Northern pipelines at mercy of global energy prices, experts say
Last Updated: Tuesday, February 12, 2008 | 3:05 PM CT
CBC News
Natural gas pipelines being proposed in the North may never be built at this point if global energy consumers can instead import liquefied natural gas from other sources around the world at cheaper prices, experts say.
Projects like the Mackenzie pipeline in the Northwest Territories and the North Slope pipeline down the Alaska Highway have been in the planning stages for decades, with Mackenzie pipeline proponents waiting for regulatory approvals.
But Bill Gwozd, a gas analyst with Ziff Energy Group in Calgary, said those pipelines may have come too late to fend off competition from liquefied natural gas (LNG) being imported in specialized tankers from overseas.
"If you don't get on the ball and push the Mackenzie and Alaska [pipelines], the LNG developers will have the new gas landed already and you'd just be squeezed out," Gwozd said in an interview.
In Alaska, the state government is looking at a proposal from TransCanada Alaska Co. to start construction of the North Slope pipeline in 2012.
But proponents of a rival plan to build a gas liquefaction plant and a pipeline to Valdez are lobbying hard to have their plans considered.
The Yukon's head of oil and gas resources is worried that natural gas being produced in Alaska could be shipped anywhere as LNG without needing a pipeline, which would run through the Yukon if built.
"You have a window of opportunity in terms of developing any asset. So if you can bring natural gas here at a cheaper price than it's going to cost you to develop northern projects, of course they're at risk," said Brian Love, executive director of the oil and gas resources branch of the Energy, Mines and Resources Department.
"But one of the things that we're finding in terms of the Alaska project — one of the issues, really — is you can make a lot more money shipping Alaska gas over to the Far East than you can selling it in North America at current prices."
Love said gas exporters can fetch higher prices by selling natural gas in liquefied form directly to Asia and Europe, compared to North American prices.
Given the market for LNG, Love said a gas liquefaction plant in Alaska would be an alternative worth considering rather than having a multibillion-dollar pipeline.
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