by Jon Harding and Claudia Cattaneo

19-04-07

Russia revived a plan to transport oil, natural gas and electricity to the United States via a tunnel under the Bering Strait from Siberia to Alaska, a colossal project that was quickly panned for its questionable economics and business logic and its impact on US energy security. The proposal, which would include a rail system ending at tiny Fort Nelson, BC, would also threaten Canada's unique energy relationship with the United States, energy experts and economists said.
"It's in the realm of George W. Bush's comment, 'Let's send someone to Mars', " said energy commentator Michael Lynch, president of Amherst, Massachusetts-based Strategic Energy & Economic Research. "It's a nice idea, but after they look at the costs and the benefits, it's going to be a long time in the future," Mr Lynch said.

Viktor Razbegin, deputy head of industrial research at the Russian Economy Ministry, told that state organizations in partnership with private companies would build and manage the energy corridor, known as TKM-World Link. The 6,000-km corridor from Siberia into the United States includes a 100- km tunnel under the Bering Strait.
It will be more than twice as long as the underwater section of the Channel Tunnel between the UK and France. The undersea tunnel would contain a high-speed railway, highway and pipelines, as well as power and fibre optic cables. According to report, proponents will meet with Canadian and US government officials for a formal presentation.

A supporter of the project is former Alaskan governor Walter Joseph Hickel, who is co-chairing a conference on the venture in Moscow. Ralph Klein, former premier of Alberta, has recently discussed energy initiatives with the Russians, according to a spokesman for the Russian embassy.
Brooke Grantham, spokesman for Canada's department of foreign affairs and international trade, said Ottawa is not aware of the project.
"We are not aware of any Canadian representatives who have been contacted,"he said, adding the idea was not mentioned as recently as late March during a Canada-Russia business summit in Ottawa.

Russian embassy spokesman Sergei Qhudiaqov confirmed the plan is being considered, but was unaware of any meetings in Canada.
Greg Stringham, vice-president of the Canadian Association of Petroleum Producers, said similar plans have been floated by the Russians in the past, but went nowhere. The first came as far back as 1905, when Tsar Nicholas II, Russia's last emperor, approved a plan for a tunnel under the Bering Strait, 38 years after his grandfather sold Alaska to the United States for $ 7.2-mm. The First World War ended the project. Mr Stringham said the latest ruminations about an oil pipeline were made as recently as six years ago.
"I know it has been extremely difficult to justify it economically in the past," he said.

Critics questioned the plan's practicality, considering that both the Alaska Highway and Mackenzie Valley natural gas pipelines from the Arctic to Alberta have struggled to get off the ground after three decades of planning, said energy economist Vince Lauerman, president of Geopolitics Central, a research firm in Calgary. Mr Lynch said another glaring weakness is that it doesn't make sense to have a connection between two Arctic regions with sparse populations and economies.
"You're sort of going from one fairly underdeveloped, underpopulated place to another that's somewhat underdeveloped and underpopulated and doing it an extremely expensive way," he said.

Judith Dwarkin, chief economist at Ross Smith Energy Group in Calgary, said the project could face significant environmental issues with burrowing under the Bering Strait. In addition, it would cross a major geological fault line.
"Given current attitudes, the US may perceive 'security' issues from relying on Russian energy supplies," she said.
Considering the project's questionable business sense, some critics wondered if Russia has ulterior motives in proposing such a grandiose plan. In Europe, there is heightened anxiety over its dependence on Russian natural gas, which many fear could be used to further the Kremlin's international political agenda.