The shale-driven natural gas supply glut in the Lower 48 states has prompted ConocoPhillips to reconsider its participation in the Denali Alaska gas pipeline project with BP plc, CEO Jim Mulva said in Houston.

The Financial Times reported that Mulva cited the gas supply surplus and prices in the $4/MMBtu area as reason to reassess the $30 billion project.

A ConocoPhillips spokesman told NGI that Mulva's remarks were mischaracterized and the company was not "reassessing" the project.

However, "following the close of the Denali open season on Oct. 4, we're going to consider the market response as well as long-term gas prices, supply forecasts and fiscal certainty in the state. As Mr. Mulva said in his speech yesterday, clearly shale gas has changed the dynamics of natural gas in North America," said spokesman John McLemore.

Denali, currently in the midst of an open season (see Daily GPI, July 7), is a competitor to a project sponsored by TransCanada Corp. and ExxonMobil Corp., which recently completed its open season (see Daily GPI, Aug. 3). The TransCanada-ExxonMobil project has the state's sanction under the Alaska Gasline Inducement Act.

There has been speculation that the two projects might be combined as it is only possible for one project to ultimately go forward.

Asked about the report, Denali spokesman David MacDowell noted that the project is in its open season and plans are continuing.

"Our activities continue as planned," he said. "Denali is a market-driven project, and we are focused on presenting an attractive offer to our potential customers. Our next steps are dependent on open season results."

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