A proposal to build a $1.5 billion pipeline to bring arctic natural gas to North American markets is being sponsored by The Alberta Gas Trunk Line Company Limited, a major Canadian gas transport system. The Company expects that applications will be made later this year for certificates to build the line and to complete it in 1974 in time to transport natural gas produced when Prudhoe Bay crude oil begins to move through the planned Alaskan pipe line system.
The 48 inch line would follow a 1550 mile route through Alaska, the Yukon, the Northwest Territories and Alberta, connecting with Alberta Gas Trunk's existing system. It would be capable of delivering Alaskan gas to United States markets and Canadian gas to Canadian markets, Alberta Gas Trunk has offered the service of the proposed system to all major Canadian and U.S. gas markets within economic range.
S. Robert Blair, Executive Vice-President of the Company stated that the equity in the Canadian portion of the pipeline would be held by Canadian investors. Under the terms of the proposal, equity ownership would remain under Canadian control.
Debt financing would be raised primarily in the U. S. capital markets, secured in the normal manner by tariff commitments obtained from United States utility companies interested in using the transport system to ship gas south.
The Company is initiating its own ecological studies and seeking participation in research groups studying the effect of pipeline construction in permafrost, Mr., Blair stated that Alberta Gas Trunk believes that its proposal provides the earliest and most economic pipeline connection for Alaska gas to multiple markets in terms of initial capital cost and over-all transportation costs.
The pipe line would consist of three sections, The Alberta section would consist of a 350 mile system to be financed and constructed before the end of 1972 at a capital cost of $100 million. This section would be operated by Alberta Gas Trunk or a subsidiary company and will be part of the orderly expansion of the present transmission system. An additional $200 million will be necessary to expand the Company's present system in 1973 and 1974, The Northwest Territories Yukon section would be a 900 mile main trunk to be financed and constructed in 1973 and 1974 by a federally incorporated company with powers to operate a natural gas pipeline.
Alberta Gas Trunk has arranged the purchase of a company which has such powers. Other Canadian companies will be invited to participate on an equity basis in the federal company. After the project development period, Alberta Gas Trunk will retain a minority equity interest. Preliminary estimates indicate an ultimate capital investment within the northern territories of $1 billion. The Alaska section would be a 300-mile system to be financed and constructed in 1973 and 1974 and operated by a new Alaska corporation.
Mr., Blair said the proposed pipe line would generate substantial benefits to the northern territories in terms of long term employment for northerners, improved communication and air transport facilities, lower fuel costs and investment opportunities.
The three companies will be autonomous units but the entire gas trunk connection will operate as an integrated gas transport service for gas purchased in Alaska and in Canada by any company. There will be no discrimination or competitive restriction on the shipping companies, which will be served "first come first served". To maintain this character, there is to be no buying or selling of gas by the pipe line transport companies, except to accomplish ancillary operations such as local off-line supply arrangements or to a specifically limited extent if needed to achieve initial project feasibility. The service rendered by the Canadian and the Alberta transport companies is to be provided under published tariffs consistent with rate regulation under the respective jurisdictions.
A basic policy of the project is to construct the gas trunk main line in time to provide an outlet for very large volumes of solution gas produced born the Alaskan North Slope reserves in conjunction with crude oil production. Without markets the gas would be reinjected into the reservoir representing an economic loss, Estimated throughput of the proposed line will be one and a half billion cubic feet per day initially, increasing to about 3 billion cubic feet per day by 1980.
Alberta Gas Trunk has so far committed some $500,000 to developmental expenditures which include studies of economic feasibility, pipeline route and engineering, materials and construction planning. The Company expects to complete its detailed capital cost calculations based on field investigation by August.
The Alberta Gas Trunk Line Company Limited was incorporated in 1954 by a special act of the Alberta legislature, to act as a common carrier of gas within the borders of Alberta, It presently operates 2,800 miles of main line and gathering system. It is owned by the general investing public in Canada who hold 97% of its shares. Its voting shares are held by groups representing gas utility, export and producer companies and two private individuals nominated by the Government of Alberta. The Company now ships some 3.5 billion cubic feet per day of Alberta gas.