The news was welcomed by Alaska lawmakers as the lack of oil industry participation with the pending TransCanada proposal under AGIA (Alaska Gasline Inducement Act) was worrying many. 

The Governor’s Office is reviewing the public comments on the TransCanada proposal as per the AGIA schedule (due May 19th for a June 3rd Special Legislative Session).  TransCanada Pipeline company was the only proposal of five submitted that met all the criteria of AGIA.  Now with the Conoco/BP proposal, the Governor will have to make a decision on how to proceed.  BP and Conoco are the two largest producers on the North Slope and having them as the backbone for a gas line is will be a benefit to the State and the pipeline projects overall viability.  With the TransCanada proposal the question of securing a supply of gas for the pipeline is left hanging as no producers joined with them in the proposal due to disagreements with the AGIA process.

The Denali Project by BP/Conoco will spend $600 million over 36 months and have 150 staff working by the end of this year.  The gas pipeline proposed will take 10 years to build and cost $30 billion dollars making it the largest construction project in North America ever.  The pipeline will have a capacity of 4 billion cubic feet of gas per day and equal a rough equivalent of 6-8% of US daily consumption.  Alaska has vast natural gas reserves in its Arctic, yet with no natural gas pipeline there has been no way to get it to market.  Exploration is already taking place in the foothills of the Brooks Range as well as near the 10-02 ANWR border to tap potential new gas fields to add to the known existing fields at Prudhoe Bay.  The gas pipeline will possibly require up to 50 trillion cubic feet of gas to be viable.  Reserves of up to 32 trillion cubic feet are already known in the Arctic.  Future exploration in the National Petroleum Reserve Alaska, possibly in the 10-02 Area of ANWR and off shore are expected to add enough to make the pipeline possible.  The natural gas pipeline will require infrastructure upgrades to facilities at Prudhoe to process the gas before shipment.  For the first 1/2 of the pipelines length in Alaska the gas line will parallel the existing Trans Alaska Pipeline TAPS right of way before heading southeast into Canada down to the gas fields in the Alberta foothills.   The Denali Project will also involve construction of “offtakes” within Alaska to allow the use of North Slope gas along the route within the state.  The two oil majors stated that they were open to partnerships with 3rd parties in completion of the project, possibly TransCanada.  Governor Sarah Palin stated she will review the proposal and that she will choose the one that is most beneficial to the State as a whole.  To read and hear more on this new proposal please see:

A review of the project can be found here:
http://www.denali-thealaskagaspipeline.com/

Denali Presentation (pdf)

Click here for the Governor’s Comments on the new proposal.