BP and ConocoPhillips said today they are dropping plans to build a natural gas pipeline from Alaska’s North Slope.
The project, known as Denali, will stop its work “because of a lack of customer support,” said Denali President Bud Fackrell in a statement.
“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,” Fackrell said. “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.”
The “potential shippers” would have been themselves, since BP and ConocoPhillips are among the two biggest North Slope producers.
Exxon Mobil, the other major producer on the North Slope, has partnered with TransCanada on a pipeline project that received backing from Alaska state officials — including a $500 million loan guarantee.
Observers said only one of the projects would ever be built, given the $30 billion-plus price tag for the 1,700 mile endeavor. Last year we reported on the two projects discussing the possibility of merging.
Neither project has started construction, just surveying work along the proposed routes, which were roughly parallel to much of the Trans-Alaska Pipeline System, which carries North Slope crude to Valdez, Alaska. The TransCanada project also conducted an open season and has said it is still still in discussions.
The North American gas market has changed significantly since 2008 when the projects were announced. The proliferation of natural gas shale production in places like Texas, Louisiana and Pennsylvania had led to an oversupply in the U.S. and to significantly lower prices.