BP, ConocoPhillips team up on gas pipeline

ALASKA NEWSPAPERS STAFF

April 18, 2008 at 9:57AM AKST

BP and ConocoPhillips have combined resources to start Denali – The Alaska Gas Pipeline, according to a written statement from the companies.

The pipeline would move approximately four billion cubic feet of natural gas per day to markets and be the largest private-sector construction project ever built in North America.

The project would combine the financial strength, Arctic experience and technical resources of the companies, according to the statement.

BP and ConocoPhillips plan to spend $600 million to reach the first major project milestone, an open season, commencing before yearend 2010.

Following a successful open season, a process during which the pipeline company seeks customers to make long-term firm transportation commitments to the project, the companies intend to obtain Federal Energy Regulatory Commission and National Energy Board certification and move forward with project construction.

The FERC and NEB certificates are the critical permits that provide government authorization to construct a pipeline.

"This project is vital for North American energy consumers and for the future of the Alaska oil and gas industry. It will allow us to keep our North Slope fields in production for another 50 years," said Tony Hayward, BP Group chief executive. "The Alaska gas pipeline will be an historic project, and we are pleased to be working with ConocoPhillips to move it forward."

"Our goal of bringing Alaska’s North Slope gas to market is becoming a reality. Denali – The Alaska Gas Pipeline project will deliver natural gas to meet North America’s growing energy needs," said Jim Mulva, ConocoPhillips chairman and chief executive officer.

"ConocoPhillips is pleased to be working with BP on this project; our companies have a long history of successfully developing projects on Alaska’s North Slope, in Canada, and around the world. The time is right to start moving this project forward."

The project consists of a gas treatment plant on Alaska’s North Slope and a large-diameter pipeline that travels more than 700 miles through Alaska and then into Canada through the Yukon Territory and British Columbia to Alberta.

Should it be required to transport gas from Alberta, the project will also include a large-diameter pipeline from Alberta to the Lower 48 states. BP and ConocoPhillips will seek other equity partners, including pipeline companies, who can add value to the project and help manage the risks involved.

The companies already have assigned staff to the joint project team. A new project headquarters in Anchorage will be identified and a new company formed to manage the project. The project will provide jobs and business opportunities.

ConocoPhillips’ previously announced intent to conduct summer fieldwork in Alaska would be rolled into the joint effort.