Reuters quoted Mr Brian Frank president of BP Energy Co and BP’s North America Gas and Power as saying that prospects for a pipeline to ship abundant North Slope natural gas reserves to US markets are dim due to free falling energy prices, the overall economic collapse and the surprising emergence of unconventional energy alternatives such as shale gas.
He added that "It's not a pretty story right now in terms of North American natural gas markets."
It may be noted that BP, in partnership with ConocoPhillips, has launched a company that proposes to build an approximately 1,700 mile pipeline from the North Slope to an existing pipeline hub in Alberta. That proposal, called Denali, unites two of the three major North Slope oil producers. The Denali plan is competing with a similar proposal by TransCanada Corp TRP.T, which envisions a gas pipeline operated independently of the producers.
It was granted an exclusive license for the project from the state of Alaska in December, part of a competitive bidding process pushed by Governor Ms Sarah Palin. TransCanada has estimated the project would cost USD 26 billion.
Mr Frank said that BP is pinning long term hopes on success of one of those pipeline plans so that it can monetize its abundant North Slope natural gas reserves. He added that but the current challenges are daunting.
He said that at the same time, there are long term alternatives to Alaska natural gas, such as shale gas in the Rocky Mountain and Midwest states, and liquefied natural gas. There is an unused capacity for the US market to import liquefied natural gas in volumes nearly three times that which would be provided by an Alaska pipeline. He added that "The Alaska gas project and Alaska gas will have to compete at the margin with unconventional supplies."
Meanwhile, Mr Drue Pearce federal coordinator for the Alaska natural gas pipeline project said that both the TransCanada and Denali proposals would seek a license from the Federal Regulatory Energy Commission in 2014, and would seek financing only after that, providing plenty of time for economies and financial systems to recover.
(Sourced from www.reuters.com)
