ConocoPhillips sells interests in Colonial, Seaway Pipelines for $2 billion

HOUSTON, Texas - ConocoPhillips said on Nov. 16 that it was selling its interests in two pipeline companies for a total of $2 billion.

The Houston oil and natural gas company announced that a subsidiary of a Canadian pension plan will buy its 16.55 percent investment in Colonial Pipeline Co. and Colonial Ventures LLC. Conoco said it will sell its 16.55 percent interest in Colonial Pipeline and Colonial Ventures to a subsidiary of pension fund Caisse de Depot et Placement du Quebec for $850 million.

Caisse, Canada's largest pension fund administrator with C$199 billion in assets under management, is among the Canadian pension funds that are increasingly looking toward direct investments in the resources sectors.

A subsidiary of Enbridge Inc. is buying Conoco’s stake in the Seaway Crude Pipeline Co.

Will the trans Alaska oil pipeline stop pumping in five to eight years?

ANCHORAGE - Kevin Meyers, ConocoPhillips' North American exploration and production senior vice president, told the Alaska World Trade Center annual conference that with no new oil discoveries, the trans-Alaska oil pipeline, which provides 90 percent of state revenues, could in a few years dry up to a minimum operating level of 500,000 b/d.
Small discoveries, efficiencies and new developments near known fields could perhaps stretch it to eight, he said.
Meyers says there is little oil exploration under way.
Almost any hope for a new discovery lies offshore, but the federal government has blocked drilling there while it reviews offshore safety in the wake of the Deepwater Horizon explosion and spill in the Gulf of Mexico.
Meyers says the industry knows where the onshore oil is in the Arctic and needs only the right fiscal structure to get the job done.
The TAPS line is currently operating two-thirds empty, and the flow is dropping by six percent a year.

Competing Alaska gasline joint ventures said considering merger

ANCHORAGE - The BP/ConocoPhillips Denali joint venture that is planning to build a massive natural gas pipeline from Alaska to the Lower 48 is in preliminary talks to join a competing project headed by TransCanada and Exxon Mobil, according to a source familiar with the projects.
The BP/Conoco project, known as the Denali Pipeline, received approval from federal regulators earlier this month to conduct an open season to solicit interest in the project from North Slope gas producers. The TransCanada/Exxon project - which won a special license to build a pipeline from the State of Alaska in 2008 - received its open season approval in March.
The $30-billion-plus price tag on the project means it is highly unlikely two pipelines would actually get built - a joining of the projects has long been seen as inevitable.
But BP's growing financial burden from the Gulf of Mexico oil spill may be accelerating the process. BP has already announced plans for up to $10 billion in asset sales, and likely changes in its capital spending.
Dave MacDowell, a spokesman for Denali, said he wasn't aware of such discussions, but stressed that BP and ConocoPhillips "have said repeatedly they are open to considering involvement of any entity that adds value and takes on risk."
The natural gas pipeline would be among the largest single energy infrastructure projects in the world. It would include a massive natural gas processing plant on the North Slope and 1,700 miles of pipe that would most likely run to Alberta, Canada. There, existing pipelines would carry the gas to U.S. markets.
Alaska granted TransCanada a license in January 2008 to build the long-sought companion to the Trans-Alaska Pipeline System, which has been moving oil to U.S. markets since 1977.
That license followed a public bidding process initiated by then-Alaska Gov. Sarah Palin, who canceled a pipeline deal that her predecessor, Frank Murkowski, had negotiated in closed-door sessions with the three major North Slope producers.
The three producers - Exxon Mobil, BP and Conoco - did not take part in Palin's state bidding process, saying it did not provide the kind of tax and tariff assurances they needed. ConocoPhillips announced its competing project shortly after, and BP joined in that project in April 2008.
Many were skeptical of the state-backed project from the beginning, saying it could not proceed without cooperation from the producers. Dwindling state coffers in Alaska, which relies heavily on royalty payments and taxes from oil and natural gas production, also undermined support.
But last year Exxon Mobil said it would partner with TransCanada on the state-backed project. Exxon Mobil holds many of the largest natural gas fields on the North Slope.

BP shareholders defeat oilsands resolution

BP shareholders overwhelmingly rejected a resolution that would have required the company to report on the environmental, financial and reputational risks of developing Canadian oilsands projects. The resolution was rejected by 85 percent of shareholders voting.
BP was one of four major oil companies involved in oilsands extraction targeted for such shareholder resolutions. The other three, Shell, ConocoPhillips, and ExxonMobil, have their shareholder meetings in May.
Besides being more expensive to extract, crude oil derived from oil sands, also known as tar sands, emits 20 percent more CO2 over its life cycle than oil from conventional sources.
However, the rising price of oil, combined with the prospect of a major new source in a friendly, stable nation, makes such development attractive, and Canada’s tar sands contain the second largest crude oil reserves in the world after Saudi Arabia.

Bush appointee resigns as U.S. coordinator for Alaska gas pipeline project

ANCHORAGE - Republican Drue Pearce, the federal official responsible for coordinating planning for the proposed Alaska natural gas pipeline, has resigned her position at the request of the Obama administration.
Pearce, a former Alaska state Senate president who has held the position since it was created by then President George W. Bush in 2006, said she will step down effective Jan. 3.
The Office of the Federal Coordinator for Alaska Natural Gas Transportation is reviewing competing plans offered by both TransCanada Corp. and a joint venture formed by BP and ConocoPhillips to build a pipeline to ship natural gas from Alaska's North Slope to domestic U.S. markets.
Pearce was the first person to hold the job, which is designed to keep federal agencies working together to get the pipeline built without undue delay. Some 22 federal agencies in the United States - plus others in Canada Thomas Barrett- must sign off on an environmental impact statement before the project can move forward.
Alaska Sen. Lisa Murkowski, who is the top Republican on the Senate Energy and Natural Resources Committee, said she was pleased that Pearce's deputy, retired U.S. Coast Guard Vice Adm. Thomas Barrett, will serve as the interim coordinator until the White House appoints someone new.

