By Dave Donaldson
Natural Gas producers have a choice of ways to get their resource to market as of this morning as the Denali Pipeline began its Open Season – the ninety days when potential users can make long-term commitments to the project. Dave MacDowell, Denali’s spokesman, says those who respond to the offer show they are willing to buy capacity on the line.
The project itself is in the neighborhood of $35-billion in terms of capital cost. We’ve spent up to this point $140-million of our owners’ money along with, I think it’s over 670-thousand man hours to get here. And all that work has resulted in what we believe is a high-quality cost estimate and a commercial offer for our customers.
The Denali line goes up against the TransCanada-Exxon pipeline project, which is working with support from the state under a license approved by the legislature. The two projects are very similar. Both will feed into North American gas supplies at the Alberta Hub in Canada. The TransCanada project’s cost is estimated to be between thirty-two and forty-two Billion dollars. And while TransCanada’s projected tariff for delivery to Alberta is between Two dollars eighty cents and three dollars fifty cents. MacDowell says the Denali project is expecting a tariff of two dollars-sixty-five cents. Also, there is a federal loan guarantee available to whichever project gets final federal approval.
However, there are differences between the two. TransCanada carries a state-offered freeze on state taxes for those who respond to the initial Open Season. Also different is Denali’s absence of an alternate route to Valdez where Natural Gas could be Liquefied for export. But MacDowell says such an option is not off the table completely.
We’ve focused on a large-diameter, high pressure gas pipeline that goes from Prudhoe Bay along the TAPS corridor to Delta Junction and then heads down the Alaska-Canada highway. Now, while we’ve not included an LNG option in our offer, we would certainly consider reviewing that if our customers ask us to.
State Gasline coordinator Mark Myers was on APRN’s Talk of Alaska this morning. He sees the Valdez option as important.
There’s an open season now for a 3-Billion cubic feet per day, 48-inch pipeline and upstream processing to Valdez. So the one thing AGIA differently is it honors the concerns and the needs and checks the viability of an LNG project. So there’s full competitive comparable credible open season for an LNG project.
The Denali project is owned by Conoco-Philips and B-P. MacDowell says B-P’s response to the oil spill in the Gulf of Mexico has not changed the pipeline plans, saying the Open Season will continue for the next three months. He says the next step will depend on how the market responds.