BP, ConocoPhillips plan to build gas pipeline greeted with enthusiasm, questions
Originally published Tuesday, April 8, 2008 at 2:23 p.m.
Updated Tuesday, April 8, 2008 at 2:38 p.m.
Digg
del.icio.us
Facebook
Mixx
Reddit
Stumble It!Photo Gallery
Plan for Alaska gas line
BP and ConocoPhillips announced plans Tuesday to jointly develop a multibillion-dollar pipeline to move North Slope natural gas to U.S. markets.
BP and ConocoPhillips announced in Anchorage this morning that they have combined resources to begin building a gas pipeline in Alaska and will put $600 million toward the effort to reach the first benchmark, which they say they will meet in less than two years.
Dubbed “Denali The Alaska Gas Pipeline,” the project would move approximately 4 billion cubic feet of natural gas per day to markets, according to a joint press release from the companies.
The companies said the project will be the largest private-sector construction project ever built in North America.
“The project combines the financial strength, arctic experience and technical resources of two of the most capable and experienced companies in the world,” the release stated.
The pipeline would follow the route of the trans-Alaska oil pipeline from the North Slope south to the Alaska Highway, then east along the highway into Canada’s Yukon. From there it would head into British Columbia and terminate at a hub in Alberta, from where it would be distributed to markets. About 700 miles of the pipeline’s total length would be in Alaska.
The project would cost upward of $30 billion, and the gas it delivers would account for about 6 to 8 percent of the nation’s daily gas consumption, company executives said.
“This project is vital for North American energy consumers and for the future of the Alaska oil and gas industry,” said Tony Hayward, BP Group’s chief executive. “It will allow us to keep our North Slope fields in production for another 50 years. The Alaska gas pipeline will be an historic project and we are pleased to be working with ConocoPhillips to move it forward.”
Gov. Sarah Palin, at a news conference later in the morning, said the announcement sounded great but cautioned that “the devil is in the details” and said she had no intention of changing course with the Alaska Gasline Inducement Act and the TransCanada pipeline proposal currently under review.
“We’ll stay with that schedule,” she said, referring to a May 19 announcement on that pipeline proposal.
Palin has said the Alaska Legislature will be called into special session in June to discuss the gas pipeline, with the topic generally believed to be a request that lawmakers approve an exclusive license to TransCanada to build the mammoth pipeline.
Palin, at her news conference, read from a copy of the Alaska Constitution dictating that the state develop its natural resources by making them available “for maximum use consistent with the public interest” and said that was still the bottom line for her administration.
“Whichever project gets us there first — in Alaska’s best interest — is what we’ll be supporting,” she said.
Palin, who has often been publicly at odds with the state’s big oil companies, credited the AGIA process with spurring the new proposal but did not take credit herself. It was lawmakers who succeeded in changing the playing field since the effort made by her predecessor, Gov. Frank Murkowski.
“They did not cave last time to demands of an administration and the producers,” she said.
Palin added that she planned to meet with officials from the two companies this afternoon.
Reaction from Washington was supportive of the BP and ConocoPhillips effort.
U.S. Rep. Don Young said today he would work closely with federal regulators to make sure a $30 billion natural gas pipeline project by ConocoPhillips and BP progressed quickly.
“I’m very excited about it,” Young said. “We finally have producers who have control of the gas to go to the Federal Energy Regulatory Commission.”
Young said he and Sen. Ted Stevens would work closely with federal agencies to obtain the necessary permits for the project.
“We’ll be working with FERC to try and jawbone this thing to make sure it gets done,” Young said. “FERC has a habit of dragging its feet. It’s a bureaucracy and it doesn’t see the rush. I’m saying there is a rush.”
Young said he believed the companies would advance the project despite the lack of a fiscal agreement with the state.
“I think they recognize the value of the gas,” Young said. “I think they are going to go forward regardless of what happens with fiscal certainty.”
Drue Pearce, federal coordinator of the Alaska pipeline project, said the government will “look forward to working with them and any other potential federal applicant.”
Young said he thought ConocoPhillips and BP had a better chance of getting their project approved by federal regulators than did TransCanada.
“I’m just happy that someone finally stepped up to the plate,” he said.
Tony Palmer, the top TransCanada executive working on the gas line, said his company was interested in aligning the interests of all three major producers with those of TransCanada and the state as the quickest way to realize the project.
“We’ve sought alignment for years and will continue to do so,” Palmer said. “I do think it is significant that two North Slope producers are prepared to advance this project.”
BP and ConocoPhillips said they would welcome other equity partners, including pipeline companies, in their project.
Exxon Mobil, the largest gas owner on the North Slope, is not yet part of the project.
“We do see other players coming into this as we move forward and Exxon is one of those companies we’d like to see join,” said Jim Bowles, president of ConocoPhillips Alaska.
Margaret Ross, a spokeswoman for Exxon, said BP and Conoco approached Exxon with the proposal only a couple of days before Tuesday’s announcement. Exxon remains committed to developing its North Slope gas reserves but must first determine whether the proposal is economically feasible.
“An Alaska gas pipeline project has the potential to increase Exxon Mobil’s worldwide gas production by 10 percent and add over 1 billion oil-equivalent barrels of proved reserves -- nearly enough to replace a full year of our worldwide production,” Ross said. “Given the significant value to our company, we are keen to be part of a project that commercializes the gas.”
Young said Exxon is more focused on getting its foreign supplies of liquefied natural gas into the U.S. market than on tapping its North Slope holdings.
“Exxon has never been a real supporter of the gas line,” Young said. “They have other fish in the deep fryer right now.”
