Thursday, June 26, 2008

Washington DC Friendly to Alaskan Natural Gas

WASHINGTON -(Dow Jones)- U.S. regulators Wednesday approved a procedural request allowing developers to move ahead with an application for a major new natural gas pipeline from Alaska to the lower 48 states.

The U.S. Federal Energy Regulatory Commission approved the request from BP PLC (BP) and ConocoPhillips (COP) to initiate a "pre-filing process," during which the regulator's staff will review the companies' proposal before the official application. The companies said they hope to file the application by August 2011, and company officials say that once the pipeline project is approved, it would take 10 years to complete.

The "Denali-Alaska Pipeline" - which would have the capacity to pump 4 billion cubic meters of gas - is in competition with a proposal from Canada's biggest natural gas pipeline company, TransCanada Corp. (TRP).

FERC's head of energy projects, Mark Robinson, told the joint-venture that the pre-filing process "will greatly improve our ability to identify issues early and address them in our environmental review document."

Alaska's North Slope holds around 35 trillion cubic feet of proven natural gas reserves, with leases owned primarily by BP, ConocoPhillips and Exxon Mobil Corp. (XOM). Long-held plans to connect this supply with the lower 48 states had been scuppered by a slump in natural gas prices, along with regulatory and political difficulties.

But prices are on the rise again and the outlook remains strong, with more U.S. power generation switching to natural gas from coal amid tightening environmental laws. Currently, natural gas is the source of roughly one-fifth of U.S. electricity supplies and an ingredient for making everything from plastics to fertilizer.

The Alaska-Denali project will include a gas-treatment plant on Alaska's North Slope and a large-diameter pipeline that travels more than 700 miles through Alaska, then into Canada through the Yukon Territory and British Columbia to Alberta. If it's necessary to transport gas from Alberta, the project will also include a pipeline from Alberta to the lowest

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