Now was that REALLY so hard?

Panel approves Mackenzie pipeline project: Calgary Herald

Finally! The JRP has approved the Mackenzie Valley Gas Pipeline project, albeit with a number of recommendations that have yet to be reviewed.

Not a big surprise, and it doesn't mean that the project is a lock, but it was a significant and necessary step in the process. As I said in my last post, the panel cannot be accused of rushing their final report, and thus it might just enjoy more credibility among critics.

So, what now? This spring, the National Energy Board will hold its final round of hearings, with this report as their starting point. These hearings will be relatively brief, and we should have a final report by fall.

The more important developments will likely take place behind closed doors, namely the negotiations between proponents and the federal government to establish a "fiscal framework". Read that as "government support" for the project, but given that our Prime Minister's home riding is in Calgary, it's fair to assume that they will do all they can to accomodate this project.

Time will tell, but this is an important day.

The event of the year! (maybe)

Long-overdue Mackenzie pipeline report to be issued Wednesday Canada.com

Well, they ran counter to their own press directive, but the Joint Review Panel has announced that their long-awaited socio-economic and environmental report on the proposed Mackenzie Valley gas line will (finally) be released tomorrow.

I don't think it's overstating to call this the single most important event to happen in the course of development of either of the major northern pipeline projects of 2009, even if it comes on the penultimate day of said year.

What are the odds? is it a definite "no"? (highly unlikely), or with no controversial recommendations that may slow development? (more likely, but not by much)

The nay-sayers will be out, either worrying about the threat to the Alaska line (there is none; the Alaska line won't proceed until Mackenzie is either finished or definitively killed off), or will once again question the economics in the light of "plentiful" (but pricey and controversial) shale gas.

And what about the environmentalists? Well, the World Wildlife Fund is actually neutral on the Mackenzie gas line, granting that the proponents have already done quite a bit in their routing and engineering to protect sensitive areas. The Sierra Club doesn't oppose the line per se (though they have expressed concern that the gas will be used to fuel tar sands extraction). Environmentalists as a group aren't likely to present the greatest obstacle in the JRP's report.

The sections dealing with potential social impacts will likely see the most scrutiny when the report is released tomorrow. While there is already some modest affluence in the communities along the route of the line, there is considerable concern that a sudden flood of cash to the region may fuel addictions, domestic violence, and other social concerns. These are difficult, complicated issues with no simple resolution short of turning the line down flat.

A flat turn-down is extremely unlikely, though. Judge Thomas Berger recommended a moratorium on building this line back in the early 80s, citing the need to settle native land claims and give this population more time to assess the impacts. These goals have been mostly been reached, and First Nations along the line have been given a significant piece of equity in the project through the Aboriginal Pipeline Group. This group now stands to lose millions if the project doesn't proceed.

The JRP has taken far longer than anticipated, but there's an upside to that: the time it has taken to prepare this report adds to its credibility. The JRP can hardly be accused of rushing.

...And Why does this break in Moose Jaw?!

Much-delayed Arctic pipeline environmental study expected this week, years late - Business - Canada - World - The Moose Jaw Times Herald: "Much-delayed Arctic pipeline environmental study expected this week, years late"

Moose Jaw? Really?

Regardless, this Canadian Press item (which I really did try to find elsewhere) is largely restated Delta angst, but I include it because it is one more in an increasingly long list of press items stating that the JRP report is coming "this week".

Holding out for a frozen pipe dream - thestar.com

Holding out for a frozen pipe dream - thestar.com

I like this reasonably balanced piece from the Toronto Star. I note that this piece also anticipates release of the JRP report in the coming week.

A Deafening Silence

As noted here previously, the Joint Review Panel studying the Mackenzie Valley Natural Gas Pipeline project issued a news release early this month stating that any release of the final report would be announced with seven day's notice with a news release. This has not yet happened.

Yes, I find this troubling. For the past year (or so), the JRP has stuck by its commitment to provide its final report before 2010, eventually settling on a window of December, 2009. If we are to gather that the JRP is following its own timetable of releasing a report with a week's notice, we're a couple of days late on that advance press release.

