Yukon Pacific loses right of way for trans-Alaska gas line

Yukon Pacific Corp. was pushing the project, which called for the gas to be super-chilled into a liquid after arriving in Valdez, in preparation to being shipped on special tankers, most likely to Asia. Yukon obtained a variety of permits for the project including, in 1988, a conditional right of way for that line from the state.

But now Tom Irwin, state natural resources commissioner, has denied Yukon's request to renew that right of way, citing the company's lack of progress on project plans or programs required in the conditional lease.

Irwin said the proposed pipeline route "is not delineated sufficiently to determine if the project will unreasonably conflict with existing uses of the land involving a superior public interest."

Yukon Pacific Corp. was founded in the 1980s after the original proposal to take North Slope natural gas to market through Canada collapsed due to rising costs and dropping Lower 48 natural gas prices.

Yukon became a subsidiary of CSX Corp., a big Lower 48 transportation company, and in the 1990s it held permits for its project and authorizations from the U.S. president and the U.S. Department of Energy to market Alaska-produced liquefied natural gas to Asian buyers.

Jeff Lowenfels, then president of Yukon, said in 1998 that the state right of way was the only one of the company's permits that needed to be renewed.

Still, prices remained low and the project remained a dream.

In 2001 Yukon was downsized, with Lowenfels going to part-time consulting status and then leaving the project entirely. The following year the company downsized the project, going from a 36-inch pipeline to a 30-inch line, and said it would look to either the natural gas owners, pipeline companies or the state development authority to build the project.

But in 2003 natural gas prices were rising sharply, and with it interest in a North Slope gas pipeline project, particularly one that would be routed through Canada toward the Midwest.

This summer two projects were launched to test the financial viability of a pipeline project into Canada. One is backed by Conoco Phillips and BP, both major oil and gas producers on the Slope, and the other a state-sanctioned proposal of TransCanada Corp., a big Canadian pipeline company.