Final leg of Rockies Express natural gas pipeline placed in service

NEW YORK - Construction of the final 195 miles of the eastern portion of the Rockies Express natural gas pipeline was complete and service began on Nov. 12 into eastern Ohio, pipeline partner Kinder Morgan Energy Partners LP said.
Kinder Morgan owns 50 percent of the 1,679-mile line that stretches from northwestern Colorado to eastern Ohio. The entire REX pipeline, capable of delivering 1.8 billion cubic feet per day of gas, is now operational, the company said in a news release.
The final leg stretches from the Lebanon Hub in Warren County, Ohio, to Clarington, in Monroe County, Ohio.
Long-term, binding commitments had been secured for virtually all of the pipeline's capacity, the company said.
REX, one of the largest natural gas pipelines constructed in North America, is operated by Kinder Morgan. Sempra unit Sempra Pipelines and Storage and ConocoPhillips each own a 25 percent stake in REX.

TransCanada, Denali leaders says gas line is needed despite glut

JUNEAU, Alaska - Low natural gas prices don't pose a threat to the Alaska natural gas pipeline, a top official with TransCanada Corp. said on June 18.
"That's the nature of the gas business - the price goes up and the price goes down," said Tony Palmer, vice president for Alaska development with the Alberta-based company, in a meeting with the Juneau Empire's editorial staff.
TransCanada knew when it began the process that natural gas prices fluctuate, Palmer said.
Industry sources have speculated that Alaska gas is not needed, given new means of producing gas in deep shales in the Lower 48. A top executive at Enbridge Inc. recently expressed doubts publicly that there is enough demand for Alaska gas, given the pipeline's cost.
TransCanada is working together with Exxon Mobil Corp., one of the state's three big natural gas lease holders, on its pipeline, developed under the Alaska Gasline Inducement Act.
A competing pipeline, Denali, is being developed by BP PLC and ConocoPhillips Co., the other two big leaseholders.
Denali spokesman Dave MacDowell said despite today's low natural gas prices, his company also expects a pipeline to be viable.

TransCanada to acquire ConocoPhillips' interest in Keystone Pipeline

CALGARY, Alta. - TransCanada Corp. on June 16 announced an agreement to acquire Keystone Pipeline System through the acquisition of ConocoPhillips' remaining interest in the project for approximately US$550 million plus the assumption of approximately US$200 million of short-term debt. As a result, TransCanada will become the sole owner of Keystone Pipeline System.
The purchase price reflects ConocoPhillips' capital contributions and includes an allowance for funds used during construction.
TransCanada will also assume responsibility for ConocoPhillips' share of the capital investment required to complete the project of approximately US$1.7 billion through the end of 2012. The transaction is expected to close in the third quarter 2009.
Keystone will be one of the largest oil delivery systems in North America, with capacity to deliver 1.1 million b/d.
The deal, slated to be closed in the third quarter, follows TransCanada's acquisition of 20.1 percent of Keystone from ConocoPhillips last year.

Federal bill gives incentives for building Alaska gas pipeline

FAIRBANKS, Alaska - U.S. Sen. Lisa Murkowski has announced several provisions benefiting an Alaska gas pipeline that she’s secured in a comprehensive energy bill.
Murkowski is the ranking Republican on the Energy and Natural Resources Committee, chaired by Sen. Jeff Bingaman, D-N.M.
If approved by Congress, the bill would increase a federal loan guarantee for an Alaska gas pipeline project from $18 billion, set in 2004, to $30 billion plus inflation from 2004 values.
In addition, a project could tap into super-low-interest loans from the Federal Financing Bank, a federal corporation, and clarifies 2004 language to specify that the federal loan guarantee will cover a full 80 percent of the total project costs.
“This is a recognition that Alaska’s gas resource is necessary for the country, and that we as a nation will step forward in helping to facilitate such a project,” she said. “The federal government is not nationalizing this. We are not taking it over. But, we are helping to facilitate it.
All provisions are available to either TransCanada, licensed by the state under the Alaska Gasline Inducement Act, or Denali - The Alaska Gas Pipeline, a joint venture between producers BP and ConocoPhillips.

Denali awards contract for design of giant gas treatment plant

JUNEAU, Alaska - The company competing with state-endorsed TransCanada to build a large-diameter natural gas pipeline from Alaska’s North Slope is spending several million dollars on early engineering for a gas treatment facility there.
The plant would be the largest of its kind and could cost $5 billion to $6 billion, said Dave MacDowell, director of media and communications for Denali The Alaska Gas Pipeline LLC, a partnership formed by North Slope producers BP and ConocoPhillips.
The engineering work is a major step toward an open season. Treatment plant costs will factor into the tariffs producers will pay to ship gas through the line.
Denali and TransCanada have competing proposals to build a large-diameter, transcontinental gas line. Denali has actively advertised each step toward an open season.
TransCanada won a state license and up to $500 million through the Alaska Gasline Inducement Act in 2008.