Yellowknife (Mar 31/04) - "The Alaska Pipeline is a threat," said Imperial Oil's Deh Cho Community Relations representative, Darrel Becker in Yellowknife on Thursday.

If the Alaska pipeline is built first, there will be less capacity within the overall pipeline system, said Mackenzie Valley Pipeline spokesperson Hart Searle.

"That would certainly put our project in jeopardy," said Searle.

One day after Imperial Oil's presentation in Yellowknife, TransCanada Corporation announced it has renewed talks with the state of Alaska relating to the building of their natural gas pipeline from Alaska's North Slope to the U.S. Midwest.

"If an Alaska pipeline initiative is running in parallel with ours, then it could pose a threat to the commercial viability of the Mackenzie Valley Pipeline project by putting cost pressures on material and supplies, by impacting the availability of most experienced contractors, and lastly, by impacting gas market demand as well as gas prices," said Searle.

The volume of natural gas that an Alaska pipeline initiative represents is 4.5 billion cubic feet per day.

"That's three times the size of our project," said Searle.

There was no mention in a Reuters report issued Friday on how TransCanada would go about financing the suggested $20 billion Alaskan pipeline.

The pipe planned to extend down the Mackenzie Valley will have enough capacity to carry gas from the Mackenzie Delta to American markets, said Imperial Oil's Mackenzie Valley Pipeline technical advisor, Keith Drysdale.

Beaufort gas going elsewhere?

At the same time, Drysdale said the pipeline is only being planned for capacity derived from the Mackenzie Delta and the Mackenzie Valley. It does not include potential reserves from the Beaufort Sea. Most experts, including Natural Resources Canada, believe there is 10 times the amount of natural gas in the Beaufort than in the Delta.

But increasing capacity would throw the environmental process shepherding the development of the Mackenzie Valley Pipeline into disarray, said Drysdale.

"You've got to walk before you run," added Searle.

"Incorporating offshore Beaufort gas into our initiative does bring with it some complications of assessing offshore impacts that would have to be incorporated into our initial applications," said Searle.

Further, a number of Beaufort discoveries are a combination of gas and oil, and the producers group would have to develop a structure to separate the oil and gas, said Searle.

Currently, about 20 companies have expressed interest in contracting capacity of the Mackenzie Valley Pipeline.

In June 2003, News/North reported TransCanada Pipe-lines, a subsidiary of TransCanada Corporation, lent the APG $80 million for its share of the $250 million project definition phase. In return, Trans-Canada received an option to purchase five per cent of the $5 billion project from the Producers Group, while the Aboriginal Pipeline Group received 30 per cent of ownership on the pipe.

Becker refused to comment on whether the Producers Group frustrations with the Deh Cho First Nation (DCFN) has affected future Mackenzie Valley Pipeline plans. The Deh Cho have rejected Imperial Oil's suggested winter work program in the Deh Cho region, saying the company's offer to the First Nation was a pittance.

"Are we frustrated the winter work program in the Deh Cho region did not proceed this year? The answer is yes. Are we frustrated we couldn't complete it? The answer is yes," said Searle.