May 2007 Update

In the news...

• Alaska Gasline Inducement Act bill passes (5/11/2007) - Governor Sarah Palin's Alaska Gasline Inducement Act or AGIA has been passed by both houses of the Alaskan legislature. The bill will be finalized by the Senate Finance Committee to reconcile slight differences in versions passed by the Senate and House. AGIA establishes guidelines and inducements for companies desiring to compete for the rights to build a gas line in Alaska. On July 1st a request for applications to a competitive bidding process for the right to build a North Slope gas line will be issued. The winning bidder will have the right to construct a natural gas pipeline to the North Slope, which has an estimated 35 trillion cubic feet of gas. The line may eventually transport 4.5 billion cubic feet of natural gas a day, which is approximately 7 percent of the current U.S. demand. [More here]

• Ethanol: Boom or Bust? (5/8/2007) - As the market grows for U.S. produced ethanol products, skeptics wonder if the demand will be there in the future. In 2006 American farmers harvested its third largest corn crop ever of 10.5 billion bushels of which an estimate 3.2 billion bushels will go into ethanol production. Although this amount allocated to ethanol is 49% more than the previous year, skeptics worry about ethanol's efficiency (worse than petrol), economic benefits and effect on the environment and food prices. [More here]

• Gas line project could establish new standards for financing (5/8/2007) - Up to now most gas line projects required funding of well under $10 billion, according Frederic Rich of the New York law firm Sullivan and Cromwell. However the projected cost for a new Alaska gas pipeline could reach $30 billion. This unprecedented amount presents numerous challenges to obtaining necessary financing. Funding will have to be customized to the risk profile of the project before construction can begin. Risk will need to be allocated between numerous stakeholders including lenders, the project builder, and the owner each, with funds at risk as well as federal loan guarantees to have a successful project completion. [More here]
  

• Official pushes joint gas line with Alaska (5/3/2007) - As cost estimates to construct gas pipelines southward from the Arctic continue to escalate, a Canadian official called again for a single line serving both North Slope Alaska and northern Canada. The proposal recommends first building a line to Mackenzie River delta reserves on the Arctic seacoast of Canada, then adding another leg westward linking up Alaska, instead of building a separate Alaska-U.S. line. While not new, the proposal has renewed urgency because estimates to build the Mackenzie pipeline have risen from $7.5-billion three years ago to $16-billion today, said Brendan Bell, Northwest Territories industry minister. [More here]
  

• National Energy Board participates in Operation NARWHAL 07 in Norman Wells, NWT (4/24/2007) - The National Energy Board (NEB) of Canada participated in Operation NARWHAL 07 in Norman Wells, Northwest Territories. The NEB regulates gas and oil operations in the North and since 2005 has been responsible for the security of pipeline infrastructure. The training exercise involved military troops, aircraft assisting the Royal Canadian Mounted Police (RCMP) and other northern civilian agencies in response to a simulated threat to Canadian oil production and transportation infrastructure in the Northwest Territories. [More here]

• Transportation Safety Administration (TSA) Joins Private Firms in Securing 2.4 Million Miles of Energy Pipelines (4/2007) - In 2004 the TSA's Pipeline Security Division began its assessment of a 3,300 mile cross-border pipeline system responsible for carrying 2 million barrels of oil a day between the U.S. and Canada. From that assessment came two reports – one classified, one unclassified – on vulnerabilities, risk-based strategies for addressing them, and options as threat levels change. Critical information was shared with the Canadian government as well as the pipeline company. Cross-border assessments represent just one of the division’s initiatives. Others are domestic corporate reviews, monthly conference calls with company officials, a weekly suspicious incidents update shared with the companies, an annual pipeline security forum, and security training assistance. [More here]