Denali updates legislators on gas line
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Responding to request from Ramras, Johnston, BP-ConocoPhillips project outlines expenditures, 2008 accomplishments, 2009 plans
Kristen Nelson Petroleum News
The administration of Alaska Gov. Sarah Palin provided an update April 30 on the TransCanada Alaska gas pipeline project licensed last year under the Alaska Gasline Inducement Act.
Reps. Jay Ramras, R-Fairbanks, and Craig Johnson, R-Anchorage, negotiated the biannual report from the administration and also asked Denali — The Alaska Gas Pipeline, the BP-ConocoPhillips gas pipeline project, for a comparable report.
Denali President Bud Fackrell provided a project update to the Legislature May 8.
“The Alaska Gas Pipeline project will be the largest private sector construction project in North American history and is unrivaled in scale, cost and complexity,” the company told legislators in the report, and said that in spite of recent economic turmoil, “Denali remains focused on the long-term prospects of the project.”
Gas market issues Denali said in an update on market and cost expectations that the most recent annual report from the U.S. Department of Energy’s Energy Information Administration “indicates that there is space in the North American gas market for Alaska North Slope gas.”
The report also says, however, that with new sources of nonconventional gas emerging, such as shale gas, and the potential for large volumes of liquefied natural gas imports, “an Alaska gas pipeline must be competitive and will need to provide a cost efficient means to move Alaska natural gas to market.”
The report went on to say that potential natural gas shippers on the line are the ones “who will assess the economic viability of the pipeline as they determine whether or not they are willing to make the commitments that will be required to finance and construct the pipeline.”
Denali acknowledged that the Legislature has spent time reviewing factors affecting the short-term price for natural gas and did not review those factors in the report, but said: “Denali is not aware of any significant changes in the long-range market price forecast for North American natural gas.”
2009 plans Denali said its work in 2009 will be focused on positioning itself for a successful open season in 2010. The company said key highlights of work this year include:
• Working with Fluor WorleyParsons Arctic Solutions and CH2MHill to update the cost estimate and the schedule for the gas treatment plant;
• Working with Bechtel on updating the cost estimate and the schedule for the mainline;
• Working with the Federal Energy Regulatory Commission, the Bureau of Land Management, the Office of the Federal Coordinator, and other federal and state agencies on regulatory requirements;
• Continuing work with Canadian regulatory agencies and government departments;
• Continuing to engage with Alaska Natives, Canadian First Nations and other aboriginal groups in Canada, and with other key stakeholders;
• Field work required to support the open season;
• Workforce development;
• Working with the Alaska Department of Transportation and Public Facilities on infrastructure upgrade planning; and
• Progressing commercial work for the 2010 open season.
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