BP Joins ConocoPhillips Plan for Alaska Gas Pipeline (Update2)
By Jim Kennett and Sonja Franklin
bloomberg.com
April 8 (Bloomberg) -- BP Plc, which operates the Alaskan pipeline shipping oil to the lower U.S., is joining ConocoPhillips in plans to build a similar natural-gas network.
The line would ship 4 billion cubic feet of natural gas a day 700 miles (1,126 kilometers) to Alberta, with an extension into the U.S. ``should it be required,'' the companies said today in a statement. The partners will spend $600 million preparing for a so-called open season, where bids are accepted for space on the pipeline, called the Denali project. The season will be held by the end of 2010, they said.
``Our companies have a long history of successfully developing projects on Alaska's North Slope, in Canada, and around the world,'' ConocoPhillips Chief Executive Officer Jim Mulva said in the statement. His company is the largest oil producer on Alaska's North Slope, the source of the gas that will fill the pipeline.
A pipeline is needed to tap gas deposits that were discovered in Alaska decades ago and are unable to reach Canadian and U.S. markets. BP, ConocoPhillips and Exxon Mobil Corp. would develop the gas reserves, estimated at 35 trillion cubic feet by the state.
ConocoPhillips said in February it was reconsidering a $30 billion pipeline proposal after Alaska's governor rejected it in January. That plan also was to ship 4 billion cubic feet of gas a day to the lower U.S. states.
Governor Palin
Governor Sarah Palin has said the plan included fiscal terms already rejected by the state, including concessions that would cost the state $10 billion in revenue over the project's life. Alaska officials agreed in January to consider a $26.6 billion pipeline proposed by TransCanada Corp.
Palin on March 28 called a special 30-day legislative session starting June 3 to consider TransCanada's proposal. The state is currently reviewing the proposal and plans to make a recommendation to lawmakers during the week of May 19.
ConocoPhillips and BP said their plan would be the largest private-sector construction project ever in North America.
``This project is vital for North American energy consumers and for the future of the Alaska oil and gas industry,'' BP's Group Chief Executive Tony Hayward said in the statement. ``It will allow us to keep our North Slope fields in production for another 50 years.''
Anchorage Headquarters
ConocoPhillips and BP have assigned staff to work on the plan, and soon will establish a project headquarters in Anchorage and form a new company to manage the work. The project will include a gas-processing plant on the North Slope, and fieldwork will commence this summer, they said.
BP rose 0.3 percent to 537 pence in London. ConocoPhillips gained 57 cents to $79.47 in New York Stock Exchange Composite trading.
Irving, Texas-based Exxon Mobil isn't currently part of the pipeline proposal, according to spokeswoman Margaret Ross.
``We have not had substantive discussions with ConocoPhillips and BP on their planned approach as we only became aware of their plans a few days prior to the announcement,'' Ross said in an e-mailed statement.
Exxon continues to ``evaluate all options'' of commercializing North Slope gas, which has the potential to increase the company's worldwide gas production by 10 percent and add more than 1 billion barrels of oil equivalent of proved reserves, she said.
To contact the reporters on this story: Jim Kennett in Houston at jkennett@bloomberg.net; Sonja Franklin in Calgary at sfranklin6@bloomberg.net
Last Updated: April 8, 2008 16:08 EDT |
