Saturday, January 24, 2009

Dim Outlook For Denali?

With crude oil trading in the $40's and natural gas below $5/MMBTU I was really not surprised to hear this news from Denali Pipeline partner BP (full story link)

"It's not a pretty story right now in terms of North American natural gas markets," Brian Frank, president of BP Energy Co and BP's North America Gas and Power, said at the annual conference held by the Alaska Support Industry Alliance.

Frank said he remains a believer in the Alaska natural gas project. But it can be successful only if there is a "stakeholder alignment," he said. "Without it, it's difficult to visualize the project going forward," he said.

Such alignment includes regulatory and fiscal "reliability" from the state of Alaska, Frank told reporters after his speech. "How do you know the economics for your project if you don't know what you're going to pay in taxes?" he said.
By comparison the Canadians took steps towards "stakeholder alignment" and fiscal certainty this week by announcing that the Canadian Government will offer financial support for the Mackenzie pipeline. Partnership vs. combativeness - now there's a novel approach, an approach that will probably lead to a pipeline decades before an Alaskan Gas Pipeline.

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