The only good explanation I can think of for this is that comment that Robert McLeod made in Calgary back on December 15 stating that the report would be released on the 31, and that the JRP's media people decided that this would stand as an official announcement. However, this report was never corroborated, and since McLeod isn't an actual member of the Panel, this would seem a rather shoddy way to manage media relations.

Any other potential explanation is that the final report is seeing an administrative hold-up, though some public word on this would be nice.

Otherwise? There's a delay. Something that will carry the final release beyond the panel's self-imposed deadline of the end of 2009.

Mackenzie pipeline panel to report Dec. 31

Source: The National Post

Okay, so I was off a couple of days. This isn't confirmed, but this National Post article claims that the NWT Industry minister says the JRP report will be released on December 31.

Probably at 11:59 PM :-)

It's still coming. Really.

Joint Review Panel report still expected in December - Slave River Journal

Apparently, the JRP report is still on track for a December release, though the window narrows by the day. We are supposed to see a media advisory 1 week before the actual release, so the latest we could theoretically see that is Christmas Eve.

If I had to take a guess, we're going to see a release sometime between the 28th to the 30th, so that advisory should come out sometime between Monday to Wednesday next week. We'll see.

Editorial: The End of the Beginning

There has been little in the way of actual news of late, so allow me to ramble a little...

2009 is drawing to a close. It has been a year of relatively little import as regards the two major northern gasline projects, but I'm hoping it winds up being remembered as the "calm before the storm".

The most significant event of the year hasn't yet taken place: the release of the Mackenzie Valley Joint Review Panel report. Or the announcement of another delay in the release of said report. Either way, it's a significant event. The hope for many, of course, is that the report is released according to the heavily-amended schedule, and that it contains no showstoppers. Such an announcement raises the likelihood of a project announcement in the next year considerably.

It's true, though, that if the JRP fails to meet its December deadline that this would be equally significant. A delay of more than a few weeks, say, could derail the project irretrievably.

Meanwhile, in Alaska, it would appear that many residents are losing patience with Sarah Palin's AGIA. There hasn't been a lot of obvious movement, and some seem to be using this to suggest the legislation is a bust. What these critics are either missing or ignoring is that TransCanada's project is progressing as planned. There isn't any real, publicly-visible progress to be seen until TC undertakes its open season in 2010. According to recently published reports, that's still on track.

The really BIG news with TC's bid to build the Alaska Highway gasline, though, was the announcement last June of Exxon/Mobil's participation in the engineering work. While this doesn't actually tie E/M to TC's bid, it did come across as something of an implied endorsement.

And Denali, the joint ConocoPhilips/BP pipeline project continues on its merry way. They performed field work in the Yukon this year, held meetings with First Nations leaders here, and continued to insist that their schedule to conduct an open season in 2010 is still solid. Mind you, they still haven't announced exactly when in 2010 they'll be holding that open season (TC's starts in May), but they may just be maintaining flexibility. Who knows?

It's been a quiet year for news, but that doesn't mean that nothing's been happening. A lot of pieces have been moved around on the board, and we're getting set for a somewhat noisier 2010.

Brett Chandler

Editorial: "Coming Months Crucial for State's Oil, Gas Industries"

Source: Anchorage Daily News

No actual substance, but a nice, supportive OpEd piece by Tim Bradner urging Alaskans to support the oil and gas (and pipeline) industries in the coming months as they do their best to put projects together.

When I read such pieces on the Internet, I find I'm just as drawn to the public comments as I am to the piece itself; it can provide a valuable (if inaccurate) insight into the mood of the public.

Pipeline Companies Release Reports

Source: ADN

No surprises in the reports released today by the two contending companies as the get set for their Open Seasons next year, though any report of ongoing activity is encouraging.

I like the way Denali proponents refer to the Energy Information Administration's optimistic forecast of shale gas potential. They say EIA forecasters don't "represent a consensus view of the market".

Canada's dirty oil needed on market: UN report

Canada's dirty oil needed on market: UN report (Calgary Herald)

I include this in my pipeline lineup because the Athabasca Tarsands is widely regarded to be the biggest market for Mackenzie Delta gas.

I'll admit, I'm not nuts about tarsands oil, if only for the spectacular amount of water it seems to take to liberate the oil. But we've got to be realistic here, we're not swearing off petroleum any time soon, and the tarsands is just about the world's largest source of the stuff...

