Energy, Mines, and Resources

Alaska Highway Pipeline Project

The Alaska Highway pipeline would begin at Prudhoe Bay, Alaska, parallel the oil pipeline to Fairbanks, follow the Alaska Highway through Yukon and then continue through northeast B.C. and on into Alberta. The AHPP would carry gas to southern markets.

  • Approximately 760 km, or 30% of the route, would be in Yukon.
  • The pipe itself would be 48-52 inches in diameter.
  • The capacity of the pipeline would be 4.5-5.9 billion cubic feet/day

The construction and operation of the AHPP is expected to generate up to 375,000 person years (2002 Informetrica study  536 KB) of employment within the Yukon and Canada over a 24-year period, and pump billions of dollars into the Canadian and Yukon economies.

There are currently two proposals for the Canadian portion of the AHPP.

  • TransCanada Pipelines Ltd. has a proposal under the Northern Pipeline Act.
  • The Denali Project is advancing a proposal that would be regulated under the traditional National Energy Board process.

Proposed Alaska Highway Pipeline Route

Status

In 2001, the North Slope Producers (BP, ConocoPhillips and ExxonMobil) completed a US $125 million feasibility study. Since that time, there has been significant progress:

  • In 2008 TransCanada Alaska received a license from the State of Alaska allowing it to access up to $500M in state assistance to offset the estimated $1B cost of applying for US regulatory approval to build and operate the AHPP. As a condition of the licence, TransCanada will hold an open season in 2010.
  • British Petroleum and ConocoPhillips have created a joint venture pipeline company called ‘The Denali Project’ which has filed a competing application with the US Federal Energy Regulatory Commission (‘FERC’) and they have stated their intent to file an application with the National Energy Board in Canada at a later date.  Denali will also conduct an open season in 2010.
  • The period leading up to the open seasons is the most important timeframe in the AHPP process because this is when the proponents will be defining the project and working out the tariffs.  As such, it’s the window in which YG must quantify/prioritise its interests and put in place measures to achieve them – noting that the proponents will spend only so much to cross Yukon or any other jurisdiction.
  • An 'open season' is a limited window created by a pipeline company to identify gas producers and shippers interested in seeking carrier capacity on the line if built – and willing to commit their product at an economically feasible carrier price.

Earlier key US legislation (signed off by President Bush in October 2004) provides the following:

  • An accelerated rate of depreciation on the pipeline. 
  • A tax credit for a gas conditioning plant on the North Slope. 
  • Loan guarantees of $18 billion for the construction of a pipeline. 
  • Expedited regulatory review in the U.S. 
  • Bans the proposed 'Over-the-Top' route.

The Yukon government is continuing its preparation in advance of construction.

Benefits

The potential benefits to the Yukon of the AHPP are many.

  • The pipeline would help us to ensure our gas reserves are not stranded. 
    • The Yukon has eight sedimentary basins, and adding Yukon gas to the pipeline would stimulate economic development in the territory.
  • Yukon access to natural gas from the pipeline. 
    • Supplying natural gas energy to residential, commercial and industrial sectors in the Yukon will also advance northern development.

Other benefits include:

  • Employment 
    • Occupations in particular demand will include those in the construction, transportation equipment, fabrication, assembly, machining, sales and service, clerical, natural sciences and engineering and managerial areas. 
    • Jobs in natural gas exploration and development with companies involved in developing other projects. 
    • Over the longer term, employment in the Yukon would increase by between 1,000 and 2,000 jobs per year. (2002 Informetrica study  536 KB)
  • Education and training 
    • Because skilled labour will be required for the project, opportunities will be available for education and training in project-related occupations.
  • Business opportunities 
    • Construction, transportation, manufacturing, communication and utilities, business services, accommodation and food, and other services.
  • Increased government revenue 
    • Yukon's GDP, or economic output, would increase by an average of 30% over the construction and operation period.

Challenges

While the benefits to the Yukon are many, challenges also remain.

  • Regulatory certainty in Canada. 
    • The Government of Yukon is working with industry, First Nations and the federal Government to address this issue.
  • Capacity for Yukon preparedness. 
    • Yukon is working to ensure all parties, including First Nations, have the resources necessary to actively participate in northern pipeline development.

Information

For further information on the economic impact of the construction and operation of the proposed Alaska Highway Pipeline Project on the Yukon, provincial and Canadian economies, please refer to The Alaska Highway Pipeline Project: Economic Effects on the Yukon and Canada - April 2002 (Informetrica Limited) report  536 KB.