Alaska's North Slope bursts with tremendous stores of natural gas. The amount is prodigious: North Slope fields contain about 35 trillion cubic feet (Tcf) of recoverable gas, with almost three-fourths of that in Prudhoe Bay alone. Eventually, as much as 100 Tcf could be developed in the region, geologists estimate. But, with no market, associated gas has been reinjected since oil production began on the Slope in 1977. Companies working this remote edge of the continent have long been considering a natural gas pipeline. (For more on this, see "Arctic Dreams," Oil and Gas Investor, August 2000.) Efforts began in 1970, and have continued intermittently for the past 25 years. BP estimates that more than $1 billion has been spent on studies and permits for various proposals. One of the closest to realization was the Alaska Natural Gas Transportation System (ANGTS). In 1977, President Carter and Canadian Prime Minister Trudeau approved a gas transportation route, roughly following the Trans-Alaska Pipeline System to Fairbanks, then heading down the Alaska Highway and into the Yukon and Northwest Territories, Canada. Environmental impact was studied for the ANGTS route. The project withered, however, when abundant Lower 48 supplies overwhelmed demand and gas prices plummeted. Now, however, prices are robust and markets are screaming for gas. Two main routes are vying for selection. The "over the top" project is a 1,650-mile line that would head offshore from Prudhoe Bay into the Beaufort Sea, then run eastward to the Northwest Territories' Mackenzie Delta region, and thence down the river valley into central Alberta and the continental pipeline grid. The pipe would carry 4- to 5 billion cubic feet of gas per day, collected from both North Slope and Mackenzie Delta fields. Alaska lawmakers are opposed to the over-the-top pipeline, and in April they passed a law that barred the Department of Natural Resources from issuing rights-of-way permits for that route. The bill would only allow permits for a northern pipeline route if a southern route were already in place. The competing 2,000-mile "highway" proposal, strongly supported by Gov. Tony Knowles, is essentially a revival of the initial ANGTS path. The stakes for the state are high. Because the North Slope fields are on state land, Alaska stands to collect a 12.5% royalty on the gas when it can finally be sold. "Spreadsheets indicate, depending on the route, that the state would receive gas royalties of $300- to $400 million a year," says Dan Zobrist, petroleum economist with the DNR. Too, the state has the option to take its royalty gas in-kind, and could possibly sell it to in-state users itself. Alaska also believes in-state demand could grow significantly if the gas line were built. It wants the construction jobs and the possible industrial development that could follow such a project. The state is even considering whether it should own a piece of the pipeline, notes Zobrist. Meanwhile, North Slope gas owners BP, Phillips Petroleum and Exxon Mobil are deep into a $75-million project evaluating pipeline routes. Their Alaska Gas Producers Pipeline Team expects to select the most feasible plan by year-end. "We have 90 people working on the project team, and we're gathering data and doing studies," says Kevin Meyers, president and chief executive of Phillips Alaska Inc. "We hope to file for permits by early next year. Our goal is to bring this gas to market by 2007." Phillips' share of the Prudhoe Bay gas is about 8 Tcf, far and away one of its largest resources worldwide. BP and Exxon Mobil each own similar volumes, based on their working-interest ownerships in the field. Simultaneously, a producer's group composed of Gulf Canada, Imperial Oil, Shell Canada and Exxon Mobil is evaluating the options for moving Canada's Mackenzie-area gas to southern markets. Even Washington is weighing in on the issue. In May, the National Energy Policy Development Group, author of President Bush's energy policy, recommended that "the president direct the secretaries of Energy and State...to expedite the construction of a pipeline to deliver natural gas to the Lower 48." Says Meyers, "We believe North Slope gas production will happen before the end of this decade. We're absolutely committed to making this resource a reserve."

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