The coming natural gas boom is not all it's 'fracced' up to be

dailyfinance.com

Interesting, the skepticism that seems to be bubbling to the surface about shale gas plays. A few more interesting links can be found on AK Engineer's blog, too. The bottom line here is that shale gas is more expensive to find and produce than conventional gas, and that the wells may not stay productive very long.

That doesn't mean that shale gas is dead, but it may well mean that it's not the pipe-killer that many are trying to make it out to be...

Alaska Pipeline Progress Report

Anchorage Daily News

The Alaska Dept. of Natural Resources released a glowing report the other day, that outlined progress on an Alaska Highway Natural Gas line on both the TCPL and Denali fronts. Nothing really new, except that Denali has apparently already spent over $100 million vs. TCPL's $18 million, though both are likely to have spend considerably more by the end of their "open seasons" next year.

Nice to see that TCPL has purchased office space in Anchorage, though...

Imperial CEO: "Still talking" to Canadian Feds

Source: Reuters

Yet another suggestion that last week's National Post item about the death of the Mackenzie Valley Gasline project may have been premature: Imperial Oil CEO Bruce March claims his company is still negotiating with the Canadian government on a fiscal framework on the project.

Now, there may indeed have been some substance to that NP piece, though it was vague on sources and didn't even specify which committee apparently declined to support the project, but that doesn't mean that this was the only avenue being pursued in providing that "fiscal framework".

I believe the National Post was irresponsible in its characterization of this story, and the facts seem to bear me out.

Exxon Reaffirms Commitment to Mackenzie

Source: Reuters

Senior Exxon VP Andrew Swiger says that the company is still "advancing" the Mackenzie Valley Gasline project, despite the National Post's report earlier in the week that the Canadian federal government had decided not to provide financial support for the project.

Seeing as the NP's report has not been corroborated anywhere as of yet, this would seem a smart move.

Worth remembering a few potential implications here: Exxon/Mobil (through their Canadian subsidiary Imperial Oil) would have to essentially write off billions of dollars of development work that they have put into the Mackenzie Delta over the past four decades. And that's just the start.

The majors would lose a new "lane" from the Beaufort. They'd also lose potential supply from gasfields in the western Arctic. And then there's that nasty little matter of the debt incurred by the current members of the Aboriginal Pipeline Group; I could easily see the Canadian federal government being on the hook for that.

Assuming the Alaska Highway Gas Pipeline goes ahead (and I'm optimistic that it will), the Mackenzie line is only viable under the scenario that it gets finished first, and that gas gets to ship over it for three to five years before Alaska gas comes onstream.

There's other implications, too. If we gain some certainty about these pipeline projects, major energy customers in Canada and the lower 48 US can start making plans to use cheap gas, helping to build the market. This won't happen until projects are finally green-lit and underway.

Interesting Timing

Source: CBC

Frankly, the timing of this seems a little suspicious to me. I had known the National Post newspaper was in financial trouble (as is its owner, Canwest/Global), but I wasn't aware it was actually in danger of being shut down. Today, a court will rule whether C/G can move the paper into a corporate division with its other, money-making papers (yes, there still are some, like the Calgary Herald and the Montreal Gazette). Corporate bondholders are fighting this move, saying there's been enough bleeding. If the court rules in favor of the bondholders, the paper will close today.

And how (you may ask) is this a pipeline story? Because this is the very paper that quoted as-yet-unnamed sources that the Mackenzie Valley Gasline was dead in the water after Stephen Harper's cabinet refused financial support. There has been no corroboration of this story, and I now suspect it may have been a "hail mary" pass; an attempt to boost sales and relevence with a last-minute scoop.

Pipeline dream "in peril"?

National Post

The Canadian business press has been buzzing over this today, though at this point it's hard to say how substantial this rumor really is.

Here's the upshot: federal Environment Minister Jim Prentice's department has been quietly working out a deal with the stakeholders in the Mackenzie Valley Gasline project, and they had all reached a rough agreement. But when Prentice presented a package to Cabinet, it was flatly turned down as being too costly.

We don't know what sources spoke to the National Post, or how definitive that refusal may have been. Prentice isn't talking, and spokesmen for both Imperial Oil and the Aboriginal Pipeline Group claim nothing has changed.