The North Slope holds 35 trillion cubic feet of proven gas reserves. The three majors combined hold the rights to 90 percent of North Slope reserves.
Young said the state should continue to work on a smaller pipeline to send gas from the North Slope to the communities of Fairbanks, Anchorage and Kenai.
“Our biggest challenge in the state is affordable energy,” Young said.
The bullet line could help meet in-state demand without detracting from the bigger gas pipeline, Young said.
Community Discussion
Newsminer.com doesn't necessarily condone the comments here, nor does it review every post. Read our full user's agreement.
GOOOOOOOOOOOO Sarah! Great job Gov.!
Finally they're getting off their duffs. Kick their butts people.
This Gas line is 30 years over due, both ecologically as well as far as economics go. Remember? Didn't the ecological reports warn us that that gas had to be removed as soon as the oil started producing it? And who dragged their feet on building the Gas Line........NOT ALASKA!
The scope of this proposal seems to anticipate shipping gas found all the way across the Arctic Ocean too..
http://www.arcticoag.com/
Well, I hope CP&BP keep an open mind and try really really hard to keep promoting new technologies for greater efficiencies.
Properly managed this could be a good thing...
...but only if the armed madhouse of lunatics currently infecting WA-DC are expunged from power and permanently exiled to live penniless in Paraguay. There always seems to be mission-creep and changing rules and additudes after a megaproject gets built.
I remain skeptical.
I fully expect the need for Alaskans to invest in plastic-pipe extrusion machinery will not be diminished by this development.
This thing won't be delivering gas to Fairbanks for another several years...
...I'm still promoting a speedy little 3" LPG-gasline, maybe it will go from Gubik to McGrath instead.
...flash/rumble
Young said he and Sen. Ted Stevens would work closely with federal agencies to obtain the necessary permits for the project.......hmmmmmmm
AGIA may have just become the best bluff in Alaska's history, or herstory!
Thank you, Sarah!
alaska hire first- its getting really old losing out on work to somebody from a different state!!! yes local 375 this is aimed at you!!!!!!
Sometimes you have to run the other direction to the top of the next mountain behind you to get the big picture....
http://www.tarsandswatch.org/
...sometimes megaprojects make a huge mess.
I hope this doesn't become "The WPPSS of the North".
Alberta tarsands is better off using Pringles klystron.
The devil is in the details...
I am all for a gas pipeline, but we need to REALLY watch these snakes in the grass. Who has been playing hardball? Who has been holding us down over the oil barrel? Who has been posting record profits at our expense? Who has been charging Alaskan families extreme prices for heating oil produced here in the state? What makes you think that they will all of a sudden be lovey-dovey? They may just get the project tied up and sit on it. Man I love oil companies!
Watch em Gov.........
Why doesn't the state of Alaska become an equity partner in the pipeline? Each resident of the state could become a shareholder and receive a dividend on the profits of the line.
I think I'll wait to celebrate. But hey, it's a step toward progress. I agree completely with the last 2 comments.
Before "geo"...
Palin said it best in the conference when she said that THIS is PROOF that competition works. Without transcanada, BP&CP would be sitting on their laurels right now. EVEN IF AGIA turns to dust and transcanada doesn't end up building a pipeline, it was STILL the right thing to do!!
Suddenly, for BP&CP, the cost of the pipeline went from "TENS OF BILLIONS OF DOLLARS!! WE NEED TAX INCENTIVES!!!!" to an OPPORTUNITY cost of "We could miss out on BILLIONS of dollars of EASY Profit, AND transcanada will control access to OUR gas, AND they will have eliminated our ONLY avenue of building a pipeline that could force them to lower costs in their massive gasline network!!!"
Just changes the way people think when it occurs to them they might lose something they thought was theirs.
Fantastic work, Sarah! Now see AGIA through to make sure these guys take it seriously!
I think it deserves consideration, but not for another 30 years. Offshoots could be shot off to everywhere in Alaska. AGIA is the initiative. This proposal takes a pipe almost clear across state. If the numbers add up for Alaska Ok, if not then We should stick with Palins initiatives "our guns". She has brought us farther, in a shorter period of time than some of our so called backdoor heavy hitters, who are now scandal ridden.
If it means lawsuits over the issue for years, then I'll stick with Palin. And AGIA.
GEO, made the comment of why don't we become equity partners. Good Idea.
We need to set up state tax incentives to reward production so they will run the lines at full capacity instead of at half like they do today.
Does anyone else find it extremely odd that TransCanada had the only plan that the State (AGIA) was considering, and now BP&CP are now players in the game? Their plan did not meet the criteria for the project before; the deadline expired; and now it somehow passed? It really make me wonder who they are paying off!
este, not too be rude. but having been involved in the way the industries work. Corporation's will mine the low grade at low prices, and the High grade at premium prices but if you are employed by them. They will always tell you they are losing money. Period.
Seeing that oil is over $109 a barrel today; would hate to see the gasline built by BP and ConocoPhillips after seeing what we are paying for heating oil in Fairbanks. We have seen these same two oil companies make billions off of OUR oil and do not trust them having anything to do with having control over the gasline. What? another 40 years of raping the State of our resources with no relief of lower heating costs?
Palin, at her news conference, read from a copy of the Alaska Constitution dictating that the state develop its natural resources by making them available “for maximum use consistent with the public interest" but know many of us Alaskans would probably agree that a gasline through Fairbanks down to Anchorage, would be Alaska's best interest by allowing us to afford to continue living here.
AGIA - R.I.P?
http://alaska-gas-pipeline.blogspot.com/...
Post a comment
Commenting requires registration.