Oilpatch History

Mackenzie Valley Pipeline Technical Feasibility & Cost Study Completed. Chances For "Go-Ahead" Favourable

The prospects for a "Go-ahead" on a 1,700-mile long, four-foot diameter oil pipeline from Prudhoe Bay, Alaska, to Edmonton, Alberta have been enhanced by conclusions reached in a detailed study by The Bechtel Corporation made for the oil industry backers of the MacKENZIE VALLEY PIPE LINE RESEARCH GROUP. The report is now in the hands of the participants, according to reliable source but its content; are at this stage a closely guarded secret.

It is understood that the report is favorable both in regard to technical feasibility of the proposed pipeline, and in regard to comparative economics of alternate means of linking the huge North Alaskan and potential huge Arctic Canadian oil reserves to North American markets. On the order of one and a quarter billion dollars would be the cost of a system with initial capacity of 1.3 million barrels between Prudhoe and central Alberta, via the Mackenzie Route a cost some fifty percent higher than tentative initial estimate of a year ago. The proposed Trans-Alaskan oil Pipeline from Prudhoe to Valdez on the south Alaska coast would be only half the length, but latest cost estimates for this 48-inch diameter project have escalated to over $1.5 Billions, compared to initial estimate of about $900,000,000.

Announced participants to date in the Mackenzie Valley Research Project are IMPERIAL OIL LTD.; GULF OIL CANADA LTD.; SHELL CANADA LTD, ATLANTIC RICHFIELD CANADA LTD.; HUDSON'S BAY OIL & GAS CO. LTD.; TEXACO EXPLORATION CO.; VALVOLINE OIL CO, OF CANADA LTD, (Ashland Oil, Inc subsidiary); INTERPROVINCIAL PIPE LINE CO. LTD.; and T RANIIS MOUNTAIN OIL PIPE LINE CO. LTD, When and if the project gets a "Go Ahead", additional participants are likely.

The MacKenzie Valley and Trans-Alaskan oil pipeline projects each rate, in terms of capital costs and carrying capacity, as the largest in the history of the Western Hemisphere. In both cases, very large additional investments would be required to link market with the southerly end of the systems at Valdez or Edmonton, For Trans-Alaska, the added costs would be tanker loading and unloading facilities, deep port facilities along the U, S. West Coast, a navy of new tankers, and possibly major new oil pipeline facilities, to get the Prudhoe oil into the Interior or Eastern United States. For the MacKenzie system, "big inch" looping of the existing Interprovinical and Trans Mountain pipelines and/or building of new systems south from Edmonton would be required. In each case, a rough estimate of the added costs would be about one billion dollars. Thus in prospect are capital investments of some $2.2 Billions for an Arctic Link via Western Canada and some $2.5 Billions for an Arctic Link via Alaska. The capital challenge is larger than ever before faced by the oil industry members serving the North American market.