Tuesday, September 28, 2010

Conoco to reassess Alaska gas pipeline

According to London's Financial Times, ConocoPhillips' chief executive Jim Mulva said recently that the company would reassess the economics of the Denali project, a $30 billion gas pipeline from Alaska to Alberta it is considering building along with partner BP. The reconsideration is coming because a glut of natural gas in North America, being driven by unconventional shale gas plays, is keeping forecast commodity prices low. The current price is so low that Conoco has even shut in some of its North American gas wells (as have other companies). Mulva candidly explained the decision: "We’d rather keep it in the ground for when it will have a greater financial impact.” The report doesn't mention whether or not that statement applies to Alaska's natural gas as well as the shut-in wells, but read much more, here. Alaska Beat thinks it's worth noting that the industry pretty much agrees that gas prices will likely stay low in the short term, but there has been quite a bit of uncertainty over what they would do in the long term. At the very least, Mulva's comments and Conoco's plans to reevaluate Denali's particulars indicate that doubts over the long-term price of gas are coming into greater focus and are significant enough to attend to.

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