Sunday, January 31, 2010

Alaska Pipeline Price Tag is $41 Billion - Price Was $26 Billion Last June

By Joe Carroll
Jan. 29 (Bloomberg) -- Exxon Mobil Corp. and TransCanada Corp. said a proposed pipeline to carry Alaskan natural gas to U.S. markets will cost 23 percent to 58 percent more than originally expected.

The 1,700-mile (2,700-kilometer) conduit from Alaska’s North Slope to a network of pipelines that connect Alberta, Canada, to the Midwest will cost $32 billion to $41 billion, the companies said today in a statement. In June, they pegged the price tag at $26 billion.

Calgary-based TransCanada won state government support for its pipeline proposal and a promise of a $500 million subsidy in 2008. Exxon Mobil of Irving, Texas, agreed to help finance and build the pipeline in exchange for a minority stake in June.

The companies provided the new cost estimate in a request to the U.S. Federal Energy Regulatory Commission for permission to gauge interest among energy companies that would pump gas into the pipe.

In addition to the Alberta-bound conduit, Exxon and TransCanada today said they will consider an alternative route that would haul North Slope gas to the Alaskan port of Valdez. The 800-mile pipeline to Valdez would cost $20 billion to $26 billion, according to the statement.

At Valdez, Exxon and TransCanada said the gas could be chilled to liquid form for transfer to U.S. or international markets on tanker ships.

Both scenarios involve start-up dates of 2020, according to the statement.

To contact the reporter on this story: Joe Carroll in Chicago at

Last Updated: January 29, 2010 13:54 EST

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