| ANCHORAGE, Alaska
ANCHORAGE, Alaska Nov 19 The head of the BP
(BP.L)-ConocoPhillips (COP.N) joint venture seeking to build a
huge Alaska natural gas pipeline said on Thursday he worries
that the state government is doing too little to reduce the
project's economic risks.
Uncertainties over long-term state tax rates, the fate of
disputed leases at the Point Thomson oil and gas field on the
North Slope and other matters should be addressed by the state
of Alaska, said Bud Fackrell, president of Denali, the
BP-ConocoPhillips company promoting the massive natural gas
Denali plans to hold an open season in 2010 to formally
solicit potential natural gas producers' bids for shipping
space in a yet-to-be-built pipeline, Fackrell said.
"I believe that Denali will have a high-quality cost
estimate that shippers will have confidence in," he said in a
speech at the annual conference of the Resource Development
Council of Alaska. "I am, however, very concerned that we will
have heavily conditioned bids at open season."
If that happens, Denali will likely have no control over
the major conditions, he said.
"What does that mean for the project? It means delay.
Delay after delay," he said. "We're hoping for success in that
open season, but frankly, we need some help from other
TransCanada Corp (TRP.TO), which holds a state gas-pipeline
license entitling it to up to $500 million in state funding and
other benefits, is promoting a competing plan.
TransCanada also plans a 2010 open season. Tony Palmer,
TransCanada's vice president for Alaska natural gas, said his
company also expects potential shippers' bids to be
conditional. But he told the conference audience that he hopes
TransCanada and new partner Exxon Mobil Corp (XOM.N) will
resolve those issues after the open season closes on July 31.
Alaskans have long sought a natural gas pipeline to ship
the North Slope's vast reserves to markets. Up to now, economic
barriers have kept the resource -- proven reserves of 35
trillion cubic feet and much more in potential finds --
stranded in North Slope oil fields, most of which have been
pumping crude for decades.
The competing TransCanada and Denali proposals both
envision a pipeline that would ship about 4 billion cubic feet
a day to U.S. markets through Alberta. State officials estimate
such a gas pipeline would cost over $30 billion.
Fackrell said he believes the federal government, long
supportive of the project, is doing a good job to promote
However, climate legislation recently passed by the U.S.
House does not provide enough incentives for major energy users
to shift from coal to natural gas, he said.
"The problem with the climate bill is it gives special
provisions to other energy sources, like coal," he said. A
carbon cap-and-trade system can give natural gas -- and the
Alaska project -- an edge, but only "if you stand back and say
natural gas is the cleanest-burning fossil fuel, by a
significant margin," he said.
Mark Myers, the Alaska state gas-pipeline coordinator, also
said reworked climate legislation could brighten the project's
Myers said quick, significant reductions in carbon emissions
are needed to avert a climate crisis. "Any logical, pragmatic
approach to the problem requires us to use a lot more natural
gas," he said told the audience.
(Reporting by Yereth Rosen; Editing by Marguerita Choy)