BP, Conoco discontinue $35 billion Alaska gas pipeline project
The $35 billion Denali - Alaska Gas Pipeline venture between subsidiaries of BP and ConocoPhillips has been discontinued due to a lack of customer interest, according to officials.
Denali said it will withdraw its Federal Energy Regulatory Commission pre-file application and, over the next few months, close out its operations.
"Denali is ending its efforts because of a lack of customer support," said Bud Fackrell, president of Denali.
"Denali is a market-driven company. As such, we cannot spend the billions of dollars necessary to advance the project unless we have binding agreements with shippers,” he continued.
“Although we have been in discussions with potential shippers for nearly a year and half, we have been unable to secure the financial commitments necessary to advance the project."
Work to date has been substantial, officials said. Denali has conducted extensive stakeholder consultations, set up multiple data rooms with detailed information, submitted comprehensive public filings, and provided access to Denali's experts to help potential customers evaluate the project.
Denali has spent over $165mn and invested more than 760,000 man-hours in its work effort, it said.
Since Denali began efforts in 2008, the North American gas market has changed significantly, primarily as a result of the development of shale gas resources. This has created a very difficult environment in which to secure financial commitments from potential customers, officials said.
"Although we are disappointed that Denali was not able to secure customer support, we are proud of our achievements," said Fackrell. "Denali's work has advanced the project further than at any point in the past and has provided potential shippers an opportunity to evaluate the competitiveness of North Slope natural gas in the North American marketplace."
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