Recent History – 2002-2003
July 26, 2002
By Mark Nielsen, Daily News Staff
British Columbia stands to gain plenty from the Alaska Highway Gas Pipeline, Peace River Regional District directors learned Thursday.
Directors took in a presentation from Dan Begley of Foothills Pipe Lines Ltd. in which he stated that construction of the section that passes through the province will bring $11.4 billion to the B.C. economy and generate $1.9 billion in revenue for the B.C. government.
It’s expected that the pipeline will take three years to build, and is scheduled to be operating by 2010, bring natural gas from the Prudhoe Bay area of Alaska to the U.S. along a route that passes through Alaska, Yukon, B.C. and Alberta. The B.C. section will extend from just southwest of Watson Lake to Boundary Lake at the B.C.-Alberta border, passing northeast of Fort St. John.
Construction of the B.C. portion will require about 500 people in the first year, about 1,500 in the second and 3,750 in the third, while an additional 300 people will be needed to construct the facilities in the second and third years.
Business opportunities include trucking, barging and air transport, winter road construction, catering and camp servicing, and manufacture of modular housing. Employment opportunities include welders, ironworks, millwrights, mechanical engineers, procurement specialists and communications engineers.
Once completed, 20-30 people will be needed to maintain the pipeline.
The project follows on a $130 million feasibility study commissioned by Exxon, British Petroleum and Phillips that looked at both the Alaska Highway and the so-called “Over the Top” route that would follow the Mackenzie Valley through the Northwest Territory.
Thanks to rising demand for natural gas, Begley sees the day when both projects will be constructed. But he said that the Alaska Highway project will be completed first even though political support for the other project is stronger in Canada because of the focus on gas from the Mackenzie Delta.
Problems with the Mackenzie project, according to Begley, include the cost, the technical difficulty, opposition from environmental groups and opposition from the State of Alaska. He added that the Mackenzie project is a much smaller scale project, about one-fifth the size of the Alaska Highway project.
Begley also stressed that contrary to media reports, gas producers tied to the project will not receive a subsidy from the U.S. government, but rather a tax credit that would come into effect if gas prices go below $3.25 US per thousand BTUs — the threshold for viability.
“It’s called a subsidy only by the press and those who are opposed to the project,” Begley said.
Conversely, said Begley, if the price goes over $4.85 there is a provision for repayment of the tax credit. Moreover, he said that while the tax credit will last for 15 years, beginning in 2010, the payback provision has no expiry date.
“In other words, all they’re doing is leveling the cost,” he said.
The original proposal was for a 42-inch pipeline, but it has since been revised to 48 inches and may go as high as 52 inches, although finding inch-thick pipe in that diameter is difficult to find.
About 8 billion cubic feet of natural gas is being produced in Alaska each day and is being re-injected into empty oil wells in anticipation of the pipeline project.
“It’s the largest source of domestic natural gas for the United States and it’s ready for market,” Begley said.