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Section II – Analysis of Program Activities by Strategic Outcome

Strategic Outcome

Facilitate the planning and construction of the Canadian portion of the Alaska Highway Natural Gas Pipeline Project while maximizing social and economic benefits and minimizing adverse social and environmental effects.

Program Activity: by Strategic Outcome

Program Activity: Regulate the planning and construction of the Canadian portion of the Alaska Highway Gas Pipeline Project.  This program activity is aligned with the Government of Canada’s Strong Economic Growth outcome.

2009-10 Financial Resources ($ thousands)			2009-10 Human Resources (FTEs)
Planned Spending	Total Authorities	Actual Spending	Planned	Actual	Difference
264.2	660.1	609.6	2	4	2

Expected Results	Performance Indicators	Performance Status	Performance Summary
In concert with other federal government departments, the NPA will develop a regulatory framework which accommodates modern environmental practices, takes into account the rights of First Nations communities, and considers the interests of provincial-territorial governments, so as to be prepared to effectively regulate and to facilitate the planning and the construction of the Foothills pipeline.  The NPA’s activities are dictated by the timing and pace of the planning and construction of the pipeline.	Regulate the planning and construction of the Canadian portion of the Alaska Pipeline Project	Met all – no construction took place during the 2009-10 fiscal year.	The NPA responded to requests from  Foothills, First Nations Yukon Government, United States and others.
	Effectively respond to any regulatory filings by Foothills and make certain that the Act is properly administered.	Met all – the NPA continued to administer the Act. There were no formal regulatory filings requiring response.	The NPA oversaw administration of the Act and associated agreements.
	Identify possible approaches for a modern environmental, socio-economic and technical review of the project.	Mostly met - the Agency has conducted a legal review, and has developed some possible approaches to updating environmental and socio-economic information, and reviewing required project filings.	The NPA has made progress in defining options for further consideration.
	Refine plans and state of readiness through staffing to respond and to enhance its engagement with other participants that would be involved in the planning and the construction of this phase of pipeline development.	Met all – the NPA hired a full-time Assistant Commissioner, Program Manager, Researcher and Administrative Assistant.  It made inter-agency arrangements for policy, technical and legal support.	The NPA now has a core team of full and part-time staff.

Benefits for Canadians

An Alaska Highway natural gas pipeline would be the largest private sector infrastructure investment in North American history. Such a project would make considerable contributions towards Canada’s strategic outcome of Strong Economic Growth.

Total project costs are estimated at $31–42 billion, which includes the gas plant facility at Prudhoe Bay, Alaska, as well as the pipeline through Alaska, the Yukon and northeast British Columbia. The Canadian pipeline portion of the project is estimated at $15 billion.

Current project timing would see Foothills make major regulatory filings in mid-2012. Prior to this, the NPA anticipates that a process for updating environmental and socio-economic data and information will occur. Full regulatory approvals are expected in 2014, with pre-construction activities taking two years, and then construction commencing in 2016.  First natural gas flows are expected in 2020.

Natural gas from Alaska will contain significant amounts of ethane (in addition to methane, the principle hydrocarbon in natural gas). Ethane is the principle feedstock for the Alberta petrochemical industry, and the Alaska Pipeline Project would make a major new source of ethane commercially available.

In addition, the Alaska gas volumes of 4–5 billion cubic feet (BCF) per day are significant relative to the current Canadian natural gas production of 16.5 BCF per day. Canadian production of conventional natural gas is declining, leaving surplus capacity on Canadian natural gas transmission infrastructure. Alaska gas has the potential to help re-fill existing Canadian pipelines, which would reduce tolls for existing users.

In addition to the macroeconomic benefits associated with an Alaska Highway pipeline, there would also be significant regional economic benefits including property taxes and the potential for developing natural gas resources in the Yukon.

Performance Analysis

In working toward realization of its strategic outcome, the Agency’s principal task for the 2009-10 fiscal year was to oversee the administration of the Northern Pipeline Act and continue preparing for regulatory filings by Foothills. With the renewed interest in the commercialization of Alaska gas the Agency was called on to provide information including an examination of the commitments of the Government of Canada that are embodied in the Act and changes to other legislation that have occurred since the pipeline was certificated.

The agreements that are currently in place with NRCan and other government departments continued to facilitate efficiencies in the administration of the Act. An administrative agreement exists between the Yukon Territory Government and the Agency to facilitate the administration of an easement agreement related to land access rights granted to Foothills for the pipeline. The Agency collected the annual fee of $30,400 for the Yukon easement from Foothills and redistributed a portion to the Yukon Territory Government. These transactions are excluded from the calculations of recoverable costs mentioned in Section III on Financial Performance.

There are no specific RPP commitments or parliamentary committee recommendations to be implemented.

Lessons Learned

In the fiscal 2009-10 period, most Northern Pipeline Agency activity was planning and administrative in nature. Therefore, there are no lessons learned to report at this time.

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