The question here is, if this item is true, and this indeed kills off the current incarnation of the Mackenzie Gasline project, what's the fallout?

AGIA Criticized. In Other News, Sky Blue, Grass Green...

Source: KTUU Anchorage

Petroleum Economist Roger Marks claims the Palin administration used "faulty accounting" when it awarded a license to TCPL under the AGIA. According to Marks, the AGIA is based on the "flawed conclusion that a pipeline owned by a third-party would be more profitable than one owned by major gas producers..."

What Marks is either forgetting or deliberately ignoring is that pipelines and producers are regulated under completely different structures, and that pipeline companies tend to do a more efficient job of operating (and building) pipelines than oil companies do.

He also manages to miss the fact that because these companies operate under different regulatory environments, pipeline construction presents a much different risk to the shareholders of TCPL than it would to those of the gas producers.

EDIT: With original Marks piece from AlaskaDispatch.com

I read this piece when it was originally posted, and probably should have commented on it. Marks' comments seemed to not only be based on a worst-case scenario, but on assumptions that are patently untrue. Marks' argument seems to come down to this: that if the producers are able to negotiate enough "certainty" in taxation with the state of Alaska, that they will choose to build their own line rather than using TCPL's. If this happens, the terms of the AGIA dictate that the state will have to pay TCPL treble damages. Marks claims this could be as much as $2 billion if TCPL claims gross expenses. However, the Revenue Commissioner that helped draft the AGIA legislation says that even TCPL's lawyers agree that given this "worst-case" scenario that only net expenses would qualify, cutting the bill to $400 million.

Still not chump change for a state with only a million or so population, but nowhere near the $2 billion Marks claims they're risking.

A Picture tells a Thousand Words

Source: TCPL via Alaska Gas Pipeline Blog

This picture says it all, and here's what it means: when gasline critics point out the potential market impact of new shale-gas deposits, they neglect to account for the declines in conventional supplies that we have seen over the past several years.

I'll reiterate: new supplies will bring down prices, which will stimulate demand. Given the lead time needed for northern pipeline projects, this just means that prices should be strong when these lines come onsteam.

Mackenzie Line "never closer" - Prentice

Calgary Herald

Jim Prentice intimates here that the Mackenzie Valley Gasline is a national environmental priority.

In a discussion with the Calgary Herald's editorial board, Prentice said he expects the National Energy Board to hear final arguments in April, 2010, contingent on the Joint Review Panel submitting its final report in December.

This isn't out of line with expectation, but it's intriguing how confident Prentice is about this timeline. I can only assume that he is keeping very close tabs on the JRP.

I predict we'll see a formal project announcement by the end of Q3 next year...

Some background: TCPL

Alaska Journal

Alaska Journal has posted this Tim Bradner piece that outlines TCPL's history regarding Alaska gas.

It's a good, sympathetic piece, albiet with some inaccuracies. First off, TCPL wasn't actually involved back in the '70s. The original Canadian partner was Foothills Pipelines. Foothills did, indeed do a lot of field and engineering work on the original proposal. They also secured a great deal of right-of-way permitting along the Alaska Highway in the Yukon and northern BC, which they still maintain.

However, TCPL did not buy Foothills in 1994. Foothills was actually merged with Alberta Gas Trunk Line to form Nova Corporation back in the early '80s. Foothills was maintained as a discrete division of Nova. Nova ran the gas transmission network within the province of Alberta (which probably had as many miles of pipe as TCPLs national network that covered the rest of Canada). Nova was actually an ambitious economic diversity initiative of the Alberta provincial government under Peter Lougheed, and at one point had a cell phone division (which was spun off as Novatel, and still makes wireless networking products), and a chemical division that still operates a massive ethylene complex east of Red Deer, AB.

Foothills/Nova constructed the so-called "Alaska pre-build" in the 80s. This is a leg that runs down the eastern slope of the Alberta Rocky Mountains, going into British Columbia through the Crowsnest Pass and eventually into the northwestern US This pre-build section was meant to increase overall capacity of the Nova network to transmit Alaska gas to the lower 48, though it has worked just fine in this regard in moving Alberta and Northern BC gas instead.

