B.C. THREATENS PIPE DELAY
DE JONG SPEAKS OUT:
LINKS ALASKA ROUTE APPROVAL TO END OF SOFTWOOD DISPUTE

John Greenwood Financial Post
Submitted by Scott Heyworth
Anchorage, AK
Mar. 4, 2005

VANCOUVER - Frustrated over the slow pace of efforts to end the bitter softwood trade dispute, the British Columbia Forests Minister is threatening to delay a proposed US$20-billion pipeline to carry Alaskan natural gas to the central United States.

Mike de Jong, who was in Washington this week to meet with U.S. politicians about the trade battle, said he warned a group of U.S. senators and congressmen that the future of the massive pipeline could hinge on Washington's attitude to softwood.

On a conference call to media, Mr. de Jong said the lumber issue "took a whole new relevance" when he pointed out "that the attitude in B.C. is such that it would be very difficult to acquire support for an expedited review process."

The project -- one of the biggest ever in North America -- would carry natural gas from reserves in Alaska to the lower 48 states, running for part of the way through British Columbia.

Permission to build the section would require an environmental assessment by the province.

"We can go slow or we can go fast," Mr. de Jong told the Financial Post yesterday. "Right now, based on U.S. behaviour, most British Columbians are telling me we should go very slow."

The Bush administration has made energy security a key objective, placing major importance on opening up Alaska's North Slope, which contains up to 200 trillion cubic feet of natural gas.

The Alaska government, which is also keen for development, is considering several applications for the construction of pipelines to bring the gas to market, with most of the focus on a route that would traverse the Yukon, British Columbia and Alberta.

The three leading producers in Alaska -- BP PLC, ExxonMobil Corp. and ConocoPhilips Co. -- are hoping to get the nod to build a 4.5-billion cubic foot a day pipeline that would take the gas to Chicago.

TransCanada Corp., the parent company of TransCanada Pipelines Ltd., has made a pitch for a similar project.

Other players expected to join the race include Enbridge Inc.

Frank Murkowski, the Governor of Alaska, has said he wants to see gas flowing within the next 10 years, meaning that getting speedy reviews will be of key importance for proponents.

Becky Hultburg, Mr. Murkowski's press secretary, said yesterday Mr. de Jong "is taking a narrow view" of a project that could provide benefits including jobs for people in the province.

Ms. Hultburg said linking the pipeline to lumber is "counterproductive."

"The trade dispute between Canada and the U.S. is not something we are focused on," she said. "We are focused on moving the gas pipeline forward because it would provide tremendous benefits to the United States as well as Canada."

Calls to Jim Peterson, the federal Trade Minister, were not returned.

Mr. de Jong's comments come amid growing frustration among British Columbians over U.S. tactics in the lumber dispute, especially recent threats by prominent U.S. politicians not to return the more than $4-billion in U.S. duties paid by Canadian producers.

Despite a string of decisions by NAFTA and WTO panels that found the softwood duties were illegal, the U.S. government has refused to lift them.

On Wednesday, Frank McKenna, Canada's new ambassador to Washington, blamed the federal government's refusal to take part in the U.S. missile defense program partly on trade disputes over softwood and cattle.

Mr. McKenna suggested that if Washington dropped its bullying tactics and agreed to settle the disputes, Canada might be more willing to sign on to missile defence.

Canadian politicians have up to now avoided linking softwood and cattle to issues like energy security, but the recent comments mark a change in strategy.