Alaska gas pipeline gets Conoco, BP, perhaps Exxon on board

Alaska gas pipeline gets Conoco, BP, perhaps Exxon on board

The world of oil and gas pipelines has long seen its share of hopes and letdowns, and prospects to get Alaska’s massive gas reserves to market are on their way up. ConocoPhillips and BP announced last week they would bid on the pipeline, and perhaps Exxon Mobil would join it, The New York Times reports.

Alaska holds 35 trillion cubic feet of natural gas, much of it on its Northern Slope, home to its major oil producing fields. But oil production — i.e. state revenues — is decreasing while the economics of natural gas improves, which is why BP and Conoco executives said they’re into the Alaska gas line now.

Before the new governor, Sarah Palin, took office in 2006, negotiations were ongoing for the gas line. But Palin criticized it as a bad shake for Alaskans and started a new pipeline process. TransCanada has proposed a pipeline plan as well.

Both will make or break in an upcoming “open season,” where a prospective pipeline lines up shippers as a means of raising investment for the project.

The United States will increase its natural gas consumption as demand for energy increases, as does the concern for more polluting energy sources such as coal. Infrastructure investment is a major cost and concern, and although a pipeline from Alaska would only satisfy about 7 percent of demand, it would cut from alternative investment in import terminals.

The pipeline, dubbed Denali, would cost $30 billion as it snakes from Alaska’s north, through Canada and into Chicago. It is likely to face challenges from TransCanada, as well as regulatory issues in both the United States and Canada.

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