Wednesday, May 18, 2011

Denali Dead. Is AGIA Next?

Another victim of the shale boom:  yesterday, ConocoPhillips and BP officially threw in the towel and declared that their "Denali" joint venture natural gas pipeline from the North Slope of Alaska to Alberta, Canada is officially dead. Officials for the proposed $35 billion project withdrew the venture's pre-application with Federal Energy Regulatory Commission.  The pipeline owners couldn't find a viable market for the gas now that cheap gas is readily available in the Lower 48 thanks to the advent of shale gas.

With the demise of Denali, the question is, what happens to the joint venture of Exxon and TransCanada for the pipeline partially subsidized ($500 million) by the state of Alaska through its now infamous Alaska Gasline Inducement Act (AGIA)?  It's been dead man walking for the past couple of years now.  If not for the political implications of its failure, it probably would have folded tent last year.

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