The great pipeline race is on. TransCanada Corp. will begin an open season for an Alaska natural gas pipeline in early 2010, beating a rival pipeline group led by North Slope producers by several months, a senior TransCanada manager told an oil and gas conference in Anchorage Sept. 23.
Meanwhile, TransCanada's rival, the Denali pipeline group, said it is ramping up its work fast and plans to have 300 to 400 people in the field next summer, up from 80 this year.
Tony Palmer, TransCanada's vice president for Alaska gas development, told the annual Alaska Oil and Gas Symposium, sponsored by the American Conference Institute, that his company will conclude its open season June 30, 2010, and will proceed with work toward certifications of the project by the U.S. Federal Energy Regulatory Commission and Canada's National Energy Board.
As agreement between TransCanada and the state of Alaska requires the company to proceed toward certification by the regulatory bodies even if the open season is unsuccessful in attracting sufficient capacity commitments.
TransCanada estimates the project will cost $26 billion, but consultants to the state the cost will more likely be $30 billion.
TransCanada was delayed in launching fieldwork by the Legislature's tardiness in approving an agreement with the state of Alaska, but was able to do aerial photography and some other work. The company will conduct a full field season in 2009 gathering environmental and geotechnical data, Palmer said. TransCanada planned to issue requests for proposals for engineering and environmental studies in late September, he told the conference.
TransCanada will spend about $80 million preparing for the open season, Palmer previously told state legislators. Alaska will pay half of that under terms of its deal with the pipeline company.
Meanwhile, the producer-led Denali pipeline group will hold its open season in late 2010, its president, Bud Fackrell, told the conference. The group is now completing its first field season in Alaska and plans a robust 2009 field program in Alaska and Canada, Fackrell said. Denali will spend $600 million preparing for its open season, he said.
Denali is owned by North Slope producers BP and ConocoPhillips.
Fackrell said Denali plans to let major engineering contracts in the first quarter to 2009 to help prepare cost estimates. He said Denali would spend $600 million between now and 2010 to get the best-cost estimates possible for the project.
"When we go to an open season, we need to give shippers confidence that we really understand this project," Fackrell told the conference.
The last cost estimates for the project were done by North Slope producers in 2001, but inflation since then will push costs up, he said. The 2001 estimate was $20 billion. Sources in the producing companies said they expect the cost to exceed $30 billion.
Fackrell said Denali had 80 people doing fieldwork in 2008 and will have 300 to 400 in the field in 2009. Denali has another 60 people now working on engineering and environmental studies, he told the conference.
Alaska contractors say both groups will face challenges in 2009, as they will compete for support contractors and consulting companies from a relatively small pool of groups that are familiar with Alaska conditions.
Denali may have the edge on the Alaska segment of the pipeline route because it was able to mobilize earlier than TransCanada, and because of current relationships Denali owners BP and ConocoPhillips now have with key contractors.
However, TransCanada may have the advantage on the Canadian segment of the route because of existing relations with contractors and familiarity with the terrain and conditions.
Copyright (c) 2008, Alaska Journal of Commerce, Anchorage. Distributed by McClatchy-Tribune Information Services.