Two of the world's largest oil companies unveiled plans to jointly develop a multibillion dollar pipeline to move natural gas from Alaska's energy-rich North Slope to US markets.
The United Kingdom's BP PLC and ConocoPhillips, based in Houston, said they plan to spend $600 million in the first phase of the project over the next three years, beginning this summer. The project's cost estimates exceed $30 billion.
The announcement represents the first visible steps toward pipeline construction on a project that hit a dead end during a legislative stalemate two years ago.
The project also has long-term implications to North America's energy needs by potentially helping homeowners and business owners with soaring heating and fuel costs in years to come.
"This is not an announcement to build a plan; this an announcement to start the project," said Doug Suttles, president of BP Exploration Alaska Inc.
"Before the year is out, we will have over 150 people working on it. What I would say is, 'Watch, just watch'."
The pipeline would eventually move about 110 million cubic meters of natural gas per day to markets, about 6 percent to 8 percent of daily US consumption, the companies said.
Interest comes at a time when natural gas has become an increasingly valuable source of energy, with US natural gas demand growing about 1.5 percent a year for two decades since 1986.
With so many regions in the continental US off-limits to oil and gas development, Alaska's gas line could help met American demand by shipping trillions of cubic feet of gas to market.
No timeline was announced for construction and completion, but the companies have said it would be at least 10 years before gas begins to flow.
The plan, dubbed Denali - The Alaska Gas Pipeline, is to deliver natural gas via a 3,200-kilometer pipeline from the energy rich North Slope in Alaska to Alberta, Canada.
Gas can then go into an existing pipeline system, or if necessary, BP and ConocoPhillips said it could build an additional 2,400-kilometer pipeline to US markets.
"There are multiple ways of bringing gas into the Lower 48 from Alberta," said ConocoPhillips' Brian R. Wenzel, vice-president of gas development.
"We'll look at existing network capacity and look at costs. We've got to keep those options open."
Two years ago, former Governor Frank Murkowski settled in principle with BP, Exxon Mobil Corp and ConocoPhillips on fiscal terms - taxes and royalties - for producing the North Slope gas.
The deal would have frozen oil taxes for 30 years and gas taxes for up to 45 years for the three major oil companies, but it did not guarantee a pipeline would get built.
Source:China Daily/Agencies
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