Competing projects to build a $30 billion-plus North Slope natural gas pipeline are on schedule to complete cost estimates and hold open seasons to solicit customers next year, managers of both consortiums told an energy conference in Anchorage.
Both groups expressed concerns over progress of talks with First Nation groups in Canada.
Kris Fuhr, mainline project general manager of the BP-ConocoPhillips Denali gas pipeline project, and Tony Palmer, senior manager of the competing pipeline group led by TransCanada Corp., gave progress reports Sept. 14 at a conference sponsored by the American Conference Institute.
Fuhr said the Denali group is 90 percent complete on cost estimates for a 2,000-mile pipeline to Alberta and a North Slope gas treatment plant that will be a mega-project on its own, and the world's largest gas treatment plant.
Fuhr said gas plant construction will involve off-site construction of modules weighing up to 8,000 tons, much larger than previous modules built for industrial plants, and movement of the modules by sealift to the North Slope. Sealifts for the project will span two to three years, he said.
Denali would also build a 1,600-man construction camp for workers on the gas plant project. The plant would be near the existing gas processing plants in the Prudhoe Bay field.
Denali plans an open season to solicit gas-shipping customers for its project in 2010, Fuhr said.
TransCanada's Palmer told the conference that his company is on schedule with its cost estimates to be completed by March 2010, and filing of a pre-open season application with the U.S. Federal Energy Regulatory Commission.
ExxonMobil Corp. is working with TransCanada in preparation of cost estimates and the conceptual engineering, Palmer said.
If FERC approves the package, TransCanda will start its open season in June and conclude it at the end of August. The company is now in discussions with potential shippers. Palmer said TransCanada expects at least some bids for capacity that will be conditioned, and the company may take up to 90 days to talk with conditional bidders before results of the open season are announced.
"We are aware that some potential shippers may condition their bids based on successful outcome of a fiscal agreement with the state of Alaska. Since we are obligated to continue past an initial open season toward FERC certification, under terms of our agreement with the state, we will be able to keep the project on schedule even as the fiscal issues with the state are resolved," Palmer said.
TransCanada has agreed to a set of conditions with the state, including continuing work if the initial open season fails, in return for a $500 million state subsidy.
The potential shippers Palmer was referring to include North Slope gas owners, including ExxonMobil Corp., TransCanada's partner in planning and engineering of the project, who has said they need a fiscal deal with the state before signing firm, long-term agreements to ship gas.
TransCanada's schedule involves having the project completed by 2018, which would mean ordering materials like steel in 2014, assuming final approvals by regulatory agencies and TransCanada's board.
Both TransCanada and Denali expressed concerns over negotiations with First Nations groups in Canada. Palmer said TransCanada has secured agreements with some groups along its pipeline route but not others, so far.
Fuhr said Denali has engaged groups in discussions. "We've made more progress with some groups than others, however. We need to bring more resources to bear to understand the First Nations' concerns," Fuhr said.
Palmer and Fuhr also expressed concerns about First Nation groups playing one pipeline group against the other in a kind of competition. "That would greatly complicate things for a project that is complex enough already," Fuhr said.
Copyright (c) 2009, Alaska Journal of Commerce, Anchorage. Distributed by McClatchy-Tribune Information Services.
Alaska Pipeline Project
Prudhoe Bay in northern Alaska to Alberta, Canada United States