BP, Conoco-Phillips kill Denali pipeline proposal

JUNEAU, Alaska - One of two groups planning to build major natural gas pipelines in Alaska has dropped its bid, saying on May 17 that it didn't get the shipping agreements necessary to justify continuing.

The announcement came from the Denali partners - BP and ConocoPhillips.

Denali had been competing to build a line with Calgary-based TransCanada Corp. and partner ExxonMobil. The latter continue to press ahead with their proposal.

Denali said it is withdrawing its application before the U.S. Federal Energy Regulatory Commission after spending US$165 million and investing more than 760,000 man-hours in the effort.

In a statement, Denali said it didn’t have the required commitments to move ahead with the application.

“Denali is a market-driven company. As such, we cannot spend the billions of dollars necessary to advance the project unless we have binding agreements with shippers,” said Bud Fackrell, Denali president. “Although we have been in discussions with potential shippers for nearly a year and half, we have been unable to secure the financial commitments necessary to advance the project.”

TransCanada officials said that although it remains the sole survivor, Denali’s decision to withdraw doesn’t guarantee it will be able to come to commercial terms with Alaskan producers.

It plans to present its own application to the FERC in October of 2012.

Denali estimates Alaska gas pipeline will cost $35 billion

JUNEAU, Alaska - Details of the Denali project, a joint effort of ConocoPhillips and BP PLC, were released on April 6 in a filing with the Federal Energy Regulatory Commission. The pipeline to move natural gas from Alaska's North Slope to North American markets will cost an estimated $35 billion, according to its planners.
Denali proposes a pipeline stretching more than 1,700 miles, with delivery points along the way to help meet gas needs in Alaska and Canada. It bills the project as "one of the largest private investments in the history of North America."
Denali is competing with a proposal being advanced by Calgary, Alberta-based TransCanada Corp. and Exxon Mobil Corp., of Irving, Texas. That project, which has been promised up to $500 million from the state for eligible costs, has estimated its cost at $20 billion to $41 billion, depending on the route, with an option crossing Alaska and into Canada estimated at $32 billion to $41 billion.