Tuesday, January 12, 2010

Open Season: Denali Shippers May Hesitate

From the good folks at Denali:

“I am pleased to announce that Denali will file its open season plan in April,” said Bud Fackrell, Denali president. “The results of the open season will provide an understanding of shipper requirements, which will be important as we consider our next steps. While our objective is a successful open season, we are concerned that shippers may hesitate to make the financial commitments needed to support the project due to issues outside of Denali’s control. These issues include increased gas supply in the Lower 48 market, the legal status of Pt. Thomson leases, and the lack of a long term fiscal regime for North Slope gas production. Our potential shippers have publicly indicated that resolution of these issues will be important in their decision to make the multi-billion dollar commitments necessary to move the project forward. “

Denali has invested $130 million moving the project forward over the past 20 months, primarily in the areas of field work, engineering, and stakeholder engagement. These work products underpin a robust project plan and cost estimate, which are essential components of Denali’s commercial offering.

“Denali’s open season will provide potential shippers the best opportunity to evaluate the economics of North Slope natural gas sales to the Lower 48 market,” said Fackrell. “I expect that the quality and timing of our open season offering will be viewed positively in the marketplace.”

Sounds like progress, kind of. Long term fiscal certainty needed.

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