Gas pipeline could cost $65 billion

JUNEAU, Alaska – A liquefied natural gas project in Alaska could cost more than $65 billion and would represent a mega-project of “unprecedented scale and challenge,” officials behind the project told Gov. Sean Parnell.

In a letter to Parnell released by the governor’s office late Wednesday, officials with TransCanada Corp. and the North Slope’s three major players said good progress has been made in pursuing a project. But they said “significant environmental, regulatory, engineering and commercial work remains to reach upcoming decisions to bring North Slope gas to market.”

They estimated the cost of a pipeline project could range from $45 billion to more than $65 billion, involve up to 1.7 million tons of steel and employ up to 15,000 people during peak construction and more than 1,000 in Alaska permanently. The project concept description lists capacity for a large-diameter line at 3 billion to 3.5 billion cubic feet of natural gas a day. It does not specify the terminus for any line, only that it would run from the North Slope about 800 miles to south-central Alaska.

Parnell set expectations for progress on a major gas pipeline during his State of the State address in January. He has said the timeline was born of frustration with the seemingly stalled progress of the project.

The first benchmarks were to resolve disputed leases at the Point Thomson gas fields and get the CEOs of the North Slope’s three major players – Exxon Mobil Corp., BP PLC and ConocoPhillips – to coalesce behind plans for an LNG pipeline to get the region’s resources to market. Both of those were met in March.

His third benchmark was for the companies to identify a project and work schedule and to have firmer numbers on a project by Sept. 30.

In a news release Wednesday, Parnell said he was encouraged by what he’s seen.