The Denali Alaska gas pipeline group says work to prepare cost estimates is nearing completion for a $30 billion-plus pipeline and a gas treatment plant needed in Prudhoe Bay, the company said in a progress report sent to Alaska legislators Nov. 11.
Denali, led by BP and ConocoPhillips, has spent more than $120 million on its preparations for a 2010 open season, company President Bud Fackrell said in a letter to Alaska lawmakers that accompanied the report.
"Denali has also initiated pre-open season discussions with potential anchor shippers and is formulating its open season plans," Fackrell wrote.
Denali plans a 1,500-mile pipeline from Alaska's North Slope to Alberta that would move 4.5 billion cubic feet of Alaska gas daily into North American markets.
Alaska gas could be shipped onward from Alberta to U.S. markets through existing pipelines, although a new pipeline from Alberta to the U.S. Midwest could be built if customers desire, Denali spokesman Dave MacDowell said.
A rival Alaska gas project, led by TransCanada Corp. and supported by the state of Alaska, is also working on plans for a 2010 open season.
ExxonMobil Corp., which owns substantial North Slope gas reserves, is participating with TransCanada in cost and engineering studies, but will not join fully with TransCanada until the state makes certain changes in its Alaska Gasline Inducement Act, a state law that requires a gas pipeline receiving state support to agree to conditions on tariffs and expansions.
TransCanada has agreed to the terms and is receiving a $500 million state subsidy.
TransCanada and ExxonMobil officials say they plan to spend about $150 million to prepare for an open season.
Denali's expenditures to the open season are expected to be about the same. Both groups are also taking advantage of a $125 million conceptual study of the pipeline done in 2001 that was sponsored by the three North Slope producers, BP, ConocoPhillips and ExxonMobil.
TransCanada is able to use information from that study through its engineering partnership with ExxonMobil, the pipeline company has said.
In his letter Fackrell reminded legislators that the Denali project is being pursued outside the state's AGIA framework and is receiving no state funds.
In the progress report, Denali said it is working with a Fluor/WorleyParsons joint venture to do engineering studies on the gas treatment plant and with Bechtel on the pipeline. The company has entered into reimbursable service agreements with the U.S. Bureau of Land Management and the state of Alaska to expedite permitting on federal and state lands in Alaska.
In Canada, federal agencies have established a Major Projects Management Office to provide a "single window coordinator" for federal regulatory review, Fackrell said in his letter.
The report also highlighted the scale of a multi-billion dollar gas treatment plant that would be built on the North Slope as a part of the project.
"The gas treatment plant will consist of several dozen modules preassembled at fabrication yards and then sea-lifted to the North Slope. The largest of these will be the largest ever sealifted to the Slope. In total, the plant will require multiple sealifts," and would constitute the largest movement by sea of equipment and material in history to the North Slope, the report said.
Tim Bradner can be reached at
tim.bradner@alaskajournal.com.
