Pipeline Construction Projects

  Hybrid air vehicles could have a valuable role in many construction projects, but pipeline projects are particularly interesting. The construction is spread out over thousands of miles and an immense volume of pipe and other materials has to be transported through areas with minimal infrastructure. There are at least four major pipeline projects planned for Canada and the north as of December 2005. They include:
     � Mackenzie Valley Pipeline (gas) � $7 billion
     � Alaska Pipeline (gas) - $13 billion
     � Gateway Pipeline (oil) � $2.5 billion
     � Keystone Pipeline (oil) - $2.0 billion

Logistics Challenges Relating to Northern Pipeline Construction

  Several transportation related challenges face the developers of northern pipelines for which hybrid air vehicle are ideally suited:

  Soft and sensitive ground conditions limit construction to a short winter season where conditions of cold and darkness are at their harshest. This creates a massive logistics challenge because the entire requirements for pipe, construction material, camps, equipment and personnel must be mustered to the northern sites during the off-season so that everything is available for the short construction season.

     � There is significant stress placed on the existing infrastructure of roads, rail and barges. Given the high peaking demands of the construction season, planners must decide whether to upgrade existing infrastructure that will then be overbuilt for ongoing requirements, or risk congestion and the related costs.
     � Project risk and cost is significantly different for northern projects because of the uncertainties of weather, local ground conditions and the distance that these construction sites are from their supply points. Unforeseen upsets can scuttle the construction schedule thus causing a delay of not a few months but a whole year. The interest costs and opportunity costs associated with these types of catastrophic delays compound the project risk and costs.
     � Redundancy in equipment and supplies is necessary to mitigate some of the project risk. However, having two items of a critical part or piece of equipment adds considerably to the risk.
     � Standby costs are inevitable. It doesn�t make sense to demobilize the equipment south during the off-season. However, the equipment owners must be given standby fees to compensate for the fact that their equipment must remain idle for up to eight months per year.
     � Northern drilling, which is essential to justifying the pipeline faces similar seasonality. The costs of drilling a single exploration well in the north can be as high as $25 million. Of this amount up to 30% of the costs relate to northern operations and would not be incurred in southern drilling.
     � People movement will also be a significant challenge. The Mackenzie pipeline is schedule to be constructed in two winter seasons. This will result in very large construction crews. These crews will be housed in large construction camps that will be built along the right-of-way. However, this means that on a daily basis these crews must be transported from the camp to the construction sites. At its furthest point between camps this will require a 2-hour trip. Again this adds to the costs and reduces the efficiency.

Mackenzie Valley Pipeline

  The Mackenzie Gas Project proposes to build a 1220-kilometre pipeline system along the Mackenzie Valley. It would link northern natural gas producing wells to southern markets. The main Mackenzie Valley Pipeline would connect to an existing natural gas pipeline system in northwestern Alberta. The natural gas exploration and development companies involved in the Mackenzie Gas Project have interests in three discovered natural gas fields in the Mackenzie Delta - Taglu, Parsons Lake and Niglintgak. Together, they can supply about 800 million cubic feet per day of natural gas over the life of the Project. Other companies exploring for natural gas in the North are also interested in using the pipeline. In total, as much as 1.2 billion cubic feet per day of natural gas could be available initially to move through the Mackenzie Valley Pipeline. Planning, building and operating the proposed $7 billion Mackenzie Gas Project will take cooperation among many different companies, communities, settlement regions, regulatory agencies and governments.



Alaska Pipeline

  This project is competing with the Mackenzie Valley project and is being lead by the Alaska Gas Producers. The Alaska Highway pipeline would begin at Prudhoe Bay, Alaska, parallel the oil pipeline to Fairbanks, and then follow the Alaska Highway through the Yukon and northeast B.C. and on into Alberta. The AHPP will carry gas to southern markets. Approximately 760 km, or 30% of the route, would be in the Yukon. The pipe itself would be 42-52 inches in diameter. Pipeline capacity would be 2.5-5.6 billion cubic feet/day. The construction and operation of the AHPP is expected to generate up to 375,000 person years. This project is estimated to cost $13 billion to construct and depends upon permits to drill in environmentally sensitive areas in Alaska.

Gateway Pipeline

  The Gateway Pipeline is being proposed by Enbridge Inc. and is envisioned to be a 30-inch, 400,000 barrel per day pipeline running from Edmonton to the west coast of British Columbia, where ships would take crude oil and petroleum products to refineries in California and the Far East. Pending regulatory approvals, construction could begin by 2008 and it would be operational by 2009/10. A regulatory application for the $2.5 billion, 1,160-kilometre (720-mile) crude oil pipeline would have to be made in 2006 to achieve a late 2009/2010 in-service date, which is when Enbridge's Western Canada crude oil supply forecast indicates that oil sands production will have increased to the level that access to a major new market will be beneficial to producers.

Keystone Pipeline

  TransCanada Corporation is proposing a US$1.7 billion oil pipeline project to transport approximately 400,000 barrels per day of heavy crude oil from Alberta to Illinois. Transporting oil from Hardisty, Alberta to markets at Wood River and Patoka, Illinois, the proposed Keystone Pipeline would be about 3,000 kilometres (1,870 miles) in length. In addition to new pipeline construction, it would require the conversion of 1,240 kilometres (770 miles) of one of the lines in TransCanada�s existing multi-line Alberta and Mainline natural gas pipeline systems in Alberta, Saskatchewan and Manitoba. TransCanada�s other existing pipelines will continue to transport Western Canada�s natural gas to markets in Canada and the United States.

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