BP and ConocoPhillips announced plans on Tuesday to combine resources and form the Alaska Gas Pipeline, which will produce approximately 4 billion cubic feet of natural gas per day to markets and cost at least $20 billion.
The Denali pipeline will be the largest private sector construction project ever built in North America, BP and Conoco said in a statement. Exxon Mobil , the third major energy producer in northern Alaska, have been invited to participate in the project, but has not yet confirmed whether they will join or decline.
The pipeline will link Alaska's North Slope to the lower 48 states, even though the proposed line would be outside the process approved by Alaska's government.
The pipeline will carry natural-gas from Alaska's oil and gas-rich North Slope to markets in Canada and the U.S. The line could meet as much as 8 percent of overall U.S. natural-gas demand.
The companies said they plan to spend $600 million to reach the first major project milestone, an open season, beginning before year-end 2010. An open season is a process during which the pipeline company seeks customers to make long-term firm transportation commitments to the project.
Once the open season is successful, the companies plan to obtain Federal Energy Regulatory Commission and National Energy Board certification and move forward with project construction.
The time is right to start moving this project forward, said Jim Mulva, ConocoPhillips chairman and chief executive officer.
The project consists of a gas treatment plant on Alaska's North Slope and a large-diameter pipeline that travels more than 700 miles through Alaska, and then into Canada through the Yukon Territory and British Columbia to Alberta, the companies said.
The project will also include a large diameter pipeline from Alberta to the lower 48 states, should it be required to transport gas from Alberta.
BP gained 39 cents to close at $63.85 at the end of Tuesday's trading. Conoco's stock was up 57 cents at $79.47 while Exxon gained 69 cents to $89.61.