federal Power Commission
Federal Power Commission
The Federal Power Commission was an independent commission of the United States government, originally organized on June 23, 1930, with five members nominated by the president and confirmed by the Senate...
to construct a natural gas pipeline from Prudhoe Bay. A proposal sponsored by El Paso Corporation routed the pipeline to Valdez along the oil pipeline route with LNG tankers then transporting the gas to terminals on the west coast. The other two proposals would cross Canada on a route parallel to the Alaska Highway. The Federal Power Commission conducted lengthy hearings on the relative merits of the three plans, and under the Natural Gas Act the Commission had the legal right to select the final route. Following the 1976 elections where John McMillian, CEO of Northwest Pipeline was a major supporter of Jimmy Carter
Jimmy Carter
James Earl "Jimmy" Carter, Jr. is an American politician who served as the 39th President of the United States and was the recipient of the 2002 Nobel Peace Prize, the only U.S. President to have received the Prize after leaving office...
, President Carter proposed special legislation to transfer the task of selecting a project from the Federal Power Commission to the President. Congress adopted the Alaska Natural Gas Transportation Act of 1977, and Carter selected the project sponsored by Northwest to the exclusion of the other two projects. The Commission then proceeded to conduct further proceedings to issue certificates of public convenience and necessity to authorize construction of pipelines from Prudhoe Bay and extending to San Francisco and Chicago, and the United States and Canada entered into an agreement regarding having the gas pipeline follow the Alaskan Highway route.
Ultimately, Northwest's consortium could not finance the project, and instead decided to "prebuild" the segments from Alberta to San Francisco and Chicago. Northwest justified the prebuild on the theory that using Canadian gas to depreciate the pipeline for a period of years would make the transportation of Alaskan gas more economic at a later date. The prebuild system went into service under the names Pacific Gas Transmission
Gas Transmission Northwest
Gas Transmission Northwest is a natural gas pipeline that brings gas from western Canada through Washington and Oregon into California, connecting to the Pacific Gas and Electric system. Prior to being purchased by TransCanada Corporation in 2004, it was named Pacific Gas Transmission...
and Northern Border Pipeline
Northern Border Pipeline
Northern Border Pipeline is a natural gas pipeline which brings gas from Canada through Montana, North Dakota, South Dakota, Minnesota, and Iowa into the Chicago area. It is owned by TC PipeLines, LP and ONEOK Partners and is operated by TC PipeLines, LP . Its FERC code is 89....
. Subsequently, an affiliate of TransCanada Pipeline acquired Pacific Gas Transmission and 50% of Northern Border. Northwest was acquired by the Williams Companies
Williams Companies
The Williams Companies, Inc. is an energy company based in Tulsa, Oklahoma. Its core business is natural gas exploration, production, processing, and transportation, with additional petroleum and electricity generation assets...
. As a result, Northwest was no longer willing to pursue the full project to Prudhoe Bay.
All-Alaskan Pipeline
Former Secretary of Interior Wally Hickel headed a consortium which sought to revive the El Paso proposal to construct an 800-mile gas pipeline along the oil pipeline route from Prudhoe Bay to Valdez (with a branch to Anchorage), because such a route would also serve Anchorage and Fairbanks and would have a much lower construction cost than the overland pipeline routes. The remaining gas would be exported as LNG. Competitors argued that this proposal was barred by the 1977 statute and President Carter's decision. The consortium argued that because the pipeline would be used for intrastate commerce and foreign commerce, but not for interstate commerce, the project would not require Federal approvals under the Natural Gas Act. Three Alaskan boroughs voted to form the Alaskan Gasline Port Authority (AGPA) to promote this project under Alaska Code § 29.35.600.Following Alaska's decision to contribute $500 million to fund startup costs of an overland route, the AGPA is now advocating a "Y" route which would first go to Valdez and later build a second fork toward Canada.
Alaska Gasline Inducement Act
On July 3, 2007, the Governor of Alaska Sarah PalinSarah Palin
Sarah Louise Palin is an American politician, commentator and author. As the Republican Party nominee for Vice President in the 2008 presidential election, she was the first Alaskan on the national ticket of a major party and first Republican woman nominated for the vice-presidency.She was...
announced that the State of Alaska was ready to receive applications to build a pipeline within the framework of the Alaska Gasline Inducement Act (AGIA). On January 4, 2008, a proposal by TransCanada was selected. Four other proposals were submitted: By Sinopec
Sinopec
China Petroleum & Chemical Corporation Limited , or Sinopec Limited , is a majority owned subsidiary of state owned company Sinopec Group. Sinopec Limited is listed in Hong Kong and also trades in Shanghai and New York ....
, AEnergia, the AGPA, which proposed a liquefied natural gas project, and the Alaska Natural Gas Development Authority.
On January 5, 2008, Palin announced that the Canadian company TransCanada Corp.
TransCanada Corp.
TransCanada Corporation is a major North American energy company based in Calgary, Alberta, developing and operating energy infrastructure in North America. Its pipeline network includes approximately of pipeline and connects with virtually all major gas supply basins in North America...
, was the sole AGIA-compliant applicant. On August 27, 2008, Palin signed a bill into law giving the state of Alaska authority to award TransCanada Corp.
TransCanada Corp.
TransCanada Corporation is a major North American energy company based in Calgary, Alberta, developing and operating energy infrastructure in North America. Its pipeline network includes approximately of pipeline and connects with virtually all major gas supply basins in North America...
500 million dollars in seed money and a license to build and operate the $26-billion pipeline to transport natural gas from the North Slope
North Slope
North Slope can refer to:* Alaska North Slope* North Slope Borough, Alaska* North Slope, Tacoma, Washington* North Slope, an Inupiaq language dialect...
to the Lower 48, through Canada.
The license is not a construction contract, and federal energy regulators must approve the project before it can go forward.
On December 5, 2008, the AGIA license, jointly awarded to Foothills Pipe Lines Ltd. and TransCanada Alaska, LLC, was signed in Fairbanks.
The pipeline proposed by TransCanada would run 1715 miles (2,760 km) from the North Slope to Calgary
Calgary
Calgary is a city in the Province of Alberta, Canada. It is located in the south of the province, in an area of foothills and prairie, approximately east of the front ranges of the Canadian Rockies...
in Alberta. It is expected to cost US$26 billion and to be operational by 2018.
Denali proposal
Outside of the AGIA process, authorities were evaluating a separate proposal issued by Denali – The Alaska Gas Pipeline LLC, a joint venture of ConocoPhillipsConocoPhillips
ConocoPhillips Company is an American multinational energy corporation with its headquarters located in the Energy Corridor district of Houston, Texas in the United States...
and BP
BP
BP p.l.c. is a global oil and gas company headquartered in London, United Kingdom. It is the third-largest energy company and fourth-largest company in the world measured by revenues and one of the six oil and gas "supermajors"...
. ExxonMobil
ExxonMobil
Exxon Mobil Corporation or ExxonMobil, is an American multinational oil and gas corporation. It is a direct descendant of John D. Rockefeller's Standard Oil company, and was formed on November 30, 1999, by the merger of Exxon and Mobil. Its headquarters are in Irving, Texas...
was invited to participate in the project. Also Enbridge
Enbridge
Enbridge Inc. is a Calgary, Alberta based company focused on three core businesses: crude oil and liquids pipelines, natural gas transportation and distribution, and green energy. The company has approximately 6,000 employees, mostly in Canada and the United States...
, Royal Dutch Shell
Royal Dutch Shell
Royal Dutch Shell plc , commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world according to a composite measure by Forbes magazine and one of the six...
and Gazprom
Gazprom
Open Joint Stock Company Gazprom is the largest extractor of natural gas in the world and the largest Russian company. Its headquarters are in Cheryomushki District, South-Western Administrative Okrug, Moscow...
had shown interest to join this project. However, on 17 May 2011 Denali announced that it ends developing the project due lack of interest from potential costumers.
The project foresaw a pipeline with a capacity of 41 billion cubic meter (bcm) of natural gas per year down the Alaska Highway across Alaska, through the Yukon
Yukon
Yukon is the westernmost and smallest of Canada's three federal territories. It was named after the Yukon River. The word Yukon means "Great River" in Gwich’in....
and British Columbia
British Columbia
British Columbia is the westernmost of Canada's provinces and is known for its natural beauty, as reflected in its Latin motto, Splendor sine occasu . Its name was chosen by Queen Victoria in 1858...
into Alberta. It also consisted of a gas treatment plant on North Slope. The project was estimated to cost US$35 billion.
Route
Possible routes include the Alaska route, or southern route, a pipeline along the Alaska HighwayAlaska Highway
The Alaska Highway was constructed during World War II for the purpose of connecting the contiguous U.S. to Alaska through Canada. It begins at the junction with several Canadian highways in Dawson Creek, British Columbia and runs to Delta Junction, Alaska, via Whitehorse, Yukon...
. A shorter alternative route, which was considered in the 1970s, links Prudhoe Bay natural gas through Mackenzie River Valley. The pipeline will be built only if Canadian authorities can strike a deal with First Nations
First Nations
First Nations is a term that collectively refers to various Aboriginal peoples in Canada who are neither Inuit nor Métis. There are currently over 630 recognised First Nations governments or bands spread across Canada, roughly half of which are in the provinces of Ontario and British Columbia. The...
whose lands are in the pipeline route, who are accusing Palin and other pipeline proponents of treating them with disrespect by not consulting with them.
Politics
Opposition to the Alaska natural gas pipeline route mandate and price supports came from both the Bush administrationGeorge W. Bush administration
The presidency of George W. Bush began on January 20, 2001, when he was inaugurated as the 43rd President of the United States of America. The oldest son of former president George H. W. Bush, George W...
and the Canadian government. In a letter to the Sen. Domenici, Secretary of Energy Spencer Abraham
Spencer Abraham
Edmund Spencer Abraham is a former United States Senator from Michigan. He served as the tenth United States Secretary of Energy, serving under President George W. Bush. Abraham is one of the founders of the Federalist Society....
wrote, "[The administration] believes market forces should select the route of the pipeline.” He continued, “The administration strongly opposes the price-floor tax credit provision in the Senate energy bill and any similar provisions." Abraham suggested several non-price support tax provisions that could subsidize the construction of the pipeline. Former Canadian Ambassador to the United States Michael Kergin
Michael Kergin
Michael Kergin is a Canadian career diplomat, who has been a member of the foreign service in some capacity since 1967, when he joined the Department of External Affairs....
wrote that Canada is of the opinion that the Alaskan pipeline should be built without subsidies and without the route being determined by legislation.
The late Governor Wally Hickel advocated an "All-Alaskan" route which would go from Prudhoe Bay to Valdez and would bring gas to Fairbanks and Anchorage. He opposed the award of the route to TransCanada which would not result in gas service for Alaska's population centers.
In June 2009 Alaska Governor Sarah Palin
Sarah Palin
Sarah Louise Palin is an American politician, commentator and author. As the Republican Party nominee for Vice President in the 2008 presidential election, she was the first Alaskan on the national ticket of a major party and first Republican woman nominated for the vice-presidency.She was...
was interviewed on The Today Show by Matt Lauer
Matt Lauer
Matthew Todd "Matt" Lauer . is an American television journalist best known as the host of NBC's The Today Show since 1997. He was previously a news anchor in New York and a local talk-show host in Boston, Philadelphia, Providence and Richmond...
. She expressed her support for the pipeline, which was ostensibly the purpose of her appearance on the program.