Thorunn Howatt
Northern News Services

Yellowknife (Apr 29/02) - The race to build a pipeline carrying Arctic gas southward to energy-hungry American markets is tighter than ever after an energy bill sailed through the United States Senate last week.

The bill pleases Alaska's two Republican U.S. senators, Frank Murkowski and Ted Stevens, who are after the jobs and benefits that would flow from construction of a $17-billion pipeline carrying huge natural gas reserves from Alaska's Prudhoe Bay and North Slope. The American pipe would follow the Alaska Highway.

"There is not room for two pipelines," said Robert Marshall, pipeline consultant to the Northwest Territories, explaining that the construction of the Alaskan line would cause a shortage of steel, labour and contractor resources.

That would mean a Canadian line would have to be put on hold. An Alaska Highway line would bypass Canadian reserves and leave them stranded for as long as 10 years.

The GNWT supports a $3-billion proposed pipe-line project that would carry Mackenzie Delta gas south following the Mackenzie Valley. Premier Stephen Kakfwi has been campaigning for support from Ottawa for it.

Right now the Canadian project is considered to be economical after a feasibility study by Mackenzie Delta producers led by Imperial Oil Ltd. The Alaska Highway line has been deemed uneconomical but pipeline construction subsidies and tax incentives would change that.

The American bill would provide builders with a tax credit whenever the price of natural gas falls below $3.25 per thousand cubic feet.

At the same time the Alaska legislature hopes to encourage the gas line's construction with a state bill that would relieve energy companies from state and local taxes -- a move that is estimated to cost $760 million in lost American tax revenue.

Both the American House and Senate bills propose the Alaska line run through the state's interior, following the highway and not go across the Beaufort Sea into the Canadian Arctic. The bills' sponsors say they are concerned about the environmental risks attached to building a pipe under the ocean. They don't want to lose financial advantages like jobs and contracts to Canada. They also reject drilling in Alaska's Arctic National Wildlife Refuge.

The move to prohibit an American pipeline from being built under the Beaufort sea blocks the potential of a third proposed pipeline, the so-called "over the top" route.

That scenario moves Alaskan gas to the Mackenzie Delta via an underwater Beaufort Sea pipe then pick up Mackenzie Delta gas and move south following the Mackenzie Valley.