Alaska Gas Pipeline Projects Receive Bids for Significant Capacity

Strategic Insights -

In a significant development, the Alaska Gas Pipeline, a proposed natural gas pipeline project in Alaska, has received bids for "significant capacity" after a three-month open season. This announcement comes on the heels of a similar pronouncement by TransCanada Corp. in July, which is working with Exxon Mobil Corp. to advance a competing project. The bids include conditions, some of which are outside Denali's control, and will be evaluated and negotiated confidentially.

Key Takeaways:

  • The Alaska Gas Pipeline project, a joint effort of BP and ConocoPhillips, has received bids for "significant capacity" after a three-month open season.
  • The bids include conditions, some of which are outside Denali's control, and will be evaluated and negotiated confidentially.
  • Denali president Bud Fackrell stated that the project will be determined by the commitments customers are willing to make, indicating a market-based approach.
  • The ultimate goal is to reach binding agreements, with Denali aiming to conclude this process by early next year.
  • TransCanada and Denali have each proposed lines that would deliver about 4.5 billion cubic feet of gas per day to North American markets by 2020.
  • Denali has estimated its project will cost US$35 billion, while TransCanada has estimated its cost at $32 billion to $41 billion.
  • TransCanada has also offered an alternative option: a $20-billion-to-$26-billion line that would lead to a liquefied natural gas facility for export.
  • The project is crucial for Alaska, with estimates suggesting there are 35 trillion cubic feet of proven gas reserves on the North Slope.
  • The market will dictate what happens next, with factors such as the competitiveness of Alaska gas against North American shale, gas market and price forecasts, and resolution on disputed leases influencing the outcome.

Statistics:

  • Estimated proven gas reserves on the North Slope: 35 trillion cubic feet
  • Proposed gas delivery capacity: 4.5 billion cubic feet per day
  • Estimated project cost: Denali - US$35 billion; TransCanada - $32 billion to $41 billion; Alternative option - $20 billion to $26 billion

Sources:

  • "Alaska Gas Pipeline project gets bids for 'significant capacity'", Euclid Infotech Pvt. Ltd., 2010.
  • "TransCanada's pipeline project gets encouragement", Euclid Infotech Pvt. Ltd., 2010.
  • "Denali says pipeline project is moving forward without state support", Euclid Infotech Pvt. Ltd., 2010.
  • "TransCanada eyes potential state support for pipeline", Euclid Infotech Pvt. Ltd., 2010.