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* Planned pipeline would be in service 2020
* Cost similar to competing TransCanada/Exxon plan (Corrects cubic feet to British thermal units in paragraph 11) (Adds Denali president, Alaska governor quotes)
By Yereth Rosen
ANCHORAGE, Alaska, April 7 (Reuters) - Denali, the company created by oil giants BP Plc (BP.L) and ConocoPhillips (COP.N) to build and operate a natural gas pipeline from Alaska's North Slope to North American markets, estimates the project will cost $35 billion, according to documents filed on Wednesday with federal regulators.
The Denali pipeline, which would run 730 miles (1,175 km) in Alaska and 1,020 miles in Canada, will deliver about 4.5 billion cubic feet a day of natural gas to North American markets, according to the company's formal plan to solicit customers, filed with the Federal Energy Regulatory Commission.
The pipeline would be in service in 2020.
Denali's 90-day open season -- the period in which potential shippers are invited to commit natural gas to the project -- would start on July 6, according to the application filed with FERC.
The BP-ConocoPhillips company, created in 2008, said it already has invested more than $140 million in the project.
The cost estimate for that 1,700-mile project is $32 billion to $41 billion, according to the TransCanada-Exxon Mobil open-season plan. Those companies have received FERC permission to start a 90-day open season on April 30.
Denali President Bud Fackrell said the company has "a really high-quality design and execution plan" and believes its $35 billion estimate is well supported.
"We have to give confidence to the shippers that we know what this project is going to cost. We feel very good about that," Fackrell said in a telephone news conference.
But he warned that Alaska's pipeline project -- promoted by state officials for decades -- has to compete with other sources of natural gas that are flooding into the North American market, including shale gas and potential new sources of liquefied natural gas.
Denali's open-season plan assumes a shipping charge of $2.67, in 2009 dollars, for every million British thermal units of natural gas sent from the intake station at Prudhoe Bay to Alberta, Fackrell said at the news conference.
Alaska's North Slope holds known natural gas reserves of about 35 trillion cubic feet and is believed to hold much more gas that has yet to be discovered. However, almost all of that gas has been stranded on the North Slope for economic reasons, even though the nation's biggest oil fields have been producing there and shipping crude down the existing trans-Alaska oil pipeline for three decades.
High costs and uncertain markets have precluded construction of a North Slope natural gas pipeline, a proposal that has been promoted by Alaska officials since before construction of the oil pipeline.
BP, ConocoPhillips and Exxon Mobil are the major North Slope oil producers and hold leases to nearly all the known reserves of North Slope natural gas.
TransCanada is not a North Slope leaseholder but holds a license from the state entitling it to up to $500 million in subsidies, as well as preferential fiscal and regulatory terms.
Fackrell said Denali offers different advantages to potential shippers. Under the Denali proposal, initial shippers would not have to subsidize any future expansion of the pipeline capacity. Under the "rolled-in rates" terms of the Alaska Gasline Inducement Act, initial shippers must help finance future capacity expansion within the Alaska portion of the line.
Other companies are invited to participate, but not under the mandates of the Alaska Gasline Inducement Act, Fackrell said. Those terms, to which license-holder TransCanada is committed, are "prohibitive for the two projects to join together at this point," he said.
Alaska Gov. Sean Parnell on Wednesday defended the AGIA terms and said, despite Fackrell's comments, a merger of the two competing gas pipeline plans is possible.
"They're negotiating, it's posturing," Parnell said of Fackrell's comments. (Editing by Bill Rigby, Walter Bagley, Lisa Shumaker, and Bob Burgdorfer)