AJM Petroleum Consultants Comments on Alaskan Pipeline's Long-Term Impact

The gas pipeline license recently awarded to TransCanada Corporation by Alaskan State Governor Sarah Palin could have a negative long-term impact on Canada's natural gas industry, says AJM Petroleum Consultants, an evaluation firm that specializes in the economic evaluation of oil and gas reserves.

"While construction of the Alaskan pipeline will likely have a positive impact on Canada's economy in the shorter term, once it is up and running it will make Alaska into a direct and effective competitor for Alberta and BC's natural gas industry," said Ralph Glass, VP Operations of AJM Petroleum Consultants. "Looking ahead, we have to consider the fact that the Alaskan pipeline will increase natural gas volumes into the US market. This could keep natural gas prices low in future years - low natural gas prices will have a significant impact on future drilling here in Canada."

Recent studies have indicated that Western Canadian gas plays require gas prices to be $7 - $8/Mcf to be viable, with even higher prices required in Alberta's deeper Foothills areas. The increase in gas production from the US shale gas plays has raised natural gas storage levels in the US, depressing today's gas prices to $6/Mcf. While Glass anticipates the additional quantities of gas expected from Alaska could continue to keep gas prices low, he doesn't feel the Alaskan pipeline needs to signify doom and gloom for Canada's natural gas industry.

"We need to reduce our dependency on the US as the primary market for our natural gas and now is the time to begin planning, rather than waiting for the impacts of the pipeline to force us into action," says Glass. "In light of the changes that will be inevitable with the completion of the Alaskan pipeline, this is the ideal time to begin aggressively pursuing an LNG and oil export terminal on BC's coast so Western Canadian hydrocarbons can gain access to world markets."