Nova combined with TCPL in 1998 in one of the biggest corporate mergers in Canadian history. The cell phone and chemical divisions were spun off as separate companies, and TCPL moved its corporate headquarters to Calgary, where they combined with Nova's pipeline management in a brand-new skyscraper.

Merging with Nova, TCPL inherited Foothills and its Alaska gas plans. Since Foothills has maintained rights-of-way all the way along the Canadian portion of the route, it believes it maintains the right to build that it was granted back in the 70s. Enbridge Pipelines disputes this, and the case is currently before the Supreme Court of Canada.

AK State Gov Hedges its Bets

Alaskajournal.com

The state of Alaska has filed applications to build a “bullet” line from the North Slope down to southern markets.

In light of dwindling supplies in Cook Inlet, the state is in a position of needing to secure a supply from somewhere.  If a larger pipe isn’t built (i.e. the TCAlaska or Denali projects), Anchorage and the Kenai Peninsula needs to get a secure supply of gas, and soon.

The biggest question posed by this application is: if such a line is necessary, which route should it follow?  The line could go south and then southeast to Fairbanks, continue southeast to Delta Junction, then southwest along the Glennallen Highway to Anchorage.  This is a bit of a circuitous route, and crosses some of the most treacherous mountain ranges in North America, but the alternative has some, um, issues.

Alternatively, the pipeline could head essentially straight south, connecting to the Parks Highway southwest of Fairbanks, and follow that south through the Mat-Su region into Anchorage.  LOTS of advantages to this one; gas from this pipe could feed a few coal-fired power plants along the way, and the Mat-Su region (including Wasilla, for instance) is chock-a-block full of potential customers.  It’s a shorter route, and doesn’t have to cross the same kinds of mountains the Glennallen route would.  While it would pass west of Fairbanks, it would also pass through Denali Park.

Tough call.  I really hope it turns out to be unnecessary.

Inuvik businesses hit by MGM Energy's drilling delay

CBC.CA

This item describes some of the local economic consequences of MGM Energy's decision to halt its gas exploration program for this year.

I'm of two minds on this item. First, companies can't be expected to sink money into projects that may never produce revenue. MGM can decide where to invest its resources, and considering that they're far smaller than the major producers, they may even have to be a little more careful.

The timing does seem a little interesting, though, when you consider that we'll be seeing the JRP's report in a few months (and maybe even a leak or two before then? We can only hope). One might consider MGM's announcement--and the subsequent economic consequences for the region--to be something of a forewarning of potential longer-term consequences.

Bottom line, though, is that even if there is something of a political motive behind MGM's decision not to drill this winter, they're well within their rights to make that decision.

NWT Minister: Both Lines Still Needed

Reuters

Yes, the Alaska Oil and Gas Congress was held in Anchorage this week, but I saw little actual “news” arising from it. Important, to be sure, and it’s great to see various players getting together to compare notes, but there were no significant announcements per se.

The NWT Commissioner for Industry, Tourism, and Investment made some statements that basically came down to: “We need both lines, and we wish the Canadian government was providing our project with the same support that the American government is giving to the Alaska line.” Heavily paraphrased, to be sure, but that’s the gist of it.

Hardly news, but that doesn’t keep it from being a worthwhile sentiment.

FERC reports on Northern Pipeline activity. Says there actually is some.

http://www.ogj.com/index/article-display/3837498141/s-articles/s-oil-gas-journal/s-transportation-2/s-pipelines/s-2009/s-09/s-ferc-expects_alaska.html

Wow.

The US Federal Energy Regulatory Commission submitted its report to lawmakers with an impressive summary of both the Denali and TransCanada projects so far. And according to FERC, there actually is some.

At this point, both projects are actively engaged in "pre-filing" activities, both preparing for their open seasons next year.

The item is really worth reading. I hadn't realized, for instance, that TC's project is planned to deliver 5bcf per day, while Denali is only proposing 4bcf...

Denali: "Hello? We're still here..."

Source: CBC.ca

Not a huge item, really. I had to chase someone down at CBC to get them to actually post it on the website after the initial item appeared on Radio One yesterday, but it's significant in its way. For one thing, it's the first field work that I'm aware of for the Denali project in the Yukon.

