Editor's Note: New talk of a Mackenzie Valley pipeline has spurred renewed interest in Mackenzie Delta natural gas. Seeing the opportunities for development and resource revenue, the Yukon government has jumped into the fray, pitching its own ideas for pipelines to untapped Northern gas reserves. Here's was they're saying in the Yukon, courtesy of the Yukon News.

Richard Mostyn
Special from the Yukon News
Northern News Services

Whitehorse (Mar 27/00) - The Yukon is in a high-stakes battle with the Northwest Territories over construction of a natural gas pipeline from the Arctic Ocean to southern markets.

With the cost of building such a pipeline pegged at $6 billion, or more, it's a fight the territory can't afford to lose, says Economic Development minister Trevor Harding.

"We're in a dogfight to secure the route," Harding told reporters at a news conference (March 9).

The stakes include an estimated 1,200 construction jobs on the pipeline, which would stretch 2,700 kilometres to northern B.C. through the Yukon. About half that distance is in Canada.

"YTG has met with pipeline companies in Calgary and Vancouver, as well as industry and government officials in B.C. and Alaska to ensure that our support for the Alaska Highway route over all other proponents is well known," said Harding.

Government leader Piers McDonald has held interim discussions with Prime Minister Jean Chretien on the matter.

As well, the Yukon has hired independent lobbyists in Ottawa to pitch the Yukon route.

Federal officials are wary of bringing Alaskan natural gas through Canada, fearing it will affect Canadian producers.

So the territory is trying to persuade them an Alaska Highway pipeline would held develop Canadian resources, including Yukon oil and gas and other industry.

The pipeline debate has progressed with incredible speed.

Part of it is due to the construction of Alliance Pipeline Ltd.'s 3,000-kilometre-long line from northern B.C. and Alberta to Chicago, Illinois.

The pipeline will become active later this year.

And, for the first time, pipeline capacity from the Western Canada Sedimentary Basin will exceed supply, says a 1997-1998 report by the Northern Pipeline Agency.

The Alliance pipeline is but one example of skyrocketing demand for natural gas in the U.S., ignited by gas-fired electrical generation.

That demand is pushing the oil companies to search for more reserves.

In February, Imperial Oil Ltd., Gulf Canada Resources Ltd., Shell Canada Ltd. and Mobil Canada launched a one-year-study to assess the viability of natural gas development in the Mackenzie River Delta.

It's the first time in 20 years the big oil companies have expressed an interest in the region, where there's an estimated 70 trillion cubic feet of gas, the National Post reported on February 29.

But it's a fraction of the reserves found on the North Slope of Alaska, which boasts the largest unconnected gas reserve in North America.

There, oil giant BP-Amoco is looking for ways to get its gas south.

So, with an anticipated shortage of gas in the south and huge, isolated reserves in the High Arctic, a number of companies have launched new pipeline schemes, or dusted off existing ones.

But there are really only two routes under discussion.

The Mackenzie Valley route has been resurrected following an unprecedented show of solidarity on the part of First Nation leaders in the NWT.

In November, they backed gas development in the Mackenzie Delta and now want to own a proposed Mackenzie Valley pipeline.

The Alaska Highway route made sense in the 1970s, and it makes even more sense today, said Harding.

It's more environmentally benign, has highway access and benefits from an established easement and regulatory approval, which was granted following an extensive environmental and socio-economic hearing by the National Energy Board in 1977, he said.

As well, it has better potential to get the support of more politicians and members of the public.

The route actually runs through Fairbanks, Alaska, Whitehorse and other smaller communities, so the benefits -- like access to a clean-burning heating fuel, local jobs and lower power costs -- are tangible, he said.

And because it runs through the state and territory, it would bring substantial tax revenues to the regions.

But the spoiler is an underwater pipeline being pitched by former Progressive Conservative minister Harvie Andre, who served under Brian Mulroney.

It resurrects the idea of linking Alaska's North Slope gas fields with the Mackenzie Delta through a pipeline along the floor of the Arctic Ocean eight kilometres off the Yukon's coast.

It's this line that would make the Mackenzie Valley pipeline economically viable.

And that's why Harding and Foothills' chairman and CEO are trying to block it.

"We're facing an incredible amount of hype on the over-the-top route," said Harding.

"This is much more than a flag-waving exercise. We want a pipeline built in an economically and environmentally responsible manner."

The Arctic Ocean is a highly sensitive area with widely varying climactic conditions.

"An underwater blowout would have a serious impact" on the marine environment," he added.

"We'll vigorously oppose it as a government."

Besides, if it came to pass, the Yukon would be cut out of the largest megaproject in the Canadian North.

"It's all hype and not a lot of substance," said Harding. "The Alaska Highway is no hype and a lot of substance."

The case for the Alaska Highway route has already moved into Alaska's Senate.

"The promoters of (the Beaufort Sea) project claim their pipeline is shorter, will encounter fewer construction obstacles and, therefore," is cheaper Pierce told the Alaskan Senate's resources committee (March 8).

It's shorter by about 200 kilometres, he conceded.

But the Alaska Highway route follows a transportation corridor.

Without that, "movement of personnel, materials and equipment would be a major undertaking in its own right."

The Alaska Highway route's terrain poses no insurmountable challenges, the geotechnical work has been done and many of the necessary permits and rights-of-way have been secured.

"An alternative project must begin from scratch," said Pierce. "That requires time and money ... and plenty of both, as we can attest to."

And a pipeline along an existing road network will be less environmentally damaging than one laid through pristine, undeveloped area, he said.

"Our project won the day the last time this issue was heard. If there must be a rematch, we believe (we) will win again."

Those are the battlelines, and the skirmishes will progress through the year when a final winner is expected to be declared.

The Yukon government's second phase has also been launched, with the forming of a committee of business, labour, municipal and environmental groups to address the problems and figure out the community needs if the Yukon secures the huge project.

As well, First Nations will be dealt with on a government-to-government basis.

Many believe the pipeline could be under construction by the year 2006, said Harding.