January 2010 Vol. 65 No. 1
Features
Denali Alaska Gas Pipeline On Track For 2010 Open Season
The Denali Alaska Gas Pipeline is a joint venture formed by ConocoPhillips and BP in June 2008 to construct a 2,000 mile long pipeline from the Alaskan North Slope to Alberta, Canada, and if required, a 1,500-mile long pipeline from Alberta to Chicago.
According to a Jan. 12 update from the company, Denali expects to begin its open season process in April of 2010.
In the company’s Nov. 21, 2009, Project Update to the Alaska Legislature, Denali said the work to estimate the cost of the pipeline and the Gas Treatment Plant (GTP) is nearing completion. A Fluor/WorleyParsons joint venture (Arctic Solutions) is assisting with the GTP and Bechtel is assisting with the pipeline. Also, work is under way to prepare a credible cost estimate that will provide the basis for Denali’s open season commercial offering. Denali has also initiated pre-open season discussions with potential anchor shippers and is formulating open season plans.
The update notes that the company is working closely with the Federal Energy Regulatory Commission (FERC) and the Office of the Federal Coordinator (OFC) as well as other U.S. federal and Alaska state agencies to ensure a common understanding of the framework for the required regulatory approvals. In addition, Denali has entered into reimbursable services agreements with the U.S Bureau of Land Management (BLM) and the Alaska Department of Natural Resources (DNR) that will allow both agencies to work closely with Denali as it progresses its right-of-way efforts in Alaska.
According to the update, significant progress has also been made in Canada to advance and coordinate the regulatory review framework. The Major Projects Management Office (MPMO) has been designated by Canadian authorities as the single window coordinator for federal regulatory review for the project. Denali anticipates that this action will facilitate an efficient and expedited review process for a Canadian Certificate of Public Convenience and Necessity (CPCN).
Outreach
The company’s outreach efforts in Alaska and Canada have reportedly remained strong and substantial and have been focused on communities, landowners, Alaska Native organizations and Canadian Aboriginal groups along the pipeline route. To date, Denali has participated in over 450 meetings with project stakeholders in the U.S. and Canada.
Denali has an Anchorage headquarters and an office in Calgary. The total number of personnel working on the project (excluding contractor personnel such as those working for Bechtel and Fluor/WorleyParsons) is approximately 95 of which about 80 are Alaskans. Through October 2009, Denali had contracted with 47 Alaska businesses that have provided goods and services to Denali. Denali also participated in two Alaska workforce development projects.
Work on the project to date represents a major advancement in understanding the cost and complexity of this enormous undertaking which will involve the largest private construction project in North American history. If constructed, Denali is projected to generate billions of dollars in sales, royalties and taxes; promote new oil and gas exploration; and create new jobs and business opportunities. When completed, Denali will deliver approximately 4 Bcf/d of natural gas to North American markets. The current estimated cost of the project is $30 billion.
Work is also moving forward outside of AGIA with funding solely from its owners, BP and ConocoPhillips. To date, Denali has spent more than $120 million to progress the technical, regulatory, commercial and stakeholder elements of the project in both Alaska and Canada.
It is reportedly progressing toward an open season later this year. [Update: Information from Denali after press time indicated that an open season process will begin in April of 2010.]
Over the coming months, the focus will be on conducting the work necessary to hold a successful open season later this year. Some of the key milestones and activities are:
- Completing the project cost estimate and execution planning;
- Progressing regulatory work with the FERC, OFC, BLM, DNR, and other federal and state agencies;
- Progressing regulatory planning with the NEB, MPMO and other Canadian regulatory agencies and government departments;
- Furthering engagement with communities, governments, Alaska Natives, Canadian Aboriginal groups, and other key stakeholders;
- Discussing pre-open season needs with potential anchor shippers; and
- Advancing commercial and regulatory preparations for open seasons in both Alaska and Canada.
Assuming the open season is successful, Denali will pursue approval by the FERC in the U.S. and the National Energy Board (NEB) in Canada to construct the project. Construction can begin after regulatory approvals are received.
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