For another, it's at least a small indicator that Denali is committed to soldier on at least to the point of holding an open season next year.

I am kind of amused that they refute TCPL's right of way through the Yukon with a simple "not so" (the matter is currently before the Supreme Court of Canada, though God only knows when they'll rule), but it's still nice to see them spending money here...

More Mackenzie "Positioning"

http://www.upstreamonline.com/live/article187034.ece

Essentially just about how the Mackenzie Valley line proponents would like to see more support from the Canadian government, particularly in the way of negotiating favorable financial terms.

There is a good point, and it's been raised before, in that the US government has provided upwards of $30 billion in loan guarantees to get an Alaska line off the ground, and our own government has so far held back.

Sadly, at this juncture it's likely a prudent thing to do, since we don't know as of yet just what the Joint Review Panel is going to recommend. That report will likely have a big impact on costs, and we probably all need to know where the producers stand before we know how many tax dollars will be required to support the project.

Why Low Prices Now Don't Spell Disaster

http://www.bloggingstocks.com/2009/08/27/natural-gas-the-key-u-s-energy-source-for-the-next-decade/

Essentially validating my view that the current low natural gas price will merely serve to stimulate demand...

Over the top really IS "over the top"

http://www.petroleumnews.com/pnads/49058072.shtml

Great piece on why the "over the top" option really isn't an option.

What's "over the top"? The concept of taking a gas pipeline from Prudhoe Bay over the top of the Yukon Territory, to link up with a pipe to run south from the Mackenzie Delta. Great idea, right? Kills two birds with one stone.

Except... TCPL CEO Hal Kvisle outlines the reasons succinctly: 1. Can't go through ANWR (Alaska) and Vuntut National Park (Yukon) 2. Expensive and challenging to route the pipe offshore to avoid (1). 3. Alaska Gas will fill the pipe completely, and some would have to be backed out to leave room for Delta gas. 4. This option doesn't send ANY gas at all into mainland Alaska.

The whole idea of having to "back out" Alaska gas might be the big roadblock to the old Dempster Lateral idea, too. Under that proposal (which the last time I checked could still be seen on the Yukon Government's Oil and Gas website), the pipeline from the Mackenzie Delta would run down the Dempster Highway into the Yukon instead of heading down along the river. The NWT isn't crazy about that one, either...

Waiting, waiting...

Yukon watches, waits, hopes for pipeline

Yes, yes we do. It's not just the economic activity from the construction phase of EITHER major northern pipeline, either. It's the access to our own resources that we are looking to advance with these projects.

The Alaska Highway Pipeline will allow us to access gas in the Whitehorse trough. Conceivably, there's more than enough here to supply the Yukon itself (thus adding to the net supply from the pipeline, even after Yukon users take off gas for their own needs). Unfortunately, there's not quite enough to justify building our own line.

This article also mentions the 6bcf potential gas in the Eagle Plains field in the northern region of the territory. It would most likely ship out on a lateral that would run east to hook up with the Mackenzie Valley project. Hence, a green light for THAT project would likely stimulate activity here in the Yukon in fairly short order.

More JRP Irritation

http://www.winnipegfreepress.com/canada/prentice-irked-by-pipeline-reviews-rising-cost-delay-51207652.html

Kudos to Permafrost Media. The little-newsletter-that-could ponied up a $2,500 Access to Information request fee to find out that the Joint Review Panel has run up a whopping $18.6 million dollar budget (roughly triple the original estimate).

The link is to a Canwest piece on how Environment Minister Jim Prentice is eagerly awaiting the JRP's final report, even if he's "irked" at the length of time it has taken.

I have to admit, this refrain is so old that it's becoming tiresome. Yes, the JRP has taken its sweet time. Yes, they still seem to be on track for a December publication (especially now that Prentice is clearly keeping a close watch on the panel). No, they won't be publishing early (shades of Orson Welles: "We will publish no report before its time!").

Enough already. Let them finish in peace.

Palin's parting(?) shot may be in her own foot

http://www.washingtonpost.com/wp-dyn/content/article/2009/07/13/AR2009071302852.html

In this op-ed piece in the Washington Post, Sarah Palin attempts to shoot down Obama's plan for a "cap-and-trade" system for controlling carbon emissions.

