Two options for Alaska: state leaders consider TransCanada's proposal while North Slope producers roll out Denali--The Alaska Gas Pipeline LLC.

• Author: Liles, Patricia
• Position: OIL & GAS

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Activity and announcements regarding a natural gas pipeline project in Alaska surged this spring, as Gov. Sarah Palin and her administration moved forward with a proposal by TransCanada Corp., while two of Alaska's largest oil and gas producers rolled out their own plan, called Denali-The Alaska Gas Pipeline.

Although increasing market prices for natural gas are helping to encourage development of an Alaska gas project, other obstacles remain, which could be as sizeable as the new mascot for the producers' project.

At its location in the heart of Alaska, the mountain called Denali stands 20,320 feet tall, the highest peak in North America.

The proposed gas pipeline project, whether it be the latest plan announced by ConocoPhillips and BP Alaska this spring or TransCanada's proposal under the state's Alaska Gasline Inducement Act, would take roughly 10 years to build and cost an estimated $30 billion or more. At that size and level of investment, an Alaska gas pipeline project would be the largest private-sector construction project ever built in North America, according to ConocoPhillips and BP.

OIL GIANTS JOIN TOGETHER

The two North Slope producers have proposed a project that would deliver approximately 4 billion cubic feet of natural gas per day to markets, slightly smaller than the 4.5 bcf project that TransCanada has proposed under its AGIA application, spinning off a company called TC Alaska.

Yet even at 4 bcf, an Alaska gas pipeline project would provide about the equivalent of 6 percent to 8 percent of the daily natural gas consumption in the United States, according to Arctic Power, a group that has been working for years to obtain permission from the federal government to drill in the Arctic National Wildlife Reserve.

It's clear that Alaska's natural gas could provide a large, long-sustaining source of clean-burning energy for the nation, which is already facing a looming energy crisis with record retail prices and political discussions about limits on future emissions from fossil fuel consumption.

Yet development of an Alaska gas pipeline project may also play a key factor in continued development and operation of Alaska's existing North Slope oil industry, currently facing a mid-life challenge of declining reserves and remaining resources that are technically difficult and expensive to develop.

"This project is vital for North American energy consumers and for the future of the Alaska oil and gas industry," said Tony Hayward, BP Group chief executive, in a joint press statement announcing the gas pipeline project.

"It will allow us to keep our North Slope fields in production for another 50 years."

Alaska's oil industry has, for some time now, linked the...