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NWT minister bullish on both Arctic gas pipelines

NWT minister bullish on both Arctic gas pipelines
Fri Sep 18, 2009
By Yereth Rosen

ANCHORAGE, Alaska, Sept 17 (Reuters) - Despite economic recession, financial skittishness and emergence of alterative supplies, the energy minister for Canada's Northwest Territories said Thursday he is confident the huge gas pipelines from both the Mackenzie Valley and Alaska's North Slope will be built and will supply North American markets.

"The time has never been riper. The conditions are absolutely ripe for both projects to proceed," said Bob McLeod, commissioner of industry, tourism and investment for the Northwest Territories.

McLeod, speaking at an industry conference in Anchorage, said there has been significant progress on the Mackenzie Gas Project, which could carry over 1 billion cubic feet a day from the northern Mackenzie River Delta starting in 2016, according to project estimates.

A key regulatory report is due in December, and five of six necessary agreements with aboriginal groups have been reached, McLeod told the Alaska Oil and Gas Congress.

The Mackenzie project, which would run 750 miles (1,220 km), is estimated to cost $14.7 billion (C$16.2 billion). The Alaska project, which would run 1,700 miles (2,740 km), would cost over $30 billion, according to state estimates. Both projects have been discussed and promoted for at least three decades.

Without supplies from both the Mackenzie and Alaska projects, customers in the United States and central Canada will shell out $300 billion more on natural gas over a decade-long period than they would otherwise pay, McLeod said.

"It's not either/or. North America needs both Arctic pipelines," he said.

He dismissed the potential competition from newly developed shale gas, imported liquefied natural gas or other alternatives.

"All of our demand projections indicate that even with shale gas, LNG and the development of renewable energy, the demand's still there," he said.

The Northwest Territories' position has always been that the Mackenzie project should go first, he said in an interview after his speech. "There's so much potential gas in Alaska, it would flood the market," possibly eliminating the need for a Mackenzie line.

A potential stumbling block, McLeod said, is the lack of "political will" in Canada, where the national government has not taken any effort to match the $30 billion loan guarantee that the U.S. Congress has offered to sponsors of the Alaska project.

McLeod said concerns about carbon emissions and climate change should give both Arctic gas pipelines a big development push.

However, the Waxman-Markey climate bill that narrowly passed the U.S. House makes far too many concessions to coal producers and provides far too little incentive for natural gas to replace coal as an electricity generator, he said.

Supporters of the Arctic projects need to campaign for changes when legislation is considered by the Senate, he said.

"We really that that act favors the coal-producing states at the expense of natural gas and hydro," he said.

In remarks after his speech, McLeod said he worries that the message about natural gas replacing coal is not resonating.

"I'm a little bit cynical. The environmental groups that take the lead in protecting polar bears and so forth. . .they probably still use coal-fired electricity for air conditioning," he said. (Editing by Christian Wiessner)

http://uk.reuters.com/article/idUKN1723047720090917?pageNumber=2&virtual...

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