It's frankly a lot of rhetoric, but for the solitary point that it would make electricity somewhat more expensive. Though that may well be true, such a system might actually benefit the US economy in the long run, not harm it.

Cap and trade benefits low greenhouse gas (GHG) emitters, by giving them the opportunity to sell offsets to higher emitters. It's a great concept, leading to a market-driven incentive for businesses to reduce emissions. One excellent way to reduce GHG is--guess what?--converting to natural gas! It's not too big a stretch to see cap-and-trade actually supporting the NG market, thereby improving the economics for the Alaska Highway pipeline.

I will assume that Palin actually wrote this piece herself, perhaps with some prompting from other figures in the GOP. Certainly, since she claimed to support cap-and-trade in her VP debate with Joe Biden last fall, it represents a change of position for her. Regardless, I wonder how carefully she actually considered the potential impact on her own state.

Governor Palin? Really?

I really hope we hear in the coming days why Alaska Governor Sarah Palin chose to step down this week, because the timing is at best puzzling.

Fair enough, she didn't want to be a "lame duck" for the rest of her term after announcing her decision not to run for reelection, but as AK State Rep John Harris noted to the Anchorage Daily News, she didn't have to announce that decision for another year.

Arguably, Palin was making political progress. She'd successfully upbraided David Letterman, forcing a public apology from the Late Night host after he'd made a couple of unfortunate jokes about her family, and, more significantly, she'd seen her AGIA agenda bolstered considerably last month with the announced agreement of Exxon to work on TCPL's gasline project.

I don't think it's overstating to say that Palin's abrupt resignation casts some slight doubt over AGIA. She has been the public face of AGIA, and the process remains controversial enough that another leader may be reluctant to step in. It's not that the process can be derailed, but without firm political will one can imagine it becoming weakened and subverted. To be fair, many critics claim that the Exxon/Mobil-TCPL agreement represents just that.

Speculation runs rampant about Palin's motivations. Her critics claim she's avoiding a corruption investigation surrounding a controversial recreation complex built when she was Wasilla's mayor. Her supporters hint she may be preparing for a run at the GOP Presidential nomination for 2012.

Inuvik Getting Antsy

http://www.nationalpost.com/story.html?id=1750698

Not bad piece on the general air of frustration around the construction delays on the Mackenzie Valley project, and how long it's taken for the Joint Review Panel to release its final report.

The JRP wasn't such a bad idea. Get representatives from stakeholder groups, have them listen to submissions from virtually everyone, and try to reach a consensus that may not make everyone happy, but would hopefully leave all concerned "equally unhappy".

Since there was no deadline, though, the process sprawled from the 10 months it was originally anticipated to take to almost 4 years. And that's assuming they actually make their proposed deadline of this coming December for their report's release.

What's done is done. Their work cannot be accelerated, apparently. Pius Rohlheiser from Imperial Oil offered his company's resources if the JRP needed any help, but that may have seemed too much like a conflict of interest. The big question is, will it matter?

Personally, I don't think so. There's been some benefit from this delay, believe it or not, and it might be just enough to get this project over the hump:

1. Construction costs have declined with the global recession. This project might actually be cheaper to build now.
2. The recession itself has made many people take a long, hard look at the abyss; a project that stimulates the economy and provides long-term revenue both for regional businesses and the GNWT (if only in the form of taxes) is more attractive now than it might have been a year ago.
3. Generally broader support for "green" initiatives makes this an easier project to support from a political point of view

There is one other argument, though, that requires a bit more of a leap of faith to overcome: what about those shales? Those massive deposits of NG uncovered in the American south and Northern BC?

In a perverse way, these, too might help the overall economics of the northern pipeline projects. Cheap, easy-to-reach NG will pull prices down, and stimulate demand (bear in mind that a lot of US's electricity generating capacity either is currently NG, or can be quickly converted). New, long-term demand will squeeze supply, and by the time these pipelines are completed, there will be lots of demande for them to serve.

North America will need the gas from the Mackenzie Valley and Alaska Highway pipelines. This is as true now as it was 20 years ago, and it will still be true 20 years from now.

