U.S. loan guarantees for Alaska pipeline worry Mackenzie line supporters

Those who support a proposed natural gas pipeline through the Mackenzie Valley in the Northwest Territories are worried that a competing pipeline in Alaska is getting an unfair advantage, thanks to the U.S. government.

Those who support a proposed natural gas pipeline through the Mackenzie Valley in the Northwest Territories are worried that a competing pipeline in Alaska is getting an unfair advantage, thanks to the U.S. government.

The U.S. is looking at increasing loan guarantees, from $18 billion to $30 billion, for the proposed Alaska Highway pipeline project. If built, the 2,760-kilometre pipeline would run from Alaska's North Slope to Alberta, and to markets throughout North America.

TransCanada Corp., which has the state's licence to build the pipeline, has recently entered the proposed project through that country's regulatory process.

If the loan guarantee boost is approved, that could help get the Alaska pipeline launched ahead of the Mackenzie Valley pipeline, N.W.T. Industry Minister Bob McLeod told CBC News.

"Our position has always been that the world or North America needs both pipelines, as long as the Mackenzie pipeline goes first," McLeod said Tuesday.

"We say that because there's significantly more natural gas in Alaska, so it would dwarf the market and overwhelm the market. And there would be some negative impacts on the Mackenzie [pipeline] if Alaska goes first."

Promoting Mackenzie project in Ottawa, Washington

McLeod said he plans to meet next week with Jim Prentice, the federal minister responsible for pipelines, to ask what the Canadian government is doing to support the Mackenzie pipeline project.

He and Nunakput MLA Jackie Jacobson will also be heading to Washington in June to promote Arctic gas and solicit support for the Mackenzie project — one that has been mired for years in regulatory procedures and delays, including a long-awaited review by the Joint Review Panel.

The panel, which has been working on the review for nearly five years, plans to release its report in December.

"Well, I mean, there's still a lot of frustration," McLeod said. "A lot of people don't believe it. They'll believe it when they see it."

U.S. showing 'some interest' in Alaska project: analyst

Gerry Goobie, an oil and gas analyst in Calgary, said the U.S. loan guarantees being proposed for the Alaska project raise more questions than answers, since the guarantees form one line in a huge piece of legislation.

"It's always been very unclear as to exactly what the loan guarantees are going to guarantee. And this doesn't really add any clarity to that issue," he said.

"I think the only conclusion you can reasonably draw is that there is some interest in seeing the Alaskan gas project going ahead."

The world is not waiting for Arctic gas, Goobie added, meaning N.W.T. and Alaskan pipeline proponents have greater hurdles to overcome than competition from each other.

Alaska line 'must move forward': TransCanada

Meanwhile, TransCanada officials are seeking support from the Yukon's First Nations, because part of the pipeline will built on their land.

Unless the Alaska pipeline progresses soon, interest in natural gas will fade, said Tony Palmer, the company's vice-president of Alaska development.

"This project must move forward. It must advance and compete," Palmer said.

"It must be supported by the communities, and it must be supported by governments, in order to succeed."

Palmer said potential customers for natural gas from Alaska's North Slope have another year to identify themselves, after which time TransCanada will have a better idea of whether the pipeline can be built.

TransCanada hopes to have the pipeline in service in less than a decade, Palmer said.

The company has started to work on economic opportunity deals with Yukon First Nations, either by negotiating new deals or by relying on existing provisions in legislation that was written in the 1970s.

"Some of them are ready to do so and negotiations are underway. Others have indicated that they are not yet ready to do so," Palmer said of the First Nation negotiations.

"If we're unable to reach an agreement with them, we, of course, would fall back on the terms and conditions that are established and that have been public for some 30 years."

Palmer said that TransCanada refuses to get involved in land claim negotiations between the federal government and First Nations that have not yet signed agreements.

"If there are land claims issues between an individual First Nation and the Government of Canada, that's between those parties," he said.

"We are a commercial party looking to do a commercial transaction with a First Nation."