A recent article in the Financial Times of London where Conoco's (NYSE:COP)chief executive officer Jim Mulva said the company may have to "reaccess" the Denali pipeline it is proposing to develop with partner BP (NYSE:BP).
The comment was based upon the enormous amount of natural gas reserves in the lower 48 states, which Conoco spokesman John McLemore commented on saying: "Clearly, shale gas (in the Lower 48) has changed the dynamics of natural gas in North America."
He added that there hasn't been a new review of the project launched.
This gave the idea to some that maybe the pipeline deal will be put on hold or abandoned, but McLemore said the company is continuing on with the work on the project.
Mulva did say after his comments to FT that natural gas still remains an "attractive" investment for the company, although it seems he's starting to think longer term than he was in the past.
This coming Monday McLemore said Conoco will look closely at natural gas prices over the long term, supply projections, response of the market and tax issues.
It sounds like in the shorter term things aren't looking nearly as good because of the huge supply for the pipeline, and it'll be interesting to see if that affects the timing of starting the pipeline, if it gets built at all by Conoco and BP.
Another factor is a competing proposal from Exxon Mobil (NYSE:XOM) and TransCanada to built a pipeline serving the same region.
Showing posts with label Denali. Show all posts
Showing posts with label Denali. Show all posts
Thursday, October 14, 2010
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.
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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