BP, Phillips Alaska and ExxonMobil announced yesterday they haveagreed to a “joint work program” to study the feasibility ofbuilding a pipeline to deliver Alaska North Slope gas to markets inthe Lower 48 states and Canada. But they’re the first to cautionthat their action is no guarantee that the on-again, off-againAlaska pipeline project will move forward this time.

“This project is not a sure thing. But the prospects forbuilding a pipeline have never looked better. The challenge now isto confirm that belief,” said Ronnie Chappell, a BP spokesman inAlaska.

Nor would ExxonMobil say the project was in the bag. However, “Iwould say right now…there’s certainly a lot of excitement andenergy” for building such a pipeline from the North Slope, notedspokesman Robert Davis.

The announcement to form a “joint work program” is key becauseit marks the first time that the three North Slope producers havecome together to study the prospect of constructing an Alaskanpipeline. Until now, each has been reviewing the projectseparately.

About 50 to 100 full-time-equivalent staff from the threecompanies will devote the “better part” of 2001 to evaluating andselecting a route for the pipeline; reviewing the construction,design and engineering aspects of the project, and sizing up theregulatory climate in the U.S. and Canada. In addition, they expectto look at projected North Slope gas production levels, future gasdemand in Canada and the U.S., and the economics associated withthe supply-demand forecasts, said Davis. The staff members willwork out of an office in Anchorage, AK, which will be set up “verysoon.” The cost of the entire effort has been pegged initially at$75 million.

Davis noted the staff members will focus on two possiblepipeline routes: 1) the southern route, which would go throughAlaska roughly paralleling the Alaska Highway; and 2) the northernroute, which would go under the Beaufort Sea over to the MacKenzieDelta in Canada, and then head southward into the U.S.

At this stage, ExxonMobil and BP said there wasn’t anypreference for one route over the other. It will be up to the staffinvolved in the joint work program to “further define the mostappropriate and economic route,” Davis noted.

Nor would the producers predict when they might fileapplications with FERC and the National Energy Board (NEB) inCanada. “This will be defined in the study,” Davis said.

The three producers indicated they will consider “in the future”potential “equity participation or cost-sharing [arrangements]” inthe Alaska project by other companies. “The companies that would beinvited to participate would have to bring something of value tothe project,” said BP’s Chappell. Davis declined to say whether anycompanies have already approached the producers about joining theAlaska project.

Interest in building an Alaskan pipeline was revived in the wakeof projections that the United States could see a 30 Tcf gas demandmarket by 2010. This in turn prompted concerns about whetherexisting supply sources would be able to meet this projected demandlevel.

Davis estimated that undiscovered gas reserves on the NorthSlope range from 25 Tcf to 70 Tcf. So far, he noted about 35 Tcfhas been discovered on the North Slope, but most of it has beenre-injected into the ground to spur crude oil production.

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