Transcript Arctic Resources Company Northern Gas Pipeline Project Forrest E. Hoglund

Arctic Resources Company
Northern Gas Pipeline Project
Forrest E. Hoglund
Chairman & Chief Executive Officer
ARC
Arctic Resources Company
Arctic Gas Pipeline
1. Most important energy project for North America – 44Tcf
2. Two competing pipeline proposals – just like 1975
3. Politics make Florida in November look like kids play
ARC
Arctic Resources Company
Comparison of Options
1. Two Pipeline Option – ANGTS through Alaska plus Mackenzie
Valley Pipeline
2. “Over the Top Route” – Prudhoe Bay to Northern Canada and
up the Mackenzie Valley to Alberta – One Pipeline
ARC
Arctic Resources Company
ANGTS & Mackenzie Delta Pipeline Routes
Zama
Boundary Lake
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Arctic Resources Company
ARC’s Northern Gas Pipeline Route
ARC
Arctic Resources Company
Economic Comparison
2 – Line Approach
ANGTS
Mackenzie
Over the Top
Total
Northern Route
Capital Construction Cost ($ Billion):
10.0
+
3.5
=
13.5
7.8
Capacity (after ramp up) (BCFD):
4.0
+
1.2
=
5.2
5.2
1,350
=
3,490
1,700
0
=
900
0
Length to Edmonton, AB (± Miles):
Mountains to Cross (± Miles):
Wellhead Netback (Mcf):
(at $2.50/Mcf into Chicago)
ARC
Arctic Resources Company
2,140 +
900
$0 to $0.20
+
$0 to $0.10
$0.75 to $0.90
Politics
Alaska Aggressively Supports 2 Pipeline Approach
•
Jobs, gas for Alaska, state pride
•
Passed State Law prohibiting the “Over the Top” pipeline
route
•
Passed ban on “Over the Top” in House Energy Bill
•
May try same effort in Senate
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Arctic Resources Company
Problems with Alaskan Approach
•
ANGTS route uneconomic today w/o large subsidies
•
Result will be to make reserves low to no value and may cause
stalemate like in 1975
•
State makes $100 mm plus per year more with “Over the Top”
route
•
Two pipeline approach causes conflict between U.S. and
Canada
•
Alaska actions are a direct challenge to Canada, ANGTS can
lower value of Canadian reserves
ARC
Arctic Resources Company
Canadian Implications
•
Canada strongly interested in an economic route – Over the Top
•
Alaskan moves seen as threatening
•
Canada will have major say where pipeline goes – NEB
hearings
•
Canada and U.S. interests are clearly aligned – one economic
project
ARC
Arctic Resources Company
Arctic Resources Approach
Lowest Tariff – Fewest Obstacles
1. Best route – Best economics
2. Significant Aboriginal involvement
− 100% Ownership
− ARC is Program Manager
3. 100% Debt Financing
4. Consortium runs project
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Arctic Resources Company
ARC Approach
1. Obtain Aboriginal support
2. Canadian Aboriginal and Alaskan Municipal Entity files project
with respective Canadian and U.S. regulatory authorities
3. U.S. and Canada come together on what the best project is
4. Major companies finally back most economic route
5. Consortium fully formed to carry project forward
ARC
Arctic Resources Company