Land-locked Alberta mulls oil pipeline to Arctic port

Fri Apr 26, 2013 2:00pm EDT
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* Price for Alberta oil has dropped on supply problems

* Arctic pipeline would face some serious challenges

By David Ljunggren

OTTAWA, April 26 (Reuters) - Canada's oil-producing province of Alberta, trying to deal with a lack of pipeline capacity to the Pacific Coast and the United States, is mulling the idea of building a line north to an Arctic port, the province's energy minister said on Friday.

Ken Hughes said he has been talking to the government of Canada's Northwest Territories, which lie directly north of Alberta, about a pipeline to a port such as Inuvik or Tuktoyaktuk on the Beaufort Sea, a section of the Arctic Ocean.

The government of landlocked Alberta has hired a Calgary-based consultant to produce a feasibility study on such a pipeline. It expects the study to be delivered by the end of the year.

Delayed pipeline projects and an excess of supply mean Alberta's heavy crude often has been selling at a deep discount to world prices, although the price gap has narrowed recently.

"We need access to tidewater, to the ocean, in order to secure world prices ... any rational economic option will be explored, and this is part of our oil market diversification strategy," Hughes told Reuters in a phone interview.

Another possibility might be to ship oil by rail to the Valdez oil terminal in Alaska, he said.   Continued...