Tuesday, October 5, 2010

BP (NYSE:BP), Conoco (NYSE:COP) Denali Joint Venture Receives Bids

Bids to transport natural gas down the proposed natural gas pipeline from Alaska to major American markets from the BP (NYSE:BP), Conoco (NYSE:COP) joint venture called Denali, have been coming in said the energy companies.

A 90-day period where natural gas producers could bid for space on the pipeline to be built just ended. The pipeline hasn't been built yet, although the overall process has been underway for some time.

Bud Fackrell, Denali's president, said in a statement, "After two years of work, more than 700,000 man-hours and more than $150 million of private investment, I can report that Denali has received bids for significant capacity from potential shippers."

"As expected, the bids include conditions, some of which are outside of Denali's control. We will carefully evaluate these bids and their conditions and continue confidential negotiations with potential shippers in an effort to reach binding agreements," added Fackrell.

Market conditions have changed since the joint venture was put together, as enormous reserves of shale natural gas have been found in the lower 48, and that has companies concerned over how competitive natural gas from the Alaska North Slope will be, which is affecting the negotiations and bids.

Plans by Denali are to develop a pipeline about 1,700 miles long which would go through Alaska to Alberta, Canada. It would also include a huge gas treatment facility at Prudhoe Bay.

The pipeline would be able to transport about 4.5 billion cubic feet a day.

Cost to build the pipeline by Denali are estimated at $35 billion.

Approximately 35 trillion cubic feet of proven natural gas reserves are located on the Alaskan North Slope.

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