Exxon Says Arctic Gas Pipeline “Not Viable”

Exxon’s CEO, Rex Tillerson, has said that rising costs to build pipelines to exploit Arctic natural gas from Alaska and Canada could soon be uneconomic.

Tillerson said that the cost estimate to build a gas line from Canada’s Mackenzie Delta gas fields had more than doubled to about $15 billion. “At those costs, it’s not viable to build that pipeline.”Exxon is a lead player in the proposed Mackenzie pipeline. While Exxon hasn’t updated its estimate for the much larger Alaska gas pipeline, Tillerson said he expects soaring costs might have made that project too expensive as well.

Others disagree with Tillerson. Marty Rutherford, Alaska’s deputy natural resources commissioner, said Tillerson’s comments were not surprising. “They have been sort of making similar comments, maybe not as explicit, for some time now,” she said. “Given the gas prices and forecast, I’d say the project is still pretty deep in the money”.

That’s generally where Exxon likes to be.