Friday, June 12, 2009

Exxon elects to support TransCanada over Denali gas pipeline plan

IRVING, Texas - Exxon Mobil said on June 11 that it will work with Canadian pipeline operator TransCanada to build a natural gas pipeline to provide natural gas from Alaska’s North Slope to the lower-48 states.
Exxon holds the largest natural gas reserves on Alaska’s North Slope. Its decision deals a blow to the rival Denali project being developed by BP and ConocoPhillips.
The competition to build a gas pipeline was set up by Gov. Sarah Palin, who had been critical of the slow pace at which oil companies, including Exxon, were moving.
TransCanada said it would retain a majority interest in the project. Both it and Exxon invited BP and Conoco to abandon their rival effort, saying they would be welcome to join the TransCanada plan.
“It has always been our position that the project will require the support of all the North Slope producers, the state of Alaska and TransCanada, and we will need to work with them,” Marty Massey, a senior executive with the Exxon Mobil Production Company, said during a conference call.
Alaska’s estimated 35 trillion cubic feet of gas reserves are now being reinjected into oil fields or left in the ground because there is no way to get it to consumers.
With Exxon and TransCanada on one side, and BP and Conoco on the other, there are two contenders for what would be the biggest civil engineering project in North America.
BP and Conoco responded to the Exxon announcement by saying their joint pipeline project, dubbed Denali, was going forward. But both said they would be open to alternative plans.
TransCanada has estimated that the project will cost $30 billion. It would stretch roughly 1,700 miles from the North Slope of Alaska through Yukon and northeastern British Columbia to the Alberta border near Boundary Lake. From there, it would connect to Alberta’s existing gas infrastructure, which is linked to the United States.

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