Sarah Palin's pipeline

MADELAINE DROHAN

GLOBE AND MAIL UPDATE

SEPTEMBER 12, 2008 AT 6:00 AM EDT

“I fought to bring about the largest private-sector infrastructure project in North American history and when that deal was struck, we began a nearly forty billion dollar natural gas pipeline to help lead America to energy independence.”

-Sarah Palin in an address to Republican delegates, Sept. 3, 2008

Anyone listening to Alaska Governor Sarah Palin at the recent U.S. Republican convention would believe that TransCanada workers are poised, shovels at the ready, to start construction of a 2,760-kilometre pipeline bringing natural gas from Alaska through Canada to the lower 48 states. They would be wrong.

The companies who have won the licence from Alaska to build the pipeline, TransCanada Alaska and Foothills Pipe Lines (both wholly ownedsubsidiaries of TransCanada Corp.), must still cross numerous hurdles before actual construction can even be contemplated.

U.S. analysis of the deal, including articles in the Washington Post and New York Times, tends to focus on potential American obstacles, ignoring the fact that 1,550 kilometres of the pipeline would run through Canada. The assumption is that if U.S. conditions are met, Canada will fall in line.  It's true that the project would fail if the major oil companies went ahead with a rival pipeline, or if the U.S. Federal Energy Regulatory Commission didnot issue the necessary certificate. However, it is equally true that unless Canadian conditions are also met, Alaskan natural gas will remain stranded inAlaska.

None of this is to say that TransCanada, which already operates some 59,000 kilometres of pipeline, will not sail over all the hurdles in its path and open the valves as planned in September, 2018. Still, it's worth looking at where things could go wrong.

The company is counting on using the Northern Pipeline Act, federal legislation that was passed 30 years ago when a similar pipeline was envisaged, as away to fast track regulatory approvals for the project in Canada. That act set up the Northern Pipeline Agency, a one-stop shop for all the federal approvals the pipeline required. That agency is currently mothballed, with a skeleton staff of two.

In correspondence with the government of Alaska earlier this year (which can be accessed at the governor's website), TransCanada said that parliament “made irrevocable judgments and decisions” with respect to the Alaska pipeline when it passed that legislation in 1978, including that it was in the public interest and would have acceptable social and environmental impacts.

While TransCanada concedes it would have to update the social and environmental assessments of the project, it wants to do so under the Northern Pipeline Act and not through the Canadian Environmental Assessment Act of 1992 or similar Yukon legislation passed in 2003.

It may well be that the company's view will prevail. However, there is potential for someone to say that a 30-year-old act should not be used in its current form and requires updating, or that the federal environmental assessment act be used. Very few, if any, decisions that parliament makes can be considered irrevocable. What one government has done can be undone by the next.

Another potential hurdle is ensuring that all the affected aboriginal communities are onboard - the pipeline would cut across the southern Yukon, northern British Columbia, and northern Alberta. In recent years, aboriginal consent has become a crucial element in major natural resource projects. TransCanadasays it has been consulting with the communities where the pipeline route has been determined, but it's not yet known whether those consultations will have smoothed the way.

There is also the matter of acquiring legal access to all the land that the pipeline will traverse. The company has arranged this for almost all of the route through Canada, but there are missing chunks in B.C. and Alberta, on both privately owned and Crown land. One private landowner refusing to sell would not necessarily scupper the entire deal, but would result in delays.

And finally there is the question of whether the workers, equipment and material would be available when they are needed and at a price that would keep the Alaska pipeline economical. The Mackenzie Valley pipeline project, in which TransCanada has a minor interest, is also heading toward construction, although whether it will get there remains uncertain. TransCanada believes that the Mackenzie valley project will be nearing completion in 2014, roundabout the time that construction should start on the Alaska pipeline. This would be perfect timing as workers and equipment could shift to the Alaskaproject.

But given that both pipelines have experienced 30 years of delays, it is not too much of a stretch to imagine that construction on the first would still be ongoing when the second is due to start. That would lead to competition for workers, equipment and materials, forcing the price of all three up, perhaps to the point where the project no longer made economic sense.

The pipeline Ms. Palin bragged about may never happen. The beauty of this from her point of view as a politician on the campaign trail in 2008 is that it could be years before anyone knows for sure.