Pipeliners

November 18, 2008 - AFX News Limited - A joint pipeline venture featuring oil giants BP PLC and ConocoPhillips turned in a federal right of way application for a 2,000-mile proposed gas line project. The collaborative effort is called Denali-The Alaska Gas Pipeline LLC and it submitted the application to the Bureau of Land Management last month, but only recently announced the move. Company spokesman Dave MacDowell said the application is important because nearly one-third of the 730-mile Alaska portion of the pipeline falls under BLM's jurisdiction. "The BLM can't work on (right of way) issues unless an application is filed, and Denali has now done that," MacDowell said. The company wants to build a pipeline that is rooted in the resource-rich North Slope and continues southeast to a hub in Alberta, Canada. It announced its plan in April just weeks before the state Legislature embarked on a plan to ultimately award TransCanada Corp. an exclusive license for a similar project. Federal regulators have said both competing projects are not likely be completed. The difference is that TransCanada has up to $500 million in state funding, but Denali does not. TransCanada, however, is obligated to pursue a federal permit but Denali can shelve or delay its project. Neither project is guaranteed. Denali's plan calls for delivering 4 billion cubic feet of natural gas daily from the North Slope to markets throughout North America. Once Denali announced its plans, the company embarked on a massive public relations campaign with full-page newspaper ads and television ads, causing some lawmakers to say the plan was a ruse to dissuade them from awarding TransCanada a license. The ads, however, continued after the license was approved but at a slower pace, and MacDowell said the company has already spent between $60 million and $70 million, especially this summer with field study work. Some of the recent and upcoming work includes:
• Establishing a field office in Tok and company headquarters in Anchorage
• Preparing for an upcoming winter program that includes more environmental field testing between the Prudhoe Bay area and the Canadian border
• Seeking bids for upcoming engineering work. MacDowell's said Denali's goal still is to solicit long-term commitments to ship gas in the pipeline
These commitments underpin the projects financing.