The "Aboriginal" Question

http://www.marketwire.com/press-release/Indian-And-Northern-Affairs-Canada-1008106.html

A common argument I've heard from some Alaskans when they express skepticism about the Alaska Highway Gas Line project is that Canadian aboriginal groups will stall construction with land claim issues. Given the interminable process that's been dragging out in the Mackenzie Delta with the Joint Review Panel there, I guess that's understandable.

Things are somewhat different in the Yukon, though. I do have to note that I am not First Nations myself, and I'm not privy to any discussion that's going on right now, but from the issues I've been following I see some significant differences between "here" and "there".

First, Yukon First Nations have generally been more engaged politically and economically than their counterparts in the NWT. Their involvement in economic development extends back even before the 1898 Klondike Gold Rush. Many FN families didn't merely benefit from the Gold Rush economy, they prospered from it. And--generally speaking--most Yukon FN groups have been supportive of responsible development.

Second, almost all identified First Nations groups in the Yukon have settled their land claims with the Canadian government. In most cases this means that there is a consultation process already in place (for the Mackenzie Valley Line, they essentially had to invent one from scratch). There is one significant exception, the Kaska/Dene that straddle the Yukon-British Columbia border in the Southeast Yukon; this group has served notice in the past that they expect fair treatment in discussions over the pipeline. Even so, this group has been working with the Yukon government on resource-sharing issues, and they are taking part in sidebar agreements on mining, gas exploration, and forestry on their traditional lands. Their engagement seems to be constructive.

The biggest reason that the Alaska Line won't see the same delays as the Mackenzie Line is... the Mackenzie Line itself. The strain from the delay is showing in the Delta, and in towns all along the route where businesses--in many cases aboriginal-owned businesses--have invested heavily for a project that's now years behind. The current world recession and the prospect of cheap gas elsewhere in North America has done nothing to lessen this strain.

The item I linked to here is a small but significant announcement: the federal govenment is providing funding to the aboriginal groups along the line's route so that they can afford to engage in discussions with government and pipeline proponents.

supportthepipeline.org Returns! (Sort of...)

I am pleased to present this blog as a kind of successor to a small website I operated a few years ago, www.supportthepipeline.org. It's a site I started in response to what I viewed at the time as undue preference on the part of Canadian officials for a Mackenzie Valley Gas Pipeline over an Alaska Highway gas line. Since neither project is yet underway even now, the point was moot.

This blog is not intended to be a news source. News on pipeline developments is available from a number of excellent sources, including Petroleum News, Northern Gas Pipelines, and the business pages of the Anchorage Daily News and the Calgary Herald. These are all great sources of information on northern pipeline projects, and I wouldn't dream of competing with them.

I mean for this blog to fill a small but significant gap; commentary on the northern pipeline projects and the impact they will have on the Yukon Territory.

Both projects will have a major impact on life in the Yukon. The Alaska Highway Natural Gas (AHNG) pipeline will have a more obvious impact, since it will actually run through the territory, but the Mackenzie Gas Pipeline (MGP) project is important to Yukoners, too. The construction of this line would employ many Yukon labourers, tradespeople and businesses, and may provide transportation for potential Yukon gas fields in the Eagle Plains region.

I think it's important that a "Yukon point of view" be presented on these major projects. I don't pretend to be the authority, but I'm definitely interested. I'd like to hear from others as well.

A Funny Thing Happened...

...as I waded through some of the fallout from ExxonMobil's announcement that they'd be participating in TransCanada Pipelines' proposed Alaska Natural Gas Pipeline project, I found an old friend, of sorts.

I discovered Dave Harbour's Northern Gas Pipelines site several years ago, when interest in building the Alaskan line once again rose over background noise to fool us all into thinking it might finally go ahead. Harbour is an Alaska insider who brought a wealth of information and insight from his connections to the web on a fairly regular basis, and his site was probably the authoratatve collection of news an fact on the proposed project. I visited Harbour's site so much that I managed to be his 100,000th visitor.

Unfortunately, Mr. Harbour had to stop contributing to the site, as he was appointed to a state government post that would have presented a conflict of interest. The site remained up, but with no new contributions after January 31, 2003.

My pleasant surprise was to revisit the site the other day, and find that Harbour had reinstated it last year following the end of his government appointment. He is still providing a great wealth of news and background information about the industry. However one feels about this project, Harbour's site is the best single source for information on it.