Companies release details on proposed Alaska natural gas pipeline; cost could hit $41 billion

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Companies say Alaska gas pipeline could cost $41B

JUNEAU, Alaska — Companies working with the state of Alaska to develop a major natural gas pipeline estimated Friday that the project would cost $20 billion to $41 billion, depending on the route.

The Alaska Pipeline Project seeks to move natural gas from the harsh North Slope to market in Alaska, through Canada and to the Lower 48.

The high end of the estimate is at least a billion more than earlier thought, but project officials believe the pipeline is economically viable and could start carrying gas in about 2020.

More details of the plan came in a filing Friday with federal regulators — the first step toward an “open season,” when companies behind the project will court gas producers and try to secure commitments for shipping deals.

TransCanada Corp., based in Calgary, Alberta, is working with Irving, Texas-based Exxon Mobil Corp. to advance the project. The state of Alaska has promised to reimburse up to $500 million of eligible costs.

A rival project by Britain’s BP PLC and Houston-based ConocoPhillips is also moving ahead, though its difficult for many — given the economics involved — to see more than one project going forward.

Tony Palmer, TransCanada vice president of Alaska Development, told reporters Friday that he believes the best and most effective way to bring the project forward is to form an alliance between the state, TransCanada and the North Slope’s current major players, Exxon Mobil, BP and ConocoPhillips.

It’s during open season when shippers interested in moving gas to markets in Alaska and outside the state indicate which their preferred route.

One pipeline option, estimated to cost $32 billion to $41 billion, would run from the North Slope to Alberta, Canada, where gas could then be moved on existing systems to North American markets.

The other option, estimated to cost $20 billion to $26 billion, would run 900 fewer miles, from the North Slope to Valdez, Alaska. From there, gas would be liquefied at a facility constructed by other entities — just who would build it is unclear — and then shipped elsewhere.

According to the filing, Alaska’s North Slope holds about 35 trillion cubic feet of currently proven natural gas reserves.

The first, or Alberta, pipeline option would carry 4.5 billion cubic feet of natural gas per day; the second, 3 billion cubic feet a day.

Early estimates from a few years ago pegged the cost of the pipeline at about $26 billion, though then-Gov. Sarah Palin had cited estimates of up to $40 billion.

Gov. Sean Parnell said the filing was a significant milestone toward achieving a project that would bring good-paying jobs, cheaper energy and new revenue to Alaska.

But Rep. Mike Hawker, co-chairman of the state House Finance Committee, said the filing is the easy part. The hard part is getting the companies’ to reach agreements with shippers, he said.

On the Net:

Alaska Pipeline Project: www.thealaskapipelineproject.com