Work to begin immediately on new joint pipeline effort to bring Alaska gas to market
April 08, 2008
BP and ConocoPhillips plan to spend $600 million to reach the first major project milestone, an open season, commencing before yearend 2010. Following a successful open season, a process during which the pipeline company seeks customers to make long-term firm transportation commitments to the project, the companies intend to obtain Federal Energy Regulatory Commission (FERC) and National Energy Board (NEB) certification and move forward with project construction. The FERC and NEB certificates are the critical permits that provide government authorization to construct a pipeline.
and Doug Suttles, President BP Exploration (Alaska) Inc.
Photo courtesy ConocoPhillips Alaska, Inc. & BP Exploration (Alaska) Inc.
"Our goal of bringing Alaska's North Slope gas to market is becoming a reality. Denali - The Alaska Gas Pipeline project will deliver natural gas to meet North America's growing energy needs," said Jim Mulva, ConocoPhillips chairman and chief executive officer. "ConocoPhillips is pleased to be working with BP on this project; our companies have a long history of successfully developing projects on Alaska's North Slope, in Canada, and around the world. The time is right to start moving this project forward."
The project consists of a gas treatment plant on Alaska's North Slope and a large-diameter pipeline that travels over 700 miles through Alaska, and then into Canada through the Yukon Territory and British Columbia to Alberta. Should it be required to transport gas from Alberta, the project will also include a large diameter pipeline from Alberta to the Lower 48 states. BP and ConocoPhillips will seek other equity partners, including pipeline companies, who can add value to the project and help manage the risks involved.
The companies already have assigned staff to the joint project team which will be ramping up over the coming months. A new project headquarters in Anchorage will be identified and a new company formed to manage the project. The project will provide jobs and business opportunities. ConocoPhillips' previously announced intent to conduct summer field work in Alaska will be rolled into the joint effort.
Alaska Governor Sarah Palin said, "We look forward to any progress they will be able to show us on this project. Their decision to proceed is further proof that competition does work," Governor Palin said. "However we are able to access our vast natural gas resources, the outcome can't help but serve the interests of Alaska and Alaskans."
Senator Lisa Murkowski also welcomed the news that Conoco Phillips and BP have joined together to form a new separate company to build the Alaska natural gas pipeline.
Senator Murkowski said that the companies' commitment to invest $600 million in the next two years on field work, surveying, engineering, environmental field work and finalizing financing for a gas line prior to applying for final key permits from the Federal Energy Regulatory Commission and the National Energy Board in Canada shows a new commitment by the producers to move forward with construction of a gas line.
"It is great news for Alaska that companies that control well more than 60 percent of the North Slope's natural gas are now committing themselves to move ahead to build a gas pipeline," said Senator Murkowski. "This should give utilities in the Lower 48 and suppliers worldwide some confidence in planning on Alaska's gas getting into America's market by about 2019, which is probably the most important ingredient in making sure that Alaska's gas is not replaced by an imported liquid natural gas."
"This announcement is great news for Alaska's economy," said Senator Murkowski. "Hundreds of millions of dollars will be spent over the next two and a half years on field studies, soil work, wildlife research, road and logistical planning and other work needed to win permits for actual construction of the gas line. This should encourage exploration companies to proceed with more confidence to look for the potential additional 150 trillion cubic feet of natural gas on the North Slope."
The Senator congratulated Alaska Governor Sarah Palin for helping to bring about this announcement from the companies. "By her tough stance over the past two years, she has brought the companies around to building a gas line now. It is unlikely this announcement would have come today, if not for a process like AGIA that has crystallized the outlook for development of Alaska's North Slope gas reserves," said the Senator.
Murkowski said the announcement that the gas producers are forming a separate consortium to build the line, and are planning to do substantial field work this summer is a great outcome for Alaska. She added that now the state has two separate entities working to build a project, ConocoPhillips and transmission pipeline company TransCanada. "Hopefully, before too long, TransCanada will be brought into this marriage, as I hope ExxonMobil also will decide to join in the not too distant future," she said.
She said she is confident that those talks will guarantee that 4 billion cubic feet of natural gas will reach the Lower 48 State markets as soon as next decade.
Murkowski noted that eventually the State will have to step forward and provide some financial certainty about the state's tax rates on natural gas, but said that since the Governor has always stated her willingness to discuss tax certainty on gas in the future, that she is confident that the fiscal issue should not prove a stumbling block to actual construction of a line.
'When you consider that a gas line ultimately will generate tens of thousands of direct and indirect jobs in the State and, by the minimum estimates, at least $50 billion and probably closer to $80 to $100 billion in Alaska State tax revenues, there is no question that for those who care about the economic future of Alaska, this is a great day indeed," Murkowski said in reaction to the project's announcement.
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