BP, ConocoPhillips Team Up

Jim Bowles, ConocoPhillips's Alaska president, left, and Doug Suttles, BP Alaska president, answers questions about the mutlibillion-dollar deal.
Jim Bowles, ConocoPhillips's Alaska president, left, and Doug Suttles, BP Alaska president, answers questions about the mutlibillion-dollar deal. (By Al Grillo -- Associated Press)
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By Steve Quinn
Associated Press
Wednesday, April 9, 2008

JUNEAU, Alaska, April 8 -- Two of the world's largest energy companies announced plans Tuesday to jointly develop a multibillion-dollar pipeline to move North Slope natural gas to U.S. markets.

Britain's BP and ConocoPhillips of Houston said they plan to spend $600 million in the first phase of the project, over the next three years.

The plan, dubbed Denali -- The Alaska Gas Pipeline, is to deliver natural gas via a 2,000-mile pipeline from the energy-rich North Slope in Alaska to a pipeline hub in Alberta that has links to numerous other markets.

The project could also involve building a 1,500-mile pipeline to U.S. markets.

BP and ConocoPhillips said they have assigned staff to the project, which they said will be the largest private construction venture ever in North America.

The pipeline would eventually move about 4 billion cubic feet of natural gas per day, about 6 to 8 percent of daily U.S. consumption, the companies said.

No timeline was announced for construction, but the first phase involves field work this summer and securing long-term commitments from gas companies to send gas down the pipeline. Much of that commitment is likely to come from BP, ConocoPhillips and Exxon Mobil. The three companies hold leases to nearly 35 trillion cubic feet of North Slope gas.

Earlier this year, Gov. Sarah Palin (R) rejected a pipeline proposal by ConocoPhillips alone, opting to stick with a plan by TransCanada/Foothills Pipe Lines. That company's plan remains under review by state regulators.

ConocoPhillips submitted its plan to Palin's gas-line team in November, but it was outside the bid requirements of the Alaska Gasline Inducement Act, or AGIA.

The plan was billed as an alternative to AGIA, a law that called for bidders to guarantee progress toward construction of a pipeline. ConocoPhillips, the North Slope's largest oil producer, wanted to negotiate a long-term fiscal package covering taxes and royalties on natural gas production; this approach failed under the previous state administration and prompted Palin to chart a new course under AGIA.

Palin turned down the ConocoPhillips proposal in January, saying such a deal could deprive Alaska of its regulatory powers.

The company moved forward, saying it did not want to lose a summer of field work.


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