North Slope pipeline won't threaten Mackenzie line, backer says

The head of one group backing the proposed Mackenize Valley natural gas pipeline in the N.W.T. says he's not worried about Alaska's renewed attempt to buildits own pipeline through the North.

The announcement by Alaska Gov. Sarah Palin on Tuesday that the state is looking for interested builders for the proposed North Slope pipeline should only prompt Mackenzie Valley pipeline proponents to work together to get their pipeline built first, said Fred Carmichael, chair of the Aboriginal Pipeline Group.

"To me, I see it as maybe a warning signal for us to keep moving," said Carmichael, whoseorganization represents aboriginal groups in the Northwest Territories. It is aimingto get a one-third stake in the pipeline if it is built.

"We're well ahead at this point they're years behind us they've been struggling for a number of years [and] so have we. I think it's a message that we need to keep moving here."

Alaska's pipeline, if completed, would transport gas from the state's North Slope, through the Yukon, British Columbia and Alberta to markets in the U.S. Midwest.

On Tuesday, Palin issued a formal request for applications, giving oil and independent pipeline companies until Oct. 1 to submit proposals for construction and operation of the pipeline. The winning bid will receive, among other incentives, a $500-million US matching grant from the state.

The request was the latest step in Alaska's effort to revive the project, after struggling for decades to secure a deal either with North Slope producers or independent pipeline companies to build the line.

In May, Alaska lawmakers passed the Alaska Gasline Inducement Act, which created the competition between oil producers and independent companies to vie for construction rights.

But Carmichael said North Slope lease holders such as BP PLC, Exxon Mobil Corp. and ConocoPhillips do not like Palin's plan. Those companies have said it is too restrictive and is not viable for them.

"I see there's very little interest in [the project] by the main players Exxon Mobil and ConocoPhillips, and the rest of them they say it's not a viable operation," he said. "They don't like the deal at all. So it'll be interesting to see what comes out of the woodwork by October.

Despite that, officials with BP and ConocoPhillips stated Tuesday that they have not given up on the North Slope project.

Analysts say the proposed Mackenzie Valley pipeline could be built by 2014, while the Alaskan project wouldn't be ready for construction until three or four years later.

Alaska faces challenges, says analyst

Bill Gwozd, a gas analyst with Ziff Energy in Calgary, said it's unlikely that the North Slope pipeline could be built ahead of the Mackenzie Valley pipeline, since Alaska has been trying for years to get the project going.

He added that Alaska faces a number of challenges: the North Slope line would be longer and would use a bigger pipe, and the project hasn't even started going through the hearing process yet.

"With regards to Alaska getting this underway, there's the old saying: 'two steps back, one step forwards.' Alaska has taken three steps backwards," Gwozd said. "This is the first step forward they've taken."

Gwozd added there isn't really any competition between the two proposed pipelines, arguing that the North American gas market needs both lines to meet its energy needs. Once one pipeline is built, he said, the construction equipment and expertise would likely move over